Madoff Ponzi Scheme

Madoff Investors May Have a Better Chance of Recovering their Investment Losses Through Tax Strategies Rather than Lawsuits

Published on: January 22, 2009 | by Shepherd Smith Edwards & Kantas, LLP

Investors who lost money in Bernard Madoff’s $50 billion Ponzi scam may have a better chance of recouping their losses through tax strategies rather than filing lawsuits. Under US tax law, Madoff clients are allowed to take income deductions for losses that occur due to theft. The claim can be filed for the year the loss was discovered, and there is reasonable expectation of recovery.

Madoff has been charged with securities fraud. The 70-year-old investment adviser allegedly confessed to swindling thousands of investors. If convicted, he could face up to 20 years in prison, have his assets forfeited, and be ordered to pay a $5 million fine.

Investors who were direct customers of Madoff can file their loss claims with the Securities Investor Protection Corporation. If they have determined that they are not likely to recover from an SIPC claim, they can file for a theft-loss deduction. Per this provision, Madoff’s victims who are eligible to file an SIPC claim but don’t would get their deduction reduced by the $500,000 cap on SIPC coverage for securities losses. According to the Internal Revenue Service, the loss from 1 occurrence has to be above $100, with the total loss needing to be over 10% of someone’s adjusted gross income for the year when the deduction is claimed.

Investor Fraud Lawsuits Stemming $50 Billion Ponzi Scheme May Name Madoff’s Family Members as Additional Defendants

Published on: January 5, 2009 | by Shepherd Smith Edwards & Kantas, LLP

The civil lawsuits that will be brought by the victims of Bernard Madoff’s $50 billion fraud scam are expected to be numerous and massive. Not only will they likely target Madoff and his firm, Bernard L. Madoff Investment Securities LLC., but a number of his family members who work for the firm could also be named as defendants.

The company’s chief compliance officer and senior managing director is Madoff’s brother Peter. Madoff’s sons, Mark and Andrew, also are employed by the firm, as is Shana Madoff, Peter’s daughter. While Madoff has maintained that no family members were involved in the Ponzi scheme and that he acted alone, actual knowledge doesn’t have to be involved when there is a fiduciary relationship or if recklessness or negligence is a factor for someone to be held liable.

According to Securities and Exchange Commission staff attorney Peter J. Henning, two main types of litigation are expected from the Madoff scheme. One type of securities fraud litigation will target Madoff, his company, and his family members. Another kind of investor fraud lawsuit will target third parties, such as investment advisers, feeder funds connected to Madoff’s company, and other parties that sent investors Madoff’s way.

Complications are expected. Determining the liability of people who acted in an agent role but did not receive compensation when they referred investors to Madoff, differentiating between claimants that invested in feeder funds and those who directly invested with Madoff, and determining whether money can be gotten back from investors who redeemed their funds earlier, are just some of the difficulties that are likely to arise.

Already, a number of investors have filed class action and group lawsuits against the 70-year-old financial adviser, who remains under house arrest. In October, Bernard L. Madoff Investment Securities LLC., was the 23rd biggest market maker on Nasdaq.

Related Web Resources:
Suits From Madoff Fraud Will Be Massive, Will Involve Family Members, Attorneys Say, BNA, December 22, 2008
Bernie Madoff Victim List, Huffington Post, December 15, 2008
Bernard L. Madoff Investment Securities LLC
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Madoff Investors Who Were Victims of “Ponzi” Scam Contact Securities Fraud Law Firm Shepherd Smith Edwards & Kantas LTD LLP to Explore Recovery Options

Published on: December 17, 2008 | by Shepherd Smith Edwards & Kantas, LLP

Wall Street Icon Bernard Madoff’s $50 billion “Ponzi” scam may very well have bilked hundreds, even thousands, of investors of their money. Now, many of Madoff’s victims are contacting the securities fraud law firm of Shepherd Smith Edwards & Kantas LTD LLP to find out how they can recover their investments.

According to SSEK Founder and Stockbroker Fraud Attorney William Shepherd, “a number of recovery options” exist, including pursuit of:

• Securities Industry Protection Corp: SIPC has a $500,000 maximum guarantee limit per account. Its reserves are also limited and it needs government infusion to be able to cover losses in the billions of dollars. To be able to recover claims, legal action against SIPC is usually necessary. On Monday, a judge ruled that investors who were Madoff’s direct clients are covered under SIPC.