Madoff Seeking to Keep $62 Million in Assets

Despite his role in a fraud that may cost his victims in the vicinity of $50 billion, Bernard Madoff is seeking to keep a $7 million Manhattan penthouse and an additional $62 million in investment assets, claiming that those assets are his wife’s and not part of the alleged scandal.  Madoff Seeks to Keep NYC Penthouse, $62 Million in Assets.   Should Madoff and his family be able to keep these assets separate from his victims losses?

Quotable

“This is the best prospecting list ever. You’ve got the names and addresses of a whole bunch of rich people who don’t demand much accountability.”  - Ken Phillips, RCG Capital Advisors, quoted in the Wall Street Journal article, Madoff Clients Exposed.  Such a comment is probably why some investors were upset with the release of the list.

The Elderly May be Targeted by Some Ponzi Schemes

The term “Ponzi Scheme” derives from a financial fraud perpetrated by con man  Charles Ponzi, where he promised investors very high returns in a relatively short period of time.  The initial investors are actually paid their returns from subsequent investment victims.  Because these schemes entice the investor with tempting and remarkable profits, they usually involve a proposition that is difficult to understand or vague in its description.

 A Wall Street Journal article reports that the number of alleged Ponzi Schemes has mushroomed since the Bernie Madoff scandal.  The reason for the proliferation is that financially-strapped investors are trying to access their assets.  Also, the inevitable failure of this type of pyramid scheme is accelerated when new investors are difficult to lure.  The poor economy is like fuel to the fire.

 A troubling detail of the article is that many of the victims are the elderly.  People who will likely need access to their nest egg in the near future and will not be able to work to try to rebuild any wealth.  In the meantime, the predators typically enjoy a lavish lifestyle.

If you personally are approached by someone offering incredible returns with little or no risk, recall the old saying “if it sounds too good to be true, it probably is.”

That’s What Friends Are For

According to an article in The Wall Street Journal, Bernard Madoff received a whopping $250 million, ten days before his arrest, from an old buddy, Carl Shapiro.  While a very nice gesture, it was insufficient to keep Mr. Madoff’s business afloat.  Mr. Shapiro lost an estimated $400 million as a result of the Madoff fraud.  No word on whether they are still pals.