Madoff investors ordered to return false profits

[FreakinDJ]

Source: David B. Caruso, Associated Press Writer

NEW YORK (AP) -- The trustee trying to unravel Bernard Madoff's massive pyramid scheme is threatening legal action to recover $735 million from investors who unwittingly made money off the swindle.

For decades, Madoff paid out steady profits to his clients, telling them the money had been earned in the stock market. The gains, though, were fictitious, and Madoff pleaded guilty last month to stealing funds from some investors to pay bogus profits to others.

In recent days, court-appointed trustee Irving Picard has sent letters to 223 investors, ordering them to return money they withdrew from their accounts at Bernard L. Madoff Investment Securities in the six years before the scheme collapsed.

"These amounts were paid to you at the expense of other customers while BLMIS was insolvent," said one letter, sent to an investor who gradually withdrew $975,000 between 2003 and 2008. "The Trustee demands that you immediately return such amounts to the Trustee for the benefit of all defrauded creditors."


Read more: http://finance.yahoo.com/news/Madoff-investors-ordered-to-apf-15027879.html?sec=topStories&pos=5&asset=&ccode=

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This is a step in the right direction

[angstlessk]

1. I agree..let them keep their principal and return the untoward profits...it is STOLEN GOODS!

ON EDIT: hell if you have stolen goods you don't even get to keep your principal!

[Happyhippychick]

2. I have mixed feelings about this.

The timeline of six years sounds incredibly arbitrary. And why should those who managed to escape with some of their swindled money have to give it back? They didn't do anything with any malice, they were just lucky and got out a few years ago.

If I were one of those who had taken out money in the past six years I would refuse to return it. I would probably lose it all in legal fees but it doesn't seem right to me.

[Journeyman]

3. Seems to me, they took their profit in good faith, as reward for a legitimate investment. . .

to now come back and hold them responsible for Madoff's crime seems arbitrary and tinged with vengeance, not justice.

Am I to return all the interest my money in the bank earned me the past 6 years, now that we know the bank's irresponsible, criminal loan procedures have rendered it nearly destitute and in need of federal bailout?

If anyone's "responsible" for Madoff, it's the regulators who didn't do their job and the industry/Congress that set the stage for such a scam to be successful. Let's pick George W's pocket first and work our way down from there before we go after those who merely profited from what they had no reason to believe was anything but a legitimate investment.


On Edit: I just saw another article that indicates some of these investors may have known their profits were shady. If so, it completely changes the dynamic, and my opinion above would not hold for those who colluded with Madoff.

See this article: "Madoff's service 4 special clients- some investors knew it was a fraud & used it to their advantage"

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x5528105

[madmom]

4. If I buy something from somebody in good faith and find out later it

was stolen, do I get to keep it?

[Happyhippychick]

8. That's a little different. If you find out that the thing you bought was stolen from YOU then yes,

you get to keep it.

[madmom]

11. If I find out the thing was stolen from somebody else, even though I bought it

in good faith believing it was legal, once it is found out I must give it up, legally, it is not rightfully mine.

[Baby Snooks]

15. A question raised by the Holocaust....

For years the survivors of the Holocaust and the families of the victims of the Holocaust have raised this very question with regard to assets stolen by the Nazis and others in Germany.

I'll not comment further except to say that it is ridiculous to claim innocence with regard to art when provenance has always indicated which art was stolen by the Nazis and sold after the war by dealers who have never been asked to explain their part in the provenance.

In this case it seems that the question of ill-gotten gains is a little misplaced given that the investors have lost their investment. If most got back their investment in interest in six years, then they have lost nothing given the fraud. But not all did. And some got much more than just their investment. Not all investors are equal. Ever.

[Happyhippychick]

6. In the original article it said that they were "unwitting" but I agree with you that it changes

things if they knew.

[hugo_from_TN]

7. If someone steals your car and sells it, do you want it back?

Or would you just tell the buyer: "You didn't know it was stolen, please keep it."

[Happyhippychick]

9. That's also a little different. I am the one who is getting the stolen car back and it was mine to

begin with.

[hugo_from_TN]

10. That's not different. The people that withdrew profits own the 'stolen car'.

The people that did not withdraw profits and lost all their initial investment had their car stolen. Madoff stole the car and gave it to the other investors.

[drm604]

5. What happens to someone who took their profits in good faith

spent them, and no longer has them?

[county worker]

12. They sell some assets and pay the money back.

[drm604]

13. That's assuming they have some assets. n/t

[customerserviceguy]

14. And that wouldn't apply to Jewish charities

which spent the money redeemed on their charitable activities. I wonder if any of them got these letters?

[greengestalt]

16. Khalil Gibran

"The Virtue of some of the rich is that they teach us to despise wealth."

[dixiegrrrrl]

17. " Beware false profits"

damn...the bible was right.