Few Madoff Victims Reimbursed
Only 1,487 of the roughly 16,000 direct investors victimized by Bernard Madoff's Ponzi scheme have received any payment for their reimbursement claims, on the eve of the first anniversary of his arrest.
And more than one in four of Madoff's burned investors still await decisions on their repayment claims, even as 1,647 claims have been allowed and 9,916 have been denied.
The pace of the repayment process and other weaknesses in the federally created safety net for