If you watch television, read the newspaper, or surf news sites, you’re sure to have hears about the $50 billion Ponzi scheme masterminded by Bernard Madoff.
The $50 billion in losses is merely an estimate. Some experts (like me) think that the actual losses will be much higher.
Stockbroker Fraud Blog discusses several options victims have for recovery:
- Securities Industry Protection Corporation (SIPC) could provide up to $500,000 per account. (Although I think the customers of the “investment advisory” business which is allegedly where the Ponzi scheme occurred won’t qualify. Only regular brokerage accounts would qualify. And fraud doesn’t qualify either, only unauthorized trading or theft. It will be interesting to see how this one pans out.)
- Victims could go after Madoff personally, seeking to get their hands on his personal or company assets.
- There may be third parties that could be liable to the victims.
- Victims might be able to get some money back from the IRS for taxes paid on phantom capital gains in prior years. There’s also a possibility of claiming a theft loss on tax returns.
So there is some potential recovery for victims, but that wouldn’t make me feel all that good, however. Investors are sure to lose money no matter how you slice it. Now they’re waiting to see how much they will lose.
I talked about this fraud and Ponzi schemes in general on CNBC’s On the Money last night. Check out the videos here.