Trustee Sues Four Madoff Relatives, Seeking $199 Million

[bemildred]

Source: NYT

A court-appointed trustee has sued four members of Bernard L. Madoff’s family to recover almost $199 million for customers defrauded in his enormous Ponzi scheme.

The action, filed on Friday in federal bankruptcy court in Manhattan, names Mr. Madoff’s younger brother, Peter; his two sons, Mark and Andrew; and his niece, Shana, who is Peter’s daughter.

All had served for many years as senior executives at Bernard L. Madoff Investment Securities, which was wholly owned by Mr. Madoff. Peter Madoff was chief compliance officer, and his daughter was compliance director. Mr. Madoff’s sons were co-directors of trading.

The complaint does not accuse the family members of participating in the Ponzi scheme — indeed, lawyers for all four have repeatedly insisted that their clients had no inkling about the fraud until Mr. Madoff confessed to his sons in December, prompting them to turn him in to the federal authorities.



Read more: http://www.nytimes.com/2009/10/03/business/03madoff.html

[leveymg]

1. That still leaves about $32 billion in real money unaccounted for. Who has it? Where is it?

The Trustee stated the other day that he estimates the amount of "real money" that went through Madoff's accounts at about $35 billion. Down a bit from the $56 billion that was claimed by the victims, but a lot higher than the $2-13 billion figure that some denies were using when this broke late last year. So, if most of the embezzled funds were real, where did they go? It didn't all go to purchase the Madoff family's own real estate, but it might finance the construction of a lot of houses somewhere else.

Why aren't these basic, obvious questions being asked and answered?

[hugo_from_TN]

3. I think the majority of that is with investor/victims that cashed out.

He ran this scheme a long time and lot of investors withdrew funds for retirement, etc. over the decades. This is the money that the Trustee will try to 'claw back' (rightly IMO). With Ponzi schemes the most recent investors lost the most, whereas longtime investors probably made some great profits that were cashed out.

[dysfunctional press]

4. ponzi schemes work by paying old investors with money from new investors...

lots of people were getting regular pay-outs from their accounts- and none of the money was ever invested.
madoff was in 'business' for quite awhile with some very wealthy clients- most of the money was distributed over the years to keep the game alive and going.

[leveymg]

5. $15 bill in payouts were traced. > half the money that went into the fund is still missing.

"At the time (the fund collapsed in late 2008), Madoff estimated he still had about $20 billion in investor funds in his accounts, Cotchett said.

About $13.2 billion of the missing money has been traced and the trustee has recovered about $1.2 billion, court documents showed.

The cases are Wexler vs. Tremont Partners, Case No. 101615/09, and Ryan vs. Friehling and Horowitz, Case No. 101616/09, in the Supreme Court for the State of New York.

(Reporting by Gina Keating; Editing by Richard Chang)" http://www.realfinancenews.com/index.php?option=com_content&view=article&id=36658:madoff-gives-feeder-fund-managers-names-to-lawyer&catid=40:business-news&Itemid=72

If all the proceeds got paid out to investors, there'd be no reason why investigators are still looking for the remainder.

This wasn't a classical "Ponzi scheme" where earlier investors are paid off and Ponzi rakes his take off the top. You're just regurgitating the MSM feed. Instead, this was a pyramid and blow-out scheme where the primary feeder funds were part of the scheme and everyone turned a blind eye while a large percentage of the principal was diverted into third-party accounts. See,

leveymg's Journal - MYTHS ABOUT MADOFF'S “PONZI SCHEME” – Bernie's ...5 posts - Last post: Mar 17
Bernie Madoff's colossal investment fraud is almost everywhere described as a “Ponzi scheme”. That echoes the very words Madoff, himself, ...
journals.democraticunderground.com/leveymg/400

[Thickasabrick]

2. K&R