I also don't think this is quite the same as the Madoff case. True, just like with Madoff, investors put money into Platinum's hedge funds and were given false information on how the funds were doing. Madoff did not use the money in the funds to make loans to companies and make it impossible for them to ever get alternate financing, causing them to never able to be profitable, so that's where this case is different. In this case if there is illegal activity on the part of Platinum, illegal loans should not be repaid.
PP made money off of converting debt to equity, possibly they made back a good part of the principal selling cheap shares for a much higher share price. Let someone figure out where the proceeds from those share sales went and pay the PP investors out of that money.
