Investment nightmare

[Keim]

I suspect lawyerly bluster: shaking the tree to get the easy fruit that pays up hoping to avoid a fight.

Too quote my Dad when I got sucked into a corporate nonprofit fraud battle a few years ago: Time to lawyer up, son. Lawyer up QUICK!

 

[pb4uski]

... The key killer for me was that they are treating these as separate accounts even though they said they would group gains and losses by “taxpayer Id”. I would think my IRA and my taxable accounts have same taxpayer Id (SSN) but they are saying otherwise. !!

Your taxable account and IRA would indeed both have the same taxpayer identification number, in the case of individuals your SSN.

You could easily prove that by looking at the TINs on the 1099-B where the sale and gain were reported and the TIN on your IRA account. If they are the same SS then it is the same TIN.

Did they explain why they are saying otherwise? I could see if one account had your spouse's TIN and another had your TIN that they might make such a claim but then just providing the first page of a joint return would prove that you are one economic unit.

 

[pb4uski]

I suspect lawyerly bluster: shaking the tree to get the easy fruit that pays up hoping to avoid a fight.

Too quote my Dad when I got sucked into a corporate nonprofit fraud battle a few years ago: Time to lawyer up, son. Lawyer up QUICK!

+1

 

[Letj]

This is correct. I had an existing IRA account money that I used to buy it at the same time that I sold the taxable account. It wasn’t the same money I took out.

I did so because the tax treatment on the gains was taxed as ordinary income so I wanted to make it more
Tax efficient…hence the IrA holding it rather than regular taxable cash.

Still confused. How do you transfer proceeds from a non-IRA account into an IRA account? Doesn’t make sense.

 

[pb4uski]

He didn't. He sold the fund in his taxable account for $300k and then within a week used $300k of cash that was sitting in his IRA to buy $300k of the same fund.

He described it poorly in the OP.

 

[gayl]

If I read it correctly, I'd be asking an attorney instead of SGOTI and divulge everything especially clawing back 50% instead of 100% of gains.

 

[Safire]

I can't find the previous post I made but this appears to be a claw back attempt by a bankruptcy trustee on behalf of all the investors who lost money in the scheme.

The way I read OP was that s/he invested 200K in a Ponzi scheme from funds in a taxable a/c, made a 100K "profit", withdrew the entire 300K funds from the scheme, then immediately re-invested the 300K back into the scheme, but from funds in an IRA. Out of this 300K, s/he lost 80% or $240K.

Thus, s/he both made and lost money in the scheme, hence the demand for half his or her "winnings" back. I'm just speculating here.

OP needs to consult a securities' lawyer to help him / her here. I am no lawyer but my understanding is the trust bankruptcy lawyer will sue if s/he does not hear back in response to the demand letter.

 

[MRG]

OP this isn't right. Don't be afraid to throw an attorney into this. I got into a suit against my former employer for their lack of fiduciary responsibility and it's working. I've collected 10k and expected a second more significant settlement. PM me if you want the nameof legal firm whose representing me.

 

[pb4uski]

OP this isn't right. Don't be afraid to throw an attorney into this. ...

+1

 

[pb4uski]

If I read it correctly, I'd be asking an attorney instead of SGOTI...

And many of the SGOTIs have been suggesting that too

...I would get a lawyer...

.... Time for the OP to hire a lawyer.

...You need a lawyer...

.... Time to lawyer up, son. Lawyer up QUICK!

 

[gayl]

And many of the SGOTIs have been suggesting that too

Yes. I should have read the entire thread instead of just the 1st 15. We're a smart group

 

[CRLLS]

I agree that an attorney might be in order.

That being said, I wonder: They are treating the 2 accounts as separate and they are asking for 50K back on his gain. I wonder how he gets in line for collecting some percentage of the 240K he lost in the IRA? (300K X 80% loss) reimbursement. This seems to me to be an important part of the discussion.

 

[audreyh1]

Crazy, crazy situation! Horrible to find yourself duped by a pyramid scheme. And then dealing with claw backs. What do do other than hire an accountant and a lawyer to advise me through this mess?

 

[ExFlyBoy5]

I suspect lawyerly bluster: shaking the tree to get the easy fruit that pays up hoping to avoid a fight.

Too quote my Dad when I got sucked into a corporate nonprofit fraud battle a few years ago: Time to lawyer up, son. Lawyer up QUICK!

Only argument I would put out there that until the OP is actually SERVED (meaning being sued) they I wouldn't pay for an attorney outside of initial consultation. A demand letter is just that...a letter.

 

[Jerry1]

He didn't. He sold the fund in his taxable account for $300k and then within a week used $300k of cash that was sitting in his IRA to buy $300k of the same fund.

He described it poorly in the OP.

