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Government: Half of Madoff accounts show no loss

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question everything Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 06:05 PM
Original message
Government: Half of Madoff accounts show no loss
Source: AP

Federal prosecutors said Tuesday that a review of most accounts held by financier Bernard Madoff's customers when he was arrested shows that about half of the customers had not lost money because they withdrew more money than they originally invested.

Prosecutors made the revelation as they told a judge in court papers that there was no need to order restitution because all of Madoff's assets will be distributed to investors through forfeiture requirements.

As part of their filing in U.S. District Court in Manhattan, they summarized the findings of a court-appointed trustee who is calculating how much investors lost so it can be decided how to divide up assets that are recovered.

The government said a search of financial records, including microfilm records dating back to 1979, show that investors suffered net losses exceeding $13 billion. In all, 15,870 claims have been made to the trustee by those seeking a share of any recovered money.


Read more: http://finance.yahoo.com/news/Government-Half-of-Madoff...
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Skink Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 06:31 PM
Response to Original message
1. So Madoff even had the credit to make loans.
Or did he just have a lot of accomplices.
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The_Casual_Observer Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 06:36 PM
Response to Reply #1
2. His credit was in the form of new investors.
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DavidDvorkin Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 06:50 PM
Response to Original message
3. Their profits came from the investments of the other half, I assume.
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Endangered Specie Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 12:00 AM
Response to Reply #3
8. pretty much, thats the whole idea of a Ponzi scheme
use the investment of "D" to pay off interest to "A, B, and C", enlist E to pay out A-D etc...
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Travis_0004 Donating Member (417 posts) Send PM | Profile | Ignore Tue Sep-22-09 07:17 PM
Response to Original message
4. I still think they had a loss
Lets say you invest 100.00 in 1990 into Madoff's account.

According to the reports Madoff gives you, your money turns into 400.00 over 18 years. If you withdraw 100.00 to help you with a financial hardship, then in 2009 the other 300.00 disappears due to fraud, you are still out money. You may not be reimbursed 300.00, but if you would have had that money in a legitimate account, you would have earned interest, and still had that interest today. That loss of interest could make a significant difference in income especially if that is for a retirement account or something similar.
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truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 08:42 PM
Response to Reply #4
5. That's a good point. Probably not a point Madoff's attorneys will be
Too interested in presenting, but still a good point.

And of course, the other side of these thing is that Money not only talks, Money walks. I knew of a guy in the SF Bay area, he swindled people out of some 52 million dollars, but a judge made him pay a fine of only $ 158,000.

Which sort of begs the question, how much was the judge's cut? (The crook said at the time of his trial that he had spent all the millions, with not a penny left to show for it!)
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question everything Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 10:30 PM
Response to Reply #4
7. Agree, and I was thinking in higher numbers
Say you put $50K and you took out $80K, "assuming" that you still had $500K for your retirement. So, in black and white you did not lose, but your life is ruined. Especially if, like most of his investors, you are already a senior and cannot just find another job.
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Recursion Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-23-09 12:36 PM
Response to Reply #4
9. BS. That's the mindset that makes ponzi schemes possible
If you deposit $100.00 and later withdraw $101.00, that's a gain, period.

It doesn't matter if you imagined that you still had $299.00 left in the account. Losing imaginary money isn't a "loss".
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saracat Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-22-09 10:14 PM
Response to Original message
6. This isn't surprising. I would suspect there is a lot of fraud floating around as well. Where there
is money to be made greed follows.
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