Madoff Funds Recovered

[travelover]

Now this is amazing. https://www.bloomberg.com/graphics/2018-recovering-madoff-money/

A decade after Bernard Madoff was arrested for running the world’s biggest Ponzi scheme, the bitter fight to recoup investors’ lost billions has astounded experts and victims alike.
While no one will ever collect the phantom profits Madoff pretended he was earning, the cash deposits by his clients have been the primary objective for Irving Picard, a New York lawyer overseeing liquidation of Madoff’s firm in bankruptcy court. So far he’s recovered $13.3 billion—about 70 percent of approved claims—by suing those who profited from the scheme, knowingly or not. And Picard has billions more in his sights.

 

[jazz4cash]

I think we had a similar post recently, and as I said I find it ironic that since it is a Ponzi with no market losses, the recoverable funds are remarkable compared to other fraudulent schemes.

 

[USGrant1962]

Coincidentally, I just watched the movie Wizard of Lies with De Nero an Pfeiffer a couple of nights ago. The difficult thing about Ponzi schemes Is that most of the “victim’s” money goes to earlier “victims”, until it doesn’t. The schemer only takes an AUM fee - however large it may be. But the vast majority of money involved is just shuffled from one mark to another.

 

[NW-Bound]

Yes. The recovered money was clawed back from earlier investors who thought they made out well by bailing early when the going was good.

Now, I wonder if people who lost money in schemes like Bitcoin could sue to get money from people who sold at the peak and made out like bandits? And current GE shareholders?

 

[aja8888]

Now, I wonder if people who lost money in schemes like Bitcoin could sue to get money from people who sold at the peak and made out like bandits? And current GE shareholders?

The problem would be finding out who the Bitcoin sellers were.

GE: Sue the CEO's.

 

[NW-Bound]

I thought the bitcoin circulation may be anonymous, but the point and time where it is converted to the despised greenbacks are known.

One cannot have his trading or banking account balance jumping up without the gummint knowing. And don't they still have to pay taxes on the gains?

 

[Sunset]

Yes. The recovered money was clawed back from earlier investors who thought they made out well by bailing early when the going was good.

..

Yes, so on the quick surface thought that is all fine and good, but imagine if you were one of those people.

One who legitimately put your 300K in the fund for 5 years and then took everything out to retire or buy a house.
You only did what any normal investor does, and expected the income was yours.

Now the claw back is $100 K
You probably paid taxes on it, do you get the taxes back ? (wonder how the IRS treats that )
And of course it could really hurt to come up with the $100K in retirement.

I'm glad I'm too poor to have run in the circles Bernie did.

 

[kcowan]

One who legitimately put your 300K in the fund for 5 years and then took everything out to retire or buy a house.
You only did what any normal investor does, and expected the income was yours...

Yes all participants in Ponzi schemes are liable even if they were ignorant of the criminal nature of their investment. This result has potential larger implications for MLM schemes.

 

[jazz4cash]

I thought the bitcoin circulation may be anonymous, but the point and time where it is converted to the despised greenbacks are known.

One cannot have his trading or banking account balance jumping up without the gummint knowing. And don't they still have to pay taxes on the gains?

Bloomberg has a piece on BTMs e.g. ATMs for Bitcoin. Who knew?
Bitcoin ATMs May Be Used to Launder Money https://www.bloomberg.com/features/2018-bitcoin-atm-money-laundering/

I don’t think there’s a case for the whole scheme being illegal. No claw backs even if it was possible.

 

[NW-Bound]

Yes, I saw that too. It is for buying Bitcoin and paying with cash.

There's no need to clawback any gain with these BTM buyers, because people have been losing money with Bitcoin. Besides, that machine does not accept Bitcoin to spit out cash anyway. Because people will be losing money, the government probably does not care. The guy who makes money is the owner of these BTM's, and there's a strong chance he will get audited.

I definitely remember Bitcoin exchanges report trades to the IRS, and traders have to report capital gain/loss just like with stocks.

 

[Texas Proud]

Bloomberg has a piece on BTMs e.g. ATMs for Bitcoin. Who knew?
Bitcoin ATMs May Be Used to Launder Money https://www.bloomberg.com/features/2018-bitcoin-atm-money-laundering/

I don’t think there’s a case for the whole scheme being illegal. No claw backs even if it was possible.

I saw a bitcoin ATM when going to a movie... I was a bit surprised it was just out in the open like a regular ATM

Yes, I saw that too. It is for buying Bitcoin and paying with cash.

There's no need to clawback any gain with these BTM buyers, because people have been losing money with Bitcoin. Besides, that machine does not accept Bitcoin to spit out cash anyway. Because people will be losing money, the government probably does not care. The guy who makes money is the owner of these BTM's, and there's a strong chance he will get audited.

I definitely remember Bitcoin exchanges report trades to the IRS, and traders have to report capital gain/loss just like with stocks.

Since I did not go look at it I did not see what it would do... but I can see not spitting out cash unless there was a max per day like my bank ATM...

 

[RobbieB]

Only fair that the victims share. If you won, too bad, you still lose.

 

[Texas Proud]

Only fair that the victims share. If you won, too bad, you still lose.

I do not have a problem with them getting funds back from people who got funds out over what they put in... the only thing that I would hope was there was a statue of limitations... If I were in early and took all my funds out 20 years ago because I just did not want to be there I think that it is too late to claw it back...


The big problem I had with most of this was them going after companies that had nothing to do with the scam but was providing normal banking services or other services... the logic seems to be you made money off the scam and you have to pay back a lot more money than you ever earned... my thinking is they provided a service that cost money to provide and they were not required to try and figure out if there was a scam...


The regulators are the ones that look the worst in this case but nothing bad happened to any of them... and they were even told that it had to be a scam many years earlier and still nothing...

 

[gauss]

I thought the bitcoin circulation may be anonymous, but the point and time where it is converted to the despised greenbacks are known.

One cannot have his trading or banking account balance jumping up without the gummint knowing. And don't they still have to pay taxes on the gains?

According to US law, BitCoin is treated as property -- not currency.

The tax ramification of this is that, yes, when BitCoin is converted back to USD it is a taxable event.

What is not so obvious, however, is that every purchase with BitCoin is also a taxable event - You have disposed of a capital asset and thus need to calculate the gain on each transaction. ie. you paid for your lunch at a diner that accepts BitCoin, it is a taxable capital gain transaction

-gauss

 

[CaptTom]

The regulators are the ones that look the worst in this case but nothing bad happened to any of them... and they were even told that it had to be a scam many years earlier and still nothing...

Good point. I wonder if anyone will sue the gov't.

I see it sort of like the Nigerian prince scam. Should I feel sympathy for those who let their own greed overcome common sense? If I were in their shoes, would I have realized that it sounds too good to be true, so it probably isn't? Or would I have succumbed to FOMO?

No easy answers here.