About half of Bernie Madoff’s fraud victims took out more than they originally invested with the disgraced money manager.
Since Bernie wasn’t actually investing any of that money, they were basically just profiting from the fact that other people were also pouring money into the Ponzi scheme.
While not techincally a loss, many of these people no doubt feel like they were ripped off. They certainly have a lot less wealth than they thought they did.
They could argue that Madoff imposed on them a huge opportunity costs, and that their money could have been parked in other investments with real returns. But nothing they were likely to invest in would have had the kind of steady returns, year after year, that Madoff pretended to be giving them. An S&P index fund, for instance, would basically have left them flat for the past decade. So, in a sense, they might have actually outperformed with Madoff.
Here’s the Associated Press story. Note that the government’s working figure is $13 billion, not $50 or $65.
AP: Federal prosecutors said on Tuesday that a review of most accounts held by Bernard L. Madoff’s customers when he was arrested shows that about half of the customers had not lost money because they withdrew more money than they originally invested.
Prosecutors made the revelation as they told a judge in court papers that there was no need to order restitution because all of Mr. Madoff’s assets will be distributed to investors through forfeiture requirements.
As part of their filing in United States District Court in Manhattan, they summarized the findings of a court-appointed trustee who is calculating how much investors lost so it can be decided how to divide up assets that are recovered.
The government said a search of financial records, including microfilm records dating to 1979, shows that investors suffered net losses exceeding $13 billion. In all, 15,870 claims have been made to the trustee by those seeking a share of any recovered money.
Authorities have identified more than $1 billion in assets that can be distributed to victims.