Madoff's $50bln: a total lie
Each and every time the heat makes a drug bust they inflate the "street value" of their success by a factor of at least three, that's so the tax dollar funding for the "war on drugs" will continue. And so it is with the Madoff $50bln which is obviously a made up amount calculated while smoking some shit in the back seat of a Hummer. It is impossible to count to $50bln in less that a week and a half and without a complete record of each and every transaction we will not know the extent. Suffice to say that this scheme apparently dating back to 1962 was paying off old investors with new investor money WHEN NECESSARY. Nobody is saying anything about the results of successful trades. I'm willing to bet that the final number will be closer to $50mln than the advertised amount. It is not possible that each and every participant in the scheme lost 100% of their money. Stay tuned. The SEC will need to get off the hook.
1 comment:
It will be impossible to know how much was lost to bad trades and how much was taken from one investor to pay a redemption to another. The money is almost all gone, gone to money heaven.
When all the victims report all of their capital contributions versus the redemption they took, that is when a rough estimate of the losses will occur. In a scheme like this, any money paid to an investor above his capital contribution will be treated as an unjust enrichment/fraudulent conveyance or profiteering. Since the court has already forced the Madoff entity in to bankruptcy the profiteers will in all probability be sued by the trustee to return their unjust enrichment.
When all of that money is put in to the pot along with the bonuses and commissions of the Madoff gang in addition to whatever other recoveries the trustee gets from third parties, then the final number will be set for the purposes of distributions to the victims proportionate to their capital investment. While too soon to tell, they will be lucky if they get back a nickel on the dollar in my opinion, even with SIPIC in the case of the larger private individual investors who invested tens of millions with Madoff.
The pragmatic best bet for the victims is to file amended returns for all of the years they paid taxes on phantom earnings and take the theft loss deductions on the capital. Depending how sporty Congress is in allowing the drawback for phantom profits tax paid more than the current law allows (reopening the returns more than 3 years prior) and allowing the theft deduction to be taken for taxes from the date of the investment instead of from when the crime was discovered, under such a scenario the private individuals (not the charities and banks) could be able to salvage back perhaps as much as 40% of the capital they invested. The biggest single hit will be to the Treasury with all the tax adjustments which in a way is fitting since the SEC failed so massively in this case.
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