A Government Bailout for Madoff Investors?

Attached is an article I wrote regarding the US tax implications
of risk management transactions of hedge fund managers. Some of the
tax analysis could apply to Madoff and his foreign investors as well.

Selva Ozelli, Esq, CPA

http://www.hedgeweek.com/download/259124/Commen…

There are hundreds perhaps thousands of investors that were NOT on the Hedge fund side of Madoff. They were on the broker dealer side where there have been NO Allegations. Everyone has lumped these two sides together and in fact they are NOT. Evidence of this is that the brothers who ran this operation on the 18th and 19th floor were not arrested. It was the 17th floor hedge fund that has taken this hit.

Why aren't you writing just a sentence or two to give people that invested on the Securities side (Like my parents) SOME HOPE that their funds, securities and IRAs may still be in tact? I pray it is not because it wont sell newspapers.

John Coffee, a Columbia University Attorney and Professor, spoke to this issue last night on the Lehrer report. Don’t take my word listen to what he says.
http://www-tc.pbs.org/newshour/rss/media/2008/1…

Can you answer this question?

Bill

This is not a bailout really. They will indeed get tax refunds, and should file return for that purpose. The other side of the story is that they will also be asked to give back the money that they were handed as “profit”, even if they have already spent them.

NO ONE WANTED TO “KNOW”

From New York to Geneva, corruption is rampant and complex on Wall Street.
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http://pacificgatepost.blogspot.com/2008/12/is-…
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MADOFF IS NOT AN ANOMALY

I agree with Bill — a distinction should be made between investors whose accounts reside in the broker/dealer business of Bernard L. Madoff Investment Securities LLC (“Madoff”) and those whose accounts reside in the investment-advisory business.

Madoff started the investment-advisory business in the 1990s, and it is that business where the fraud originated, according to the FBI complaint. The broker/dealer and market-making business of Madoff operated separately and independently from his fraudulent investment-advisory business. According to cnnmoney.com, Madoff's market-making operation was “unaffected by his firm's collapse.” I believe the evidence supports the view that accounts in Madoff's broker/dealer business may be safe.

If the U.S. Gov't immediately paid each account a maximum of $5 million in settlement — based upon Nov 30, 2008 Bernard L. Madoff Investment Securities LLC end of month statements dollar value amount — in exchange for look back taxes paid & walk forward theft deductions, this would save $billions, along with the cost and effort of the legal process, and, in particular and most favorably, the excessive legal fees and the decade plus time of the adversarial legal process. In addition, claw back rights should be extinguished.

This would be a matter of the benefit to public policy, as a whole, and the immediate amelioration in the life circumstances of thousands of the elderly who, and most reasonably so, thought that after so many years the SEC was watching out for their honest interests in terms of both the brokerage and investment advisory/power of attorney fiduciary responsibilities of Bernard L. Madoff and of Bernard L. Madoff Investment Securities LLC.

For example, if the average individual account had a $2 million balance a/o Novemeber 30, 2008 end of month statement, and there were 5,000 such accounts, the total amount paid by the U.S. Government to all account holders would cumulatively amount to $10 billion, which is an estimated $7 billion to $10 billion LESS than the total estimated $17 to $20 billion the U.S. Treasury will lose to tax refunds & theft deductions, not including the judicial resources that will be consumed by all forms of litigation.

I therefore recommend that my suggestions should be adopted as an alternative to years of questionable & costly civil actions, complaints, and cost to the U.S. Treasury.

It appears no end to the bailout bucks; now for investors! Congress O.K.'d this? Twilight Zone, yeah?

It appears no end to the bailout bucks; now for investors! Congress O.K.'d this? Twilight Zone, yeah?