Parker Waichman LLP

Madoff Fraud Losses Could Spread to Those Who Got Out

Even investors who pulled their money out early could sustain substantial losses as a result of the alleged investment fraud committed by Bernard Madoff.  According to a report on Reuters.com, those investors could ultimately be forced to turn over any profits they made from their Madoff investments. Madoff – once a chairman of the Nasdaq […]

Even investors who pulled their money out early could sustain substantial losses as a result of the alleged investment fraud committed by Bernard Madoff.  According to a report on Reuters.com, those investors could ultimately be forced to turn over any profits they made from their Madoff investments.

Madoff – once a chairman of the Nasdaq stock exchange – is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

The 70-year-old Madoff was arrested on one count of securities fraud late last week.  According to the FBI complaint against Madoff,  his investment advisory business was largely a Ponzi scheme.   Employees of Madoff’s firm told the FBI that Madoff himself estimated the scheme could cost investors as much as $50 million.

According to Reuters, because of a legal concept known as “fraudulent conveyance,” investors who took their money out of Madoff’s funds before the fraud was discovered might have to return their profits to help offset losses incurred by others who stayed in.   Basically, those “profits” were just an illusion, because Madoff was simply using funds from new investors to pay off old ones.

Last week, a federal judge ordered that Madoff’s business be liquidated under the jurisdiction of a bankruptcy court and assigned a  trustee to oversee that process.  According to Reuters, a bankruptcy allows the estate’s trustee to go back six years to recover moneys from fraudulent conveyance.  One expert told Reuters that for investors who got out during that time, “anything past your principal” is  “fair game to be brought back in.”  However, a judge could decide to limit how many years back the estate can demand investors return their money, Reuters said.

The end result is likely to be a substantial amount of litigation.  Another expert told Reuters he expects the Madoff fraud to yield three types of lawsuits.  One type would focus on fraudulent conveyance.  Another would go after feeder funds set up by outside investment advisory firms that marketed Madoff’s investments to high net-worth individuals and pension funds. A third group of lawsuits will likely be filed against financial advisers who entrusted 50 to 100 percent of their clients’ money with  one manager.

The expert told Reuters that the litigation stemming from the Madoff fraud would be “staggering”, and could play out for “years and years”.

What Our Clients Say About Us
We have worked with thousands of clients and we appreciate them and their positive reviews. Here are just a few recent client reviews...
5 Star Reviews 150
I just wanted to say thank you. My nurse,Joanne is always making sure I'm good and my attorneys at Parker/Waichman are extremely thorough and understanding. So compassionate. Thank you.
Jezebel Gallardo
5 years ago
5 Star Reviews 150
Michele Josama Has been an Amazing Help, I appreciate all she has done!! Her customers service is 100%.
Angee Hammond
4 years ago
5 Star Reviews 150
Parker Waichman excellent law firm. They have the best customer service. They always answer my questions. Thanks to Jorge Peniche for always helping me. Create job Parker Waichman!!!
Irma Perez
4 years ago

Why Choose Us to Help You?

We Take Care of Everything
Your situation is stressful enough: Let us take on the deadlines, paperwork, investigation, and litigation. We'll handle every detail so you don't have to worry.
No Recovery = No Legal Fees
We work on a contingency-fee basis, meaning that we only get paid from a portion of your settlement or jury award. If you don't get compensation, you owe us nothing.
Decades of Experience
Your situation is stressful enough: Let us take on the deadlines, paperwork, investigation, and litigation. We'll handle every detail so you don't have to worry.
Respected by Our Peers
Judges, insurance adjusters, and fellow attorneys all speak highly of our skills, and we've earned numerous accolades, including a flawless rating from AVVO.
We Have Many Locations To Serve You
We have the experience and the skilled litigators to win your case. Contact us and speak with a real attorney who can help you.
Long Island – Nassau
Parker Waichman LLP
6 Harbor Park Drive
Port Washington, NY 11050
Long Island – Suffolk
Parker Waichman LLP
201 Old Country Road – Suite 145
Melville, NY 11747
New York
Parker Waichman LLP
59 Maiden Lane, 6th Floor
New York, NY 10038
Queens
Parker Waichman LLP
118-35 Queens Boulevard, Suite 400
Forest Hills, NY 11375
Brooklyn
Parker Waichman LLP
300 Cadman Plaza West
One Pierrepont Plaza, 12th Floor
Brooklyn, NY 11201
New Jersey
Parker Waichman LLP
80 Main Street, Suite 265
West Orange, NJ 07052
Florida
Parker Waichman LLP
27299 Riverview Center Boulevard
Suite 108
Bonita Springs, FL 34134
Nationwide Service
Parker Waichman LLP
59 Maiden Lane, 6th Floor
New York, NY 10038