Perhaps I should go out and buy a new swimsuit, because I may be part owner of a multimillion-dollar yacht? Or maybe I should take piano lessons, because I may own a $39,000 Steinway piano. I hope I’m not a part owner of a $7.45 million home in Palm Beach—I can’t afford the property taxes of $157,298.
These objects exceed the limits of reason or necessity. They are extravagant. But why wouldn’t a man who admittedly stole billions of dollars from thousands of innocent victims live anything less than an extravagant life?
Perhaps it’s time, as Barack Obama said on his first day in office as president of the United States, that "The way to make government responsible is to hold it accountable.”
That’s not the issue. The issue that thousands of Bernie Madoff investors, many of whom have worked and saved for their entire lives, are dealing with now is sorting out who gets the proceeds from the seizure and sale of this extravagance.
The government has seized Madoff’s homes, his boats, his silver, his bank accounts, his possessions. It has frozen the assets of Peter Madoff, Bernie’s brother, as well as those of his wife, Ruth. Bernie's sons, Mark and Andrew, had loans from dad to the tune of $31 million that must be repaid. The trustee is trying to follow the money. One of the lawyers working for the trustee said they have traced $75 million to an account in Gibraltar, which raises the amount of located assets past the $1 billion mark. A court document filed in March shows Madoff and his wife had almost $1 billion in personal wealth at the end of 2008, with nearly $1 billion held by Madoff's company, and potentially more than $100 million in personal assets.
So, that’s good news to the investors, right? Maybe. All those assets add up to a small fraction of what Madoff took from clients. It’s been reported that investigators claim the actual loss to be only around $20 billion, but that figure has not been validated. According to prosecutors, the total loss from Madoff is as high as $65 billion. That is the figure the thousands of defrauded victims believe to be more accurate. That’s the figure they lived on and the figure they based their life decisions on. That’s the figure the SEC accepted to be viable by their lack of action in this case. That’s the figure the IRS used to base income-tax payments on.
The question then becomes how do the Madoff investors, who were innocent of any wrongdoing, and who relied on the SEC to watch over the legitimacy of their broker/dealer, recoup some of their losses?
The Securities Investor Protection Corporation was formed in 1970 to do just that. As an industry-funded, nongovernmental organization, their sole obligation is to “step in as quickly as possible and, within certain limits, work to return customers' cash, stock and other securities. Without SIPC, investors at financially troubled brokerage firms might lose their securities or money forever.”
SIPC appoints the trustee—in the Madoff case, Irving Picard—to recover as much money from the bankrupt firm as he can. Mr. Picard announced in February that claims would be going out shortly. More than one month later, we have seen only 12 claims allowed. Mr. Picard announced at the February 20 creditors’ meeting that he would base claims on the investors “net equity.” He defined net equity as total money invested less any money withdrawn, totally ignoring any accumulated profits. There seems to be no exact definition to support his interpretation within the SIPC statute. In fact, there is legal precedence to allow victims’ claims to include the same income that the IRS has been collecting taxes on.
Madoff victims are anxiously awaiting funds in order to continue to pay mortgages, health-care bills, and to avoid becoming a burden on the already faltering public-assistance programs.
As members of a Madoff victims’ support group, which consists of more than 400 members, we have written to Mr. Picard, to IRS Commissioner Douglas Shulman, to SEC Chairwoman Mary Shapiro, to our congressmen, and even to our president.
To date, we have received little or no response from our government representatives.
How is it that thousands of individuals who lived productive lives and contributed to the economic well-being of our country, as well as to the IRS, can be so blatantly ignored by the very organizations that benefited from them? How can the SIPC and the IRS ignore the fact that, were it not for the negligence of the SEC, we would not be dealing with a $65 billion travesty?
Perhaps it’s time, as Barack Obama said on his first day in office as president of the United States, that "The way to make government responsible is to hold it accountable.”
I only ask for SIPC and the IRS to follow President Obama’s wise words and take responsibility for the lack of action and oversight on the part of the SEC. If SIPC and the IRS aren’t up to the task, then I ask President Obama to step in.
Ronnie Sue Ambrosino is a retired computer analyst originally from New York. She has traveled the country for the last four years in a motor home experiencing all the country has to offer. That ended abruptly on Dec. 11, when her only source of income, Bernard Madoff, confessed to running the largest Ponzi scheme in history. Ronnie Sue is proactively involved in joining together other Madoff victims in an effort to find restitution and recovery at bernardmadoffvictims.org. Some of her travel blogs can be seen at domsue.blogspot.com.