Madoff Never Invested His Investors' Money

A meeting for investors of admitted Ponzi schemer Bernard Madoff was either confirmation of their worst fears or another shattering realization: The trustee overseeing Madoff's estate said that it appeared that the once-revered financial guru never made any of the investments that were listed on investors' statements. So while client were told their investments—which were supposedly earning attractive returns— were in stocks and Treasury bills, trustee Irving Picard said, "We have found no evidence to indicate that securities were purchased for customers’ accounts [for] perhaps as much as 13 years... [It was] cash in and cash out."

So far, Picard has received claims from 2,350 people (which total $1 billion) and he expected that the number of claimants will double by summer—and urged anyone who thinks they have a claim to file one. Picard added, “We are operating out of a crime scene," and described the many files seized, including 7,000 boxes found at a warehouse, "We’re getting a feel for how this operation worked."

Picard and a lawyer said they were working hard to recover money; one investor said,
“I would hope in the recovery you look not just for artwork but I would get the furniture, his clothes, the curtains on the windows," but apparently Madoff's personal assets, including his multiple homes, are untouchable until the federal investigation is over. One thing they will go after is investors who took more money than they invested—lawyer David Sheehan said, "We will be seeking to recover false profits from people who received them in substantial amounts over the years. You have to think of it this way: It’s your money.”

The NY Times reports, "Customers with valid claims, however, can be assured of receiving repayment only up to $500,000 from the SIPC fund. Any additional money they are owed must come from dividing the assets the trustee can find — and he has found less than $1 billion so far." One investor said the government should be involved, “This is a human tragedy like any other tragedy and we should be getting help from the government like any other victims. I lost my entire life savings that I worked for my entire life.”

Contact the author of this article or email tips@gothamist.com with further questions, comments or tips.

By Jen Chung in News on February 21, 2009 4:21 PM

Comments [rss]

FinalShaft

@ 30

http://www.rootsweb.ancestry.com/~casfvgs/george-washington-picture.jpg

robingee

Yeah, that's what he looks like.

STVO

this guy doesn't even have a black eye yet?

robingee

I thought that was a picture of George Washington!

gregorsamsa77

Why is everybody being so naive? It is OBVIOUS Madoff hid a good part of this money somewhere. There was "cash in" but no "cash out" as their putting it. This money is somewhere only Madoff and his sons know about.

pete

5 words

numbered anonymous swiss bank account

felixthecat2

His employees were involved yet no other arrests. All those fake trade tickets that they send daily via Fax to the investors and banks. All those monthly statements with pages of trade recap. unbelievable.

Clarice City

Hope Ruth Madoff had a fun time spending every penny of someone else's life savings at Bergdorf.

NannyState

"But...where has he been eating his lunches?"

Past Taliban

There was a guy denouncing Madoff before the SEC for YEARS and they ignored him. NOW they're getting all flustered and investigative about it.

That's because the entire U.S. economy is based on the same basic Ponziesc principle and is also collapsing.

A nice gift to America from George W Bush, ANOTHER criminal who will NEVER see justice here on earth.

JacqueMehoff

that time was less than a century ago,

less if you're a black man.

anyway, if more people become homeless, they'll be desperation in the air. hopefully by then something will happen and all the cops from nassau, suffolk and rockland can't get to the UES in time.

Past Taliban

Was a time in America when scum like this would have been tarred, feathered and strung-up like a Christmas light instead of allowed to leisurly walk the streets with that stupid grin on his face.

Ahhh the sweet stench of IMPUNITY that permeates Amerika is soooooo delightful!

Snoopy

@16 and @17 those are totally racist comments and I want the Cuomo's to boycott the Gothamist blog and start proceedings.

blablanyc

The Fed needs to treat this like an organized crime case.

ub2009

It was organize and it was a crime....no single man could have pulled off all that paperwork, and the sheer amount of calculations, and logistics of mailings and filings.....they are hoping he sings.

Mr Mel

He should start singing when they start arresting his wife an their children who were involved in the scam.

ub2009

If Madoff were of a different people, he'd be "swimming with the fishes" by now! So to speak.

ub2009

No one like a crook or a con. Seems our society is such that we breed the best of both.

editedby

Human Tragedy? People dying THAT'S human tragedy. Investor's getting ripped off, while thinking they're in a *special* get rich club, that's a farce.

Snoopy

Hopefully the people working down on Wall street wont do any insider trading.

I wouldn't trust them to wash their hands after taking a piss in a high class restaurant.

ub2009

If I were you I wouldn't even trust the chef.

ides_of_march

The SEC dropped the ball big time, either through sheer incompetence, corruption or both. Unfortunately, I don't expect any of them to be held accountable.

There are enough regulations already; they're just not enforced.

Steven

People now expect when you invest money and lose all of it there is a entitlement to get it back!?

Snoopy

With the Madoff idiot, it was similar to investing in a gambling game where the dealer from the get go knows he's never going to place your bet. Now how would you ever win?

Stevie boy I hope you lose your job, your house, your shirt, and everything in your life including your token wife and 2.3 kids. Then you will realize that investing is different then gambling. It's called trust in who you lend your money to.

Steven

The market tanked yet nobody asked questions about how Madoff was able to do it. Idiot people put all their money into one bag. This is more about people were trying to live the millionaire life when they are just average middle class people.

Steven

The market tanked yet nobody asked questions about how Madoff was able to do it. Idiot people put all their money into one bag. This is more about people were trying to live the millionaire left when they are just average middle class people.

OurBroker

Aren't various financial advisors, accountants, CPAs, attorneys and regulators paid a lot of money to assure the safety of the investing system? How is it possible that no one effectively checked this guy for at least 13 years -- and how many more Madoffs are out there?

Hopefully we will also go after the salaries, fees and commissions of those who failed to do their jobs.

Peter

OurBroker.com

Jersey Cityist

Madoff was on the NASDAQ Board and very charismatic...so people thought he was trustworthy while they received returns on their investments that were mathematically impossible...

Madoff seems to be a classic Sociopath, this is probably more about power over other's lives rather than greed. Remember, one out of every 25 human beings is born with no conscience or sense of empathy. Sociopaths are drawn to positions of power like moths to a flame. Sociopaths are often very charismatic and manipulative they can convincingly fake emotions including empathy if needed.

Snoopy

Something fishy is going on here.

ides_of_march

The judges have been paid off that's for sure. Otherwise this crook would be in jail instead of laughing his ass off in his luxury apartment.

JacqueMehoff

what a mess. I hope they'll go after everyone who made money from commissions, fees, and whatever nickle and dime stuff they put in.

everyone got rich but the investors. kinda like Frank White in King of NY.

babyhitler

"I lost my entire savings from investing with someone who told me I could get a whole lot richer from doing nothing" BOo Hoo. YOu should have done the research. Like they say PAST RETURNS ARE NOT INIDICATIVE OF FUTURE RESULTS. Live by the hedge fund die by it.

Rocknrope

So even as the stock market was skyrocketing from the mid 90s to the early 2000s, this idiot didn't invest any of his clients money? He's even more of a scumbag.