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How Much Was Invested With Madoff?

Posted by chisue (My Page) on
Tue, Mar 17, 09 at 17:21

News reports are all over the place on this. I don't want to know how much investors lost 'on paper'. I want to know how much was handed to Madoff to invest. I want to know who cashed out, when, and for how much.

Am I hearing correctly that the Feds are going to let Madoff's investors write off their losses? Come on! Who believes he can make 40% on an investment -- honestly?!


Follow-Up Postings:

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RE: How Much Was Invested With Madoff?

What's the source on the Fed possibly allowing write offs?

I think the off paper losses are a lot less than the bandied about sum of 50-65 billion. If Madoff's investors are anything like me (not a Madoff investor!!), they've got files full of cancelled checks, documents, confirmations of amounts actually sent to purchase investments. Surely some proof should be demanded for any reimbursement. Those who cashed in early in the scheme and actually paid taxes on their real gains could be tracked down too - and maybe by "fraudulent conveyance" they'd be on the hook to pay back.

I don't get any sense on how deep the IRS and the Fed accountants are going to go on this or if they're going to give up with just the easily found.

If there is any big blanket write off (and the govt. does it's usual cursory due diligence) - people who never heard of Madoff are going to be doctoring up paperwork to claim their piece of the pie. It must be easy since nothing raises red flags. LOL

40% - what planet did they live on?


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RE: How Much Was Invested With Madoff?

Granted that I'm working from news reports ... but I haven't heard about anyone expecting to "earn" anything like 40% annual rate of return from allowing Madoff to manage their money.

Anyone who invests anywhere near 100% of one's assets in one type of investment, or with one carrier, has cheese for brains!

That said ... at age 80, I have about 80% of my assets in a variety of equity-type assets.

And the recent major slippage in current apparent value of the investments isn't leading me to conclude that such is not a worthwhile investment style, as I've earned dividends that increased in amount, over the years, and in my jurisdiction used to be taxed at a low rate, and now at an even lower rate.

When there's increase in value of the assets, I don't have to answer to the tax people until I either sell them ... or die ... and I don't figure to do either, this week or next.

Then, I'm required to pay tax at regular rate on half of the gain ... but I get half of the gain free of tax.

When I put money into the bank ... the number of dollars of the principal isn't going to grow ... and the rate of interest usually doesn't grow much, either. And interest income is all earned in each year as one goes along ... and is taxed at top rate: not my idea of a good deal!

I'd rather buy (part of) the bank!

ole joyful

P.S. Don't tell me that Madoff ran all of those assets all on his own ... there must have been others in on the deal, but we haven't heard of others being pursued (apart from some of his family).

o j


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RE: How Much Was Invested With Madoff?

Heard something on the Nightly Business Report then looked up some details under IRS deduction for theft by fraud. Takes me a while to sift through all this and make some sense out of it.

Anyone who invests anywhere near 100% of one's assets in one type of investment, or with one carrier, has cheese for brains!

Well, OJ, truer words were never spoken, but sometimes cheese-brained idiots just win by default. Kind of a Murphy"s Law.

They are reportedly going after a few millions in jewelry and 30 million in loans to each of the Madoff sons.


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RE: How Much Was Invested With Madoff?

Still no number on what got invested.

I gather that the IRS is going to refund taxes on phoney Madoff investment 'gains' that individuals reported on their returns. (I don't quite get that. If they didn't receive real money on 'gains', why would they have paid taxes?)


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RE: How Much Was Invested With Madoff?

I believe that Madoff promised a 10% return on investments - no where near 40%. In fact I heard one of his investors on the radio. She said that during the last stock market boom, when people where earning much more than 10%, someone asked her why she was sticking with Madoff who was only giving a 10% return. It was because she felt the Madoff "fund" was "safe".


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RE: How Much Was Invested With Madoff?

