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Lawyers For Madoff Victims' Trustee Back in Court

Thursday, November 10, 2011

Attorneys for the trustee who represents victims of Bernie Madoff head back to Manhattan federal court Thursday. 

Irving Picard has sued about 5,000 Madoff investors who made money with the Ponzi schemer, hoping to get billions back in order to pay those who lost money.

Attorney Helen Davis Chaitman represents hundreds of these victims, including elderly people living off Individual Retirement Accounts, or IRAs.

"I have people who are 90-years old who are being sued by Mr. Picard to pay back the last six years mandatory IRA withdrawals they took from their IRA accounts," she said.

Madoff victims are hiding behind a veil of being an innocent investor, according to the trustee's suit. Oral arguments will be heard in the case Thursday afternoon before federal judge Jed Rakoff.

With reporting by Janet Babin

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Comments [3]

Richard M Friedman

Brenda, if you are reading this.
To answer all your questions, simply disregard the questions you wrote. Listen to me. Simply put: in doing his calculations, the Trustee went back to Day 1 of when a person first invested with Madoff (regardless of how many decades ago that might be). To that he added all subsequent monies deposited by that investor into the account, then subtracted all withdrawals. If the person withdrew more than was deposited, the Trustee deemed that investor a "net winner" and made them subject to clawback. If the person withdrew less than they put in, that person is deemed a "net loser" and qualifies for SIPC money. Returns on the money, in the form of interest, dividends, and capital gains do not factor into this at all since they did not exist (though the IRS was a huge beneficiairy of this since people collectively paid in billions to the IRS and respective state governments on those "earnings"). The IRS, up to a point, has returned tax dollars, while many states have not. Not all "net winners" get clawed back since it depends upon the amount, and it depends upon when a person's account got "overdrawn," that is if it was within the last six years (or two years, depending upon which judge you are following).

One of the most important things to take away from all this is that SIPC (Securities Investor Protection Corp) which states that it is the "investors' first line of defense" is beholden to Wall Street and has always done as much as possible NOT to help investors, and to protect Wall Street, which provides its funding.

This all came about in 1970, when Wall Street wanted to stop issuing stock certificates, because it was too costly and time consuming, and Congress listened and created SIPC to protect investors.

SIPC and the SEC has failed miserably in their missions.

Nov. 10 2011 03:55 PM
Larry Young from New York

My understanding is that any money received beyond the money that was originally 'invested' is eligible for the clawback, on the basis that such distributions were not in fact earnings, but thefts from the investments of other clients.

Nov. 10 2011 03:08 PM
Brenda from New York City

I'm curious as to how they are determining who lost money? If you received inflated returns on your "investments" over the years are those factored into the equation? Are the people who "lost" money, those that never received dividends? I know several people who lost their principal but their interest payments over the years more than made up for the loss. Does anyone know the answer to this question? Thanks!

Nov. 10 2011 11:08 AM

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