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Madoff Victims Betrayed Again; This Time in Gov’t Scam

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On Thursday, November 9, the U.S. government announced that it will begin paying out $772.5 million to over 24,000 victims of Bernie Madoff’s Ponzi scheme.

The funds are coming from an account called the Madoff Victim Fund, which was set up four years ago by the government with money acquired through asset seizures and settlements with companies and people related to the case, to assist the people who fell victim to Madoff’s scheme. Federal authorities said that in total it plans to pay out $4 billion from the fund.

Deputy attorney general Rod Rosenstein said, “We have recovered billions of dollars from third parties — not Mr. Madoff — and are now returning that money to tens of thousands of victims. This is the largest restoration of forfeited property in history.”

Madoff received a prison sentence of 150 years after pleading guilty in 2009, to stealing approximately $20 billion from investors who contri buted to his fabricated Wall Street firm.

According to CNN Money, “The government began recovering money as it pursued legal action against Madoff, his conspirators and others associated with the case. But there’s another effort to repay Madoff’s victims. When investors filed a class action lawsuit against Madoff, a court appointed the attorney Irving Picard to help them get their money back. He has distributed around $10 billion to victims so far — money amassed largely through civil settlements. The U.S. government took that tack, too. About $1.7 billion in its own victims fund came from JPMorgan Chase (JPM), which agreed three years ago to pay to settle allegations that it ignored red flags about Madoff’s crimes while it was his banker. The bank insisted that its employees did not knowingly assist in the crimes. But federal authorities also funded their account through the forfeiture of civil assets. The agency seized around $2.2 billion from the estate of Madoff investor Jeffry Picower, who died in 2009. Picower is said to have benefited the most from Madoff’s scheme, though his wife has denied his involvement.”

According to officials, additional funds were collected by the U.S. through forfeiture actions against Madoff as well as some of his investor and co-conspirators. Much controversy has been raised by the government’s asset forfeiture program, which allows the federal government to seize money and assets from suspects before they are even convicted.

On Thursday, the use of this program in the Madoff case was defended by DA Rosenstein in an op-ed published in the Wall Street Journal. Rosenstein wrote, “Not everyone who possesses illegal proceeds can or should be criminally prosecuted. Many criminals transfer ill-gotten gains to relatives or friends, and others use couriers to transport cash. In such cases, civil forfeiture enables the government to recover property when prosecuting the person caught holding it may not be appropriate or feasible.”

by Rebecca Gold

 

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