Bernard Madoff (who is now known as Prisoner 61727-054) and his wife have been stripped of their vast riches. The government seized all of Madoff’s property in an agreement that also forces his wife to give up homes and property worth millions. Federal prosecutors obtained a $170 billion judgment against Madoff, who, as most Americans now know, masterminded the largest and most sweeping Ponzi scheme ever. They will try to collect as much of it as possible. Madoff will spend the rest of his natural life in prison. Madoff was sentenced in a federal court in Manhattan to 150 years and has already been sent to prison.
Thus far, federal investigators have identified 1,341 investors in Madoff’s firm, with losses exceeding $13 billion and the full amount of damages is still being counted. Many of the victims said they had banked their life savings with Madoff’s firm and they were ruined as a result of his scam. There are two ways for victims to get compensated, or at least partially compensated, for their losses: through seized assets and through the Securities Investor Protection Corporation, an organization that shields investors in brokerage firms.
The value of the Madoff assets will eventually be used to compensate victims, based on how much they invested in Madoff’s firm. Also, SIPC will pay up to $500,000 for any eligible claimant who lost money to Madoff, based on how much they put in. This coverage comes from dues paid by brokerage firms.
During a Congressional hearing in January, testimony from a whistle-blower who had repeatedly alerted the Securities and Exchange Commission about his suspicion that Mr. Madoff was operating a gigantic fraud got a great deal of media attention. An internal investigation is now under way at the SEC to determine why the agency did not detect Madoff’s scheme and shut it down years ago. The SEC and the Securities Investor Protection Corporation, a government-chartered program to compensate customers of failed brokerage firms, have been criticized repeatedly over the Madoff matter. If nothing else, the litigation already filed in and around the Madoff case will help shape how regulators, the courts and SIPC respond to large-scale Ponzi scheme losses in the future. How the losses of victims will be addressed is just one of many open questions.
The criminal investigation is continuing, as prosecutors try to determine who else bears responsibility for the crime. So far, only Madoff’s accountant has been arrested on criminal charges, but securities regulators have filed civil suits against several of his long-term investors, accusing them of knowingly steering other investors into the fraud scheme for their own gain. The bankruptcy trustee has sued more than a half-dozen hedge funds and large investors, seeking to recover more than $10 billion withdrawn from the fraud in its final months and years. It’s uncertain how much money will be recovered to share among the victims and how long that effort will take. The sentence itself is likely to leave a mark as well, according to legal experts, on white-collar crime. Hopefully, it got the attention of others who might be tempted to cheat and hope to get away with it like Madoff did for much too long.
Source: CNN Money
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