Some Tips for Victims of the Madoff Ponzi Scheme
On Thursday, December 11, 2008, the presses started buzzing with the news that Bernard Madoff confessed to running what may be the largest and longest “Ponzi scheme” in history. According to reports, Madoff swindled investors out of an estimated $50 billion over 30 years.
This past week the details continued to surface, revealing new victims and touching what may be the tip of the iceberg as to the complexity and scope of this scheme. The records that were supposedly kept are in disarray, and no one yet knows the scope of the damage Madoff caused. According to the Wall Street Journal, SEC Chairman Christopher Cox stated that Madoff “kept several sets of books and false documents, and provided false information involving his advisory activities to investors and to regulators.” With the media frenzy and panic, investors need to carefully evaluate their options and avoid a knee-jerk reaction.
For an array of reasons, investors are encouraged to contact tax counsel and/or legal advisors to evaluate these options. First, investors affected by Madoff need to collect and maintain any records related to their investment, such as monthly statements and investor reports going back as far as possible. In addition, they must evaluate whether or not they received returns above their initial investment. If so, the investor may be subject to potential claims from the bankrupt estate to collect funds. Investors should take action to protect themselves from this possibility.
Second, investors should seek advice from a tax advisor. Tax rules may allow investors who are victims of criminal theft by an investment advisor or broker to claim a tax deduction stemming from their losses.
Third, anyone who may have a claim should complete the proper claim forms which are being mailed by SIPC (Securities Investor Protection Corp.) and return them with as much supporting documentation as possible. SIPC, which was created by Congress and funded by the securities industry to protect investors against brokerage theft and unauthorized trading, will then review all the claims and try to determine if and how to satisfy these claims. Since the records from this scam are in such disarray, an investor needs to be prepared to back up their claim with as much documentation as possible. It is important to remember that even if the claims are valid, SIPC only covers up to $500,000 in losses, and has a miserly track record of paying investors’ claims.
Finally, investors should evaluate the potential for legal action against persons who have liability for their losses and have the capital to pay claims. Not all the players in this scheme are yet identified, and investors should continue to analyze what participants in the scheme may have legal liability. It is recommended that investors start early to organize their records and evaluate their options.
Page Perry, LLC is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in counseling institutional and individual investors regarding their investment problems. For further information, please contact us.
