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Victims’ Anger Shifts Past Madoff

After hailing Bernard Madoff's 150-year prison sentence, some of his former investment clients intensified criticism of what they termed an equally tough adversary - the government systems charged with stopping financial scam artists and reimbursing its victims.

Rallying outside a Manhattan federal courthouse Monday, about 20 ex-clients who together lost millions to Madoff said they have been victimized by inadequate oversight before the fraud collapsed in December and questionable decisions and slowness in the ensuing repayment process.

Several carried signs specifically criticizing the Securities and Exchange Commission, the agency that failed to discover Madoff's scheme; the Securities Investor Protection Corp., the government-created insurance system that pays up to $500,000 to each client of failed brokerages; and Irving Picard, the court-appointed trustee seeking Madoff's assets on behalf of ex-investors.

Asked why she never suspected Madoff, former client Stephanie Halio stressed that the SEC investigated the financier, a former Nasdaq chairman, several times without finding evidence of any serious wrongdoing.

"My due diligence was the SEC. What greater due diligence can you have than the SEC?" asked the Boca Raton, Fla., resident. "They failed us. We have to fix the system."

Ronnie Sue Ambrosino, who with her husband, Dominic, lost $1.6 million to Madoff, said the SIPC and Picard should scrap an "incorrect" repayment formula that bases each victim's losses on the amounts they actually invested, rather than the larger, interest-boosted totals in Madoff's records.

"Today, the victims are no better off, financially, than they were yesterday," Ambrosino said.

The pace of an asset-seizure effort that has so far recovered just over $1 billion of the $13 billion to $65 billion fraud has unfairly forced some victims to rely on relatives and friends to survive, several victims who gathered at the rally said.

"Mr. Picard is not doing anything speedily," complained Halio.

Picard declined to comment. The SEC issued a formal statement that said: "As we have previously expressed, not a day goes by where we don't regret this tragedy or the harm suffered by investors. But, since then, we have been doing what any responsible agency should do by conducting a rigorous self-assessment, improving our procedures and filling the regulatory gaps."

The SEC's inspector general is probing the agency's oversight of Madoff.

Stephen Harbeck, the SIPC president and CEO, said the reimbursement system was proper and had been used to repay victims of other frauds.

"The primary people who are objecting are people who have taken out more money than they put into the (Madoff) scheme," Harbeck said. "To allow them to share on an equal basis with those who have not gotten their principal back is neither equitable nor in compliance with the statute we administer."

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