I haven't gotten through all the IRS stuff yet and I can't wrap my head around this whole thing other than it is likely that early investors who took money out did make real gains in real dollars. New investors were still coming on board giving Madoff a backlog of cash to pay off people who cashed out. Very active recruitment and money funneling campaigns going on there. It was only when one of the big boys wanted out and Madoff couldn't cover that it all came crashing down. Any old investors who were no longer in the scheme after a certain date probably don't have any bearing on anything now.

The real number will never be known unless and until every current investor with Madoff coughs up a concrete receipt for monies dumped into his fund. That would be the least you and I would have to do to prove we owned something for which we were asking to be compensated for its loss. It's ever so much more glamorous to include the false gains in the number. To my way of thinking, Mr. and Mrs. A, sitting on a beach chair in Boca Raton, FL who sent Madoff a check for $1.2m - that's what they lost. A forensic accountant with end of day stock, security, bond, precious metals, whatever was supposedly being invested in etc. etc. charts for the last 20-30 years could pin down exactly when any "gains" disappeared into the ether.

Just because something's printed on a piece of paper doesn't make it true - except when it comes to Madoff fraud victims, I guess.

Maybe if Bernie gets to hating jail, he'll spill some real details to get himself a better deal.


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RE: How Much Was Invested With Madoff?

ole joyful-"P.S. Don't tell me that Madoff ran all of those assets all on his own ... there must have been others in on the deal, but we haven't heard of others being pursued (apart from some of his family)."

The accountant has been charged with fraud.


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RE: How Much Was Invested With Madoff?

If you paid taxes on gains that never existed then you should be able to get the tax money paid back. I am sure they got 1099-B (Brokerage proceeds) from Madoff. You had to pay taxes even if you did not take any money out of the fund, as long as you had reported gains. So there will be lots of money IRS will be sending back to Madoff investors.


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RE: How Much Was Invested With Madoff?

Duh, the accountant is his son in law.


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RE: How Much Was Invested With Madoff?

I heard that the accounting outfit was some little one-horse outfit up-country, somewhere - and I think from a reasonably good source.

And heard that there was an Italian-sounding name there, with a suggestion of Mafia connections - but I'm inclined to sprinkle a couple of grains of salt on that one.

ole joyful


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RE: How Much Was Invested With Madoff?

David Friehling, who operated from a 13 x 18 foot office in Rockland County, New York, was Madoff's accountant. He's not Madoff's son in law.

Friehling and his firm, Friehling & Horowitz, did not do anything remotely resembling audits or try to confirm that stocks Madoff purportedly bought on behalf of clients actually existed which would be a "fundamental" audit test.

He spent his time simply "rubber stamping" everything. No one's going to believe he was so incompetent as to be unaware this was a ponzi scheme.


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RE: How Much Was Invested With Madoff?

The March 23 New Yorker magazine has an interesting story about Ponzi and 'the match king' Ivar Kreuger (another, much larger Ponzi-schemer). See 'Annals of Finance' for "Madoff And His Models" by Ron Chernow.

Ponzi's wasn't a very large scam, but others really have 'madoff' with billions.


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RE: How Much Was Invested With Madoff?

beachlilly-"Duh, the accountant is his son in law."

duluthinbloomz4-"David Friehling, who operated from a 13 x 18 foot office in Rockland County, New York, was Madoff's accountant. He's not Madoff's son in law."


Thanks duluthinbloomz4, for clarifying that little detail.

Beachlilly, you worked with the FDIC for 10 years as a bank examiner. Awhile back (Aug 07') you posted the following:

"I was trained as a financial analyzist by First Union (after I got my MBA). During the S&L failure my husband worked with the RTC and routinely sold bank holdings: GNMA and FREDDIEMAC participation certificates, junk bonds (really junky ones), and CMO's (collateralized mortgage obligations). He also unwound interest rate swap positions and other hedging instruments. Our table talk could make your eyes glaze over. It's interesting to us, though."

How do you feel about analysts being compensated by the banks they are rating?

How does one go about unwinding interest rate swap positions and other hedging instruments that are essentially worthless?


How are your investments doing these days?


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