Local media here in Trinidad were doing a human interest story about a homeless woman going riches to rags, she claimed she was living in New York and had retired and had $3 million in a bank account. She claimed she also invested money with Bernie Madoff and had received a few payouts and then the scandal broke and her entire bank account was seized by the government. With that she said she could no longer pay bills or rent and had no other accounts, and she had to beg for money to get a plane ticket and come home where she is currently on the street.
I’ve been searching but I don’t see any quick confirmations, did the government really seize your entire bank account if you had invested with Bernie Madoff?:dubious:
The argument was that they were not victims, but beneficiaries of the crime. In that the payments they got were not investment profits, but money scammed from the new victims. Thus like any Ponzi scheme or pyramid marketing scam, those that got in early get money from those that get suckered in later.
One of the proposals for an equitable solution to this was to take all the money paid out plus the current assets, divided by all the money paid in. This would give a ratio of losses. For example, assume the money paid out+ current assets = $40 billion, while money paid in was $100 billion. That gives a value of 40%. To fairly distribute the assets (and the losses), everyone would get back 40% of the money they put into the funds. This distributes it equally to every investor, without giving more those who got into the scheme earlier. But it might mean that some people who got in early, and got lots of money out (taken from later investors) would have to give back some of their ill-gotten gains to pay back (partially) the later investors. So that in the end, everyone takes an equal share of the losses.
To do this would probably mean seizing accounts temporarily, until they calculate the actual amounts paid in & paid out from that account.
But I don’t know if the Court actually implemented this proposed solution.
In any case, this story seems unlikely to be true.
When accounts are seized ‘by the government’, they are generally under the control of some court. And it is possible to petition the court to release certain funds to cover normal living expenses – that’s quite common, and frequently granted. Here in Minnesota, a corrupt auto dealer whose assets had been seized petitioned the court for $1000’s per week to keep him, his kids, his wife, & his mistress living in the style they were accustomed to. And it was granted (partially) – even though he had already been convicted!
Seems like this woman would have had an even better chance of getting some of her funds for basic living expenses.
It’s called a ‘clawback lawsuit’ and the Madoff court-appointed trustee has filled over $800 million in such suits against some 338 investors, to recover profits taken before the scheme was exposed:
Seems like any millionairess who got caught up in the Madoff situation would at least have enough social support to avoid becoming a homeless woman in Trinidad. I don’t doubt that some beneficiaries of the scam, esp. the unwitting ones, had a hard time surviving after their bank accounts were frozen, but if this particular lady thinks her story is true then she must have very, very poor social skills and therefore no friends. Either that, or she’s just plain crazy.