I sure didn’t get that. Thanks for the clarification.

As others have said, time for a lawyer. However, I just don’t see how they could support the $100K. Yes, he moved his investment from a taxable situation to a IRA, but he did not divest himself from the fund. I’d argue that there is nothing there to be clawed back. He lost most of his investment and is no better off than anyone else in the fund and should be treated accordingly. It doesn’t seem to be a stretch to say that it was in essence, the same money. Had he only bought $200K of the fund in his IRA, then I think the argument would be different.

 

[OldShooter]

Only argument I would put out there that until the OP is actually SERVED (meaning being sued) they I wouldn't pay for an attorney outside of initial consultation. A demand letter is just that...a letter.

IANAL, so I don’t' know if this is the correct approach or not. Preemptive moves, including a harsh response, might be advised. A knowledgeable lawyer reading the court documents might suggest other tactical moves as well. This situation is not one where I'd try to save a buck at the front end.

 

[ivinsfan]

Thanks for the thoughts so far everyone. This has been a very sad, scary and difficult few years as the courts attempt to settle this mess.


Yes this has a lot of moving pieces so sorry for confusing.

I booked a 100k gain over 5 years.

I then swapped that money out and invested instead (using non comingled funds) through an IRA account I had for about the same $$ amt. (This happened in a week of one another.)

And yes, I can’t deduct the loss for tax purposes since it happened in IRA. This was the worst of both worlds.

They have appointed a court receiver who has hired a law firm to track down this part of the funds money for investors. They have tracked down and paid out about 20% of the investment (through other avenues already) and are only expecting 5-10% more at best by these remaining types of claw backs.

The key killer for me was that they are treating these as separate accounts even though they said they would group gains and losses by “taxpayer Id”. I would think my IRA and my taxable accounts have same taxpayer Id (SSN) but they are saying otherwise. !!

Your posts are so confusing, are you saying they returned 60K to you or they will return 60K, I cant figure it out. What is your actual financial damage to this point using your 200+100K number..and what might you still stand to get back.

 

[gayl]

Crazy, crazy situation! Horrible to find yourself duped by a pyramid scheme. And then dealing with claw backs. What do do other than hire an accountant and a lawyer to advise me through this mess?

+1. I think that might help OP sort through what he actually made / lost / owes / if this is for real or a shakedown.

FWIW I have no experience in something like this bc I have only invested through Fido - Schwab - Hartford (thats where my 457 was until retirement)

 

[ExFlyBoy5]

IANAL, so I don’t' know if this is the correct approach or not. Preemptive moves, including a harsh response, might be advised. A knowledgeable lawyer reading the court documents might suggest other tactical moves as well. This situation is not one where I'd try to save a buck at the front end.

Well, I *am* licensed as one (arguably a recovering one) and I am not saying to *not* lawyer up. With something this complex, especially if it involves a lot of parties and the federal court, the retainer will be enormous. Paying for an hour of time to get a consult from a reputable FEDERAL practitioner is prudent, however.

 

[Retireby45ish]

Your posts are so confusing, are you saying they returned 60K to you or they will return 60K, I cant figure it out. What is your actual financial damage to this point using your 200+100K number..and what might you still stand to get back.

IRA
They have returned 20% of 300k to me. 60k. So a loss of 240k in IRA. I only expect a few % more if anything. A lot has gone to lawyers and others as they dissolve the funds holdings.

Non IRA
I have a gain of 100k on the 200k investment. They want 50% of this back now.

So looking at a total loss of 290k on a 300k investment if I pay them back(I think of it as one investment that I simply swapped at one point to a more tax efficient means). Some might say a loss on 600k since it was separate. But at any one time I only had 300k in as I didn’t want to risk too much in this one fund. At the time the 300k was about 20% of my NW.

All this was my attempt to diversify against the ups and downs of the market as 2008 really rattled me. I guess In the end I made the biggest financial mistake of my life here by not diversifying more (wish I knew about this board back then)

There are a few groups with suits against Deloitte who was the the auditor of the fund. But I don’t see any other class actions. the money is gone so who else is there to sue? The guy is going to federal prison.

 

[Safire]

Your posts are so confusing, are you saying they returned 60K to you or they will return 60K, I cant figure it out. What is your actual financial damage to this point using your 200+100K number..and what might you still stand to get back.

He gained 100K minus taxes in his taxable a/c.

Thinking this "investment" was a sweet deal and seeking to save on taxes, he closed the fund in his taxable a/c then put down 300K back into the same scheme with mlney in his IRA, losing 80% of that (240K)

In effect, his total "investments" were 500K, with a net loss of (-) 240K + 100K or (-) 140K + taxes he paid on a gain of 100K in his taxable.

