Now it seems that lots of people didn’t actually lose the money they put into the Madoff scheme at all! (I predicted that would be the case on this blog).
But that’s not going to stop them from filing for the return of their (paper) principle…..nor is it going to stop people who actually lost their investment from going after some of the winners for a chunk of real profit, claiming it was only virtual.
I know your head is spinning. But that’s the latest news:
“No one knows yet how many people will emerge as net winners in the scandal, but the numbers appear to be substantial. Many of Madoff’s long-term investors have, over time, cashed out millions of dollars of their supposed profits, which routinely amounted to 11 percent to 15 percent per year.
Jonathan Levitt, a New Jersey attorney who represents several former Madoff clients, said more than half of the victims who called his office looking for help have turned out to be people whose long-term profits exceeded their principal investment.
“There are a lot of net winners,” he said.
Asked for an example, Levitt said one caller, whom he declined to name, invested $1.8 million with Madoff more than a decade ago, then cashed out nearly $3 million worth of “profits” as the years went by.
On paper, he still had $4 million invested with Madoff when the scheme collapsed, but it now looks as if that figure was almost entirely comprised of fictitious profits on investments that were never actually made, leaving his claim to be owed anything unclear.
Other attorneys report getting similar calls.
Under federal law, the court-appointed trustee trying to unravel Madoff’s business can demand that people who profited from the scheme return some or all of the money.”