Bernard Madoff Clients
As of Thursday March 12, 2009, Bernard Madoff has been before a judge and has plead guilty to all charges against him in his reported $50 billion Ponzi scheme. The judge has remanded him to jail - no more penthouse living - and he will be formally sentenced to jail in the future. As for his present and former clients, they are looking to get all their money back.
What "all their money back" means is another thing altogether. If they mean the money they invested with Madoff, that is a reasonable request. If they mean all the money they thought they had based on statements received from Madoff, that another thing altogether because it assumes that Madoff invested their money and made the profits he reported to them - which, of course, he didn't. From a practical point of view, they are really only owed what they invested with him and not the additional monies he pretended to have earned for them. With a Ponzi scheme, monies received from one client are used to pay off another client who asked for his/her investment back. If Madoff ran a true Ponzi scheme, the sum total of what he still held, what he paid back to investors over the years and what he spent on homes and yachts, should equal what monies he received from investors. They would allow each investor to get his/her actual investment back.
The receiver, assigned by the court, should total up all the monies still held in Madoff's account (currently just under $1 billion), sell all of Madoff's properties and total up all payments made over the years to clients. This should be the pool of monies available to pay off clients. Some clients might have to repay monies they thought they had earned, back to the receiver but this way every investor could be made whole on what he paid to Madoff, either 100% or as close to 100% as possible. To expect to received and keep profits that never actually existed just isn't possible and should not be expected. Any none existent profits they were told the earned should be considered payment for a lesson learned.
3/12/09 ( 694 )
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