He banked the "gain" in the taxable, paying taxes on it, no doubt, and then ate the loss in his IRA. The trustee is now trying to clawback another 50K of the gain out of him, failing which they're planning to sue him for the entire 100K gain on taxable. If he forks over the 50K, then he is increasingly his net loss to 190K + the taxes already paid on the 100K "gain".

There must be a legal reason that the bankruptcy trustee is treating his taxable & IRA as two different investments, even if he owns both of them. What he needs is a securities lawyer and a pitbull CPA in his corner. I doubt laypeople can figure out why the trustee is allowed to legally demand money back, even if it increases OP's losses to almost 200K!

 

[ivinsfan]

So if my math is right of the 60K they returned on your 300K, 20 of it was paid on the 100K profit you rolled over, yes?


Now looking at the original 200 plus 100 gain they want you to cough up 50K in fact you would payback a net of 30K.. 50 minus the 20 = 30? ..you might not like but I'm guessing they could collect it.



It would have been a lot less confusing if this had been in post number one.

 

[ivinsfan]

He gained 100K minus taxes in his taxable a/c.

Thinking this "investment" was a sweet deal and seeking to save on taxes, he closed the fund in his taxable a/c then put down 300K back into the same scheme with mlney in his IRA, losing 80% of that (240K)

In effect, his total "investments" were 500K, with a net loss of (-) 240K + 100K or (-) 140K + taxes he paid on a gain of 100K in his taxable.

He banked the "gain" in the taxable, paying taxes on it, no doubt, and then ate the loss in his IRA. The trustee is now trying to clawback another 50K of the gain out of him, failing which they're planning to sue him for the entire 100K gain on taxable. If he forks over the 50K, then he is increasingly his net loss to 190K + the taxes already paid on the 100K "gain".

There must be a legal reason that the bankruptcy trustee is treating his taxable & IRA as two different investments, even if he owns both of them. What he needs is a securities lawyer and a pitbull CPA in his corner. I doubt laypeople can figure out why the trustee is allowed to legally demand money back, even if it increases OP's losses to almost 200K!

losing 80% term is confusing did the fund go to zero, he indicated he got paid 60K. the exact term he used was they returned to him.the fact he paid taxes on it means nothing in the grand scheme of things.

 

[ExFlyBoy5]

IRA
They have returned 20% of 300k to me. 60k. So a loss of 240k in IRA. I only expect a few % more if anything. A lot has gone to lawyers and others as they dissolve the funds holdings.

Non IRA
I have a gain of 100k on the 200k investment. They want 50% of this back now.

So looking at a total loss of 290k on a 300k investment if I pay them back(I think of it as one investment that I simply swapped at one point to a more tax efficient means). Some might say a loss on 600k since it was separate. But at any one time I only had 300k in as I didn’t want to risk too much in this one fund. At the time the 300k was about 20% of my NW.

All this was my attempt to diversify against the ups and downs of the market as 2008 really rattled me. I guess In the end I made the biggest financial mistake of my life here by not diversifying more (wish I knew about this board back then)

There are a few groups with suits against Deloitte who was the the auditor of the fund. But I don’t see any other class actions. the money is gone so who else is there to sue? The guy is going to federal prison.

Deloitte, eh? Sounds reminiscent of the Aequitas Capital Management scheme.

 

[Safire]

IRA
They have returned 20% of 300k to me. 60k. So a loss of 240k in IRA. I only expect a few % more if anything. A lot has gone to lawyers and others as they dissolve the funds holdings.

Non IRA
I have a gain of 100k on the 200k investment. They want 50% of this back now.

So looking at a total loss of 290k on a 300k investment if I pay them back(I think of it as one investment that I simply swapped at one point to a more tax efficient means). Some might say a loss on 600k since it was separate. But at any one time I only had 300k in as I didn’t want to risk too much in this one fund. At the time the 300k was about 20% of my NW.

All this was my attempt to diversify against the ups and downs of the market as 2008 really rattled me. I guess In the end I made the biggest financial mistake of my life here by not diversifying more (wish I knew about this board back then)

There are a few groups with suits against Deloitte who was the the auditor of the fund. But I don’t see any other class actions. the money is gone so who else is there to sue? The guy is going to federal prison.

The bankruptcy trustee will sue all the "investors" who had "gains" on their returns from this Ponzi scheme, in order to spread out & distribute whatever is left equally among all those who were victims of this scheme. There may be other "investors" who were also sent claw back notices that you just aren't aware of.

Per your OP numbers, your investment wasn't 600K. You only invested 500K (the 200K in taxable, and then the 300K in IRA). Do you have a CPA to help you figure out if you can get some of the capital gain taxes you paid on the 100K "gain" from this scheme? You sound very stressed, and need a 2nd pair of eyes in your corner - preferably those eyes belong to a securities lawyer. Hang in there.