Fleeced Madoff Ponzi Investors Receive Partial Payments on Initial Investments

by Mayer Nazarian and Geoffrey A. Weg 

Geoffrey Weg

Mayer Nazarian

On Thursday, September 20, 2012, Irving H. Picard, Securities Investor Protection Act (“SIPA”) Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC ("BLMIS")(the “Trustee”) announced that checks for the second pro rata interim distribution to eligible account holders totaling $2.5 billion were mailed on Wednesday, September 19, 2012. This second distribution, when combined with the funds already returned to account holders, fully satisfies more than 50 percent of the total current accounts with allowed claims.

 

The Trustee also reported the following: 

• 1,230 accounts will receive approximately 1/3rd of the allowed claim amount;
• The average payment will be slightly more than $2 million;
• Of these 1,230 accounts, previously 892 were fully satisfied; an additional 182 accounts will be fully satisfied by this second distribution;
• A total of $3.625 billion has been returned to account holders;
• The Trustee has recovered or reached agreements to recover more than 50% of the approximately $17.3 billion lost by claimants.  

“In addition to recovering as much stolen money as possible for Madoff’s victims, we are also moving forward aggressively to resolve litigation and appeals which are delaying further distributions to BLMIS customers,” said David J. Sheehan, Chief Counsel to the SIPA Trustee. “We are confident in our positions and we look forward to putting more recovered funds back in the hands of their rightful owners in the near future.”

 

Amounts not recovered by claimants may be claimed as a theft loss deduction on the taxpayer’s federal income tax return, which may offset other income and result in a tax refund. For taxpayers who suffered similar losses from investment fraud, IRS offers tax relief in Revenue Procedure 2009-20 (the “Revenue Procedure”). The Revenue Procedure provides that investors may deduct up to 95% of the investment loss, less any actual recovery and any potential recovery from SIPC or other insurance claim. The investor may have to report income or an additional deduction in future years depending on any actual recovery.

 

For more information, contact Mayer Nazarian or Geoffrey A. Weg
Tax & Wealth Planning Group.