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Bernard Madoff $50 Billion Ponzi Scheme
This is very funny -- in a funny
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Tuesday, December 16, 2008 9:10:43 AM
This is very funny -- in a funny strange sort of way -- the thing about the internet is that anybody can post anything they want...
the SIPC will bail out Madoff investors? Dollar for dollar? Nice headline:
Don't worry, be happy!!
Madoff Investors May Be Protected By Government
Judge Says Those Duped Need Aid Under The Securites Investor Protection Act
Timeline: U.S. Credit Crunch & Financial Failures
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NEW YORK (CBS) - Federal investigators remain at the investment offices of disgraced investor Bernard Madoff, scouring through records to learn the scope of what may be the biggest Ponzi scheme ever in the United States.
The numbers are staggering, the losses far-reaching, but help may be on the way for investors thanks to an order for protection from a federal judge.
The scheme was operated out of the so-called "Lipstick Building" on Third Avenue. Bernard Madoff Investment Securities LLC occupies three floors and may have bilked investors of $50 billion.
Prosecutors say it was a classic Ponzi scheme. The firm paid-off earlier investors with money from new investors. It collapsed amid a nervous economy when some people wanted their money out.
"I believe he was a polished, polished, highly sophisticated schemester," said investors' attorney Mark Mulholland.
Mulholland's Long Island firm represents some 100 investors that could grow to several hundred who claim they lost millions.
"University endowments, pension funds; the scope seems to be limitless and affects little people too," says Mulholland.
In addition to publisher Mort Zuckerman; Fred Wilpon, owner of the Mets; former Philadelphia Eagles owner Norman Braman; there were the modest investors who put their faith in Madoff.
"We lost our life savings," said investor Joan Sinkin.
Brooklyn transplants to Florida, Sinkin and her husband Arnold said they lost 85-percent of a nearly $1 million investment.
"We were able to do things to enhance our retirement. Then in 72 hours, we were bankrupt," she said.
It's charged at least 50 charities were bilked, including a charitable fund set-up by the family of Senator Frank Lautenberg of New Jersey.
Meanwhile, a federal judge on Monday threw a lifesaver to investors who may have been duped, saying they need the protection of a special government reserve fund set up to help investors at failed brokerage firms.
U.S. District Judge Louis L. Stanton ordered that clients of Madoff's private investment business seek relief under a federal statute created to rescue cheated investors. Stanton also ordered that business be liquidated under the jurisdiction of a bankruptcy court and named attorney Irvin H. Picard as trustee to oversee that process.
Stanton signed the order after the Securities Investor Protection Corporation asked that steps be taken to protect investors in the scheme, which has ensnared several major banks and prominent figures as victims and could result in as much as $50 billion in losses.
Congress created the SIPC in 1970 to protect investors when a brokerage firm fails and cash and securities are missing from accounts. Funds can be used to satisfy the remaining claims of each customer up to a maximum of $500,000. The figure includes a maximum of up to $100,000 on claims for cash.
The order came just days after federal prosecutors charged Madoff with securities fraud, saying he had admitted to orchestrating a massive Ponzi scheme. Madoff is free on $10 million bail after he was charged with securities fraud last week.
Ira Lee Sorkin, Madoff's lawyer, declined to comment.
SIPC President Stephen Harbeck said in a statement that the fund's task will be harder than in other bankruptcies because of the size of the misappropriation and the condition of the defunct firm's records.
Harbeck said it would be unlikely that the trustee can transfer the firm's customer accounts to a solvent brokerage firm. He added that it was impossible at this point to determine what share each investor might hold in any remaining assets.
From its inception through December 2007, the SIPC has advanced $507 million and made possible the recovery of $15.7 billion in assets for an estimated 626,000 investors, the fund said on its web site.
Several major banks including Spain's Grupo Santander SA, Britain's HSBC Holdings PLC, Royal Bank of Scotland Group PLC and Man Group PLC, France's BNP Paribas and Japan's Nomura Holdings reported falling victim to Madoff's alleged Ponzi scheme.
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