A federal bankruptcy judge has upheld a payback formula to calculate the victims' losses in Bernard Madoff's massive Ponzi scheme.
Judge Burton R. Lifland sided with Irving Picard, a trustee overseeing the liquidation of Madoff's assets and rejected the legal challenge of hundreds of defrauded investors.
According to the New York Times, the judge endorsed Picard's formula for the liquidation of Madoff's assets in his 53-page ruling.
As previously discussed, Madoff, 71, was sentenced in June to 150 years in prison for -- the maximum penalty the judge could give him for orchestrating a massive scheme that spanned decades. Billions were bilked from investors to fuel his Madoff's life of luxury.
Investors said they are owed $64.8 billion reflected on fictitious account statements.
The "cash in, cash out" will be the court trustee appointed method to calculate investors' losses. The formula is based on difference between the cash investors put in their Madoff accounts and the cash they withdrew in the years before the scheme unraveled.
For some investors however, this means they would get nothing and others who may have withdrawn fictitious profits could be forced to pay back the trustee.
But investors who did not retrieve all or, in many cases, any of their initial investment say they should be compensated first.
Picard has said allowing net winners to get a piece of the recoveries would again come at the expense of net losers.
The money victims will receive is distributed through industry-financed Securities Investor Protection Corp., which must repay as much as $500,000 for each qualifying claim.
Many defrauded investors are likely to appeal Lifland's decision.
- In Court, Challenges of Madoff Trustee's Plans (New York Times)
- US judge backs Madoff trustee claims method (Reuters)
- Baker Hostetler's Picard Victorious in Madoff Victims Case (Wall Street Journal)
- White Collar Crime Overview (provided by Frank A. Rubino)
- Fraud (provided by Terry W. Yates & Associates)