Madoff “net winners” just became “net losers”

A Bankruptcy Judge sided with Madoff Trustee Irving Picard today and sustained his decision to deny recovery for those Madoff victims who took out more than they took in. I understand the logic, but it’s going to cause real hardship and even destitution for those people who have been living on their “investment returns” from Bernie. No easy, just answer here, I fear.

A bankruptcy judge on Monday ruled that certain investors in Bernard Madoff’s Ponzi scheme aren’t entitled to recoveries from the fraud.

The ruling, by U.S. Bankruptcy Judge Burton Lifland in Manhattan, affirmed the view of a trustee who is recovering assets for victims of the multibillion-dollar fraud, Irving Picard. Mr. Picard has said that investors who withdrew more money from Mr. Madoff’s investment firm than they put in—making them “net winners” from the fraud—shouldn’t be entitled to recovered funds.

Lawyers for the so-called net winners said they would appeal. That sets up a showdown later this year in the Second Circuit Court of Appeals. At a hearing last month, Judge Lifland said that application of a prior legal ruling cited by both sides was unclear and would need to be resolved by the higher court.

The ultimate decision will determine how the pot of money being collected in the aftermath of the fraud is divvied up. A lawyer for Mr. Picard previously said the trustee might be able to recover as much as $10 billion for investors, or about half the amount they collectively lost from the fraud, and far more than the $1.5 billion currently recovered.


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15 responses to “Madoff “net winners” just became “net losers”

  1. out looking in

    You are bordering on the intelligence of the college moron in ‘Nam. Of course it will cause hardship (for everyone)…but it was a P-O-N-Z-I scheme…no one should take out more than what they put in…Next time just stop at “I understand the logic”

  2. Sound Beacher

    CF: Did you see the item on Today show this am? Matt interviewed H. Markolopolis (sp?) and his new book about Madoff? Also, I just drove by the son, Andrews’ house on Tomac Ave. All the lights are on and there a few cars in the driveway. Wonder what is up??

  3. whatever

    madoff victims should only get what they put in…c’mon cf please!

    12% a year with zero volatility and the investors didn’t know? sure whatever you say!

  4. whatever

    now in a world where people are held accountable they would get nothing for the same reason:

    12% a year and zero volatility… know the rest…

  5. Greenwich Ex-Pat

    Markopolos has a book out, and in it he says if he and/or his family was threatened by Madoff, he was going to take the guy out. I believe him. He had a lot of guts to pursue the matter as far as he did. I myself was too chicken to give my views on the housing bubble to people in social gatherings, for fear of being laughed at or shunned, or making a friend feel like an idiot.

  6. Anonymous

    I have not read Lifland’s decision, but the decision should be that anyone who got any money from madoff needs to return it and then share in the total recovery. when there’s a ponzi scheme or other fraud, any money paid out to early victims is not investment return; it is money stolen from newer victims.

  7. Anonymous

    CF, why are you boo hoo hooing for people who want to claim a phony profit from a scheme where they had no profit, thereby robbing others who put their money into the scheme nearer to the end of the game and lost everything?

    “out looking in”, why are you still obsessing about “the college moron in ‘Nam”? Surely that’s old news here by now, but for some reason you seem to have that story clutched closely to your heart. Please release it, let it go. You must have better things to worry about.

    Meanwhile, “Sound Beacher” says that he has been driving by Andrew Madoff’s home and is able to report that “all the lights are on and there a few cars in the driveway.” My parents taught me that folks who make a point of driving by and scoping out the homes of those affected by some misfortune are creepy people, and I continue to believe that.

  8. Priapus

    Anyone who took money out early is complicit in the fraud, just like Bernie. Why is that so diffcult for people to understand. They should feel lucky they aren’t unindicted co-conspiritors. Some knew for sure…

  9. out looking in

    Okay Anon-

    Did my 5 hrs of TM (sleep)…its gone…peace love and understanding brother (or sister)

  10. Greenwich Gal

    Dude – the math is the math! I’m with everybody else on this and I can’t believe you don’t see it, logical person that (I thought) you are!

    • christopherfountain

      Well I just feel sorry for the dumb chumps who accepted the fact that they were blessed by Bernie and led fat, happy lives in retirement believing that they’d found a benevolent savior who was keeping them secure in their retirement. I accept the universal rebukes from readers, but I still worry about those ignorant, now-impoverished dreamers.

  11. out looking in


    Many were not ignorant….I can say this with tremendous confidence…we had a drag down battle at last firm bcs some private bankers we hired from BBVA and Santander (two large Spanish banks) were insistent on placing 10s millions of their client money in the feeders (ie, Fairfield Greenwich) since they already held these positions at these banks and also UBS…I said no…got nasty…