Already Burned, Madoff Victims Now Face “Clawbacks”
by Peter Gorenstein, finance.yahoo.com
Last week U.S. District Judge Denny Chin guaranteed scammer Bernard Madoff would spend the rest of his life in prison – sentencing him to 150 years behind bars. But as Tech Ticker learned first hand at last week’s sentencing hearing, the financial woes are just beginning for many of his victims’.
Court-appointed trustee Irving Picard has recovered about $1.2 billion of $13.2 billion in estimated net losses so far, The Wall Street Journal reports. He is now looking to victims who pulled out their money in previous years for the rest. To this end, he has filed so-called “clawback” suits.
Picard wants “to get all of these assets back so he can now give them to all of Madoff victims rather than have them only benefit a few,” says Ken Rubinstein, senior partner at Rubinstein & Rubinstein, and a specialist in areas of estate and tax planning.
What’s a victim in this situation to do? Rubinstein, who represents a number of Madoff clients, is telling them to engage in pre-bankruptcy planning. “You’re allowed under the law to convert non-exempt assets… into exempt assets.” In plain English, that means put your money where the government (or Irving Picard) can’t touch it. Such exempt assets include life insurance policies, retirement accounts and annuities.
On the bright side, there is a chance some of these same victims can get back money from the IRS. In what may be a rare moment of positive PR for the tax authority, they are allowing victims to get refunds on phantom profits by filing an amended return. Rubinstein says, “The IRS is cooperating and helpful in this regard.” A phrase not often uttered in America.
Madoff Trustee Demands Investors Return $735 Million
By Christopher Scinta, Linda Sandler and David Voreacos, Bloomberg.com (4/23/09)
The trustee liquidating Bernard Madoff’s defunct money management firm told 223 investors to return as much as $735 million or face legal action, said a person familiar with the matter.
“The trustee demands that you immediately return such amounts to the trustee for the benefit of all defrauded creditors” of Bernard L. Madoff Investment Securities LLC, according to a copy of the letter obtained by Bloomberg News.
Trustee Irving Picard mailed the so-called clawback letters to customers who redeemed investments over the past six years, the maximum period for which he can seek recovery under New York law, according to the person. Picard contacted mostly individuals, not so-called feeder funds, the person said. The 223 letters constitute the bulk of expected clawback letters, according to the person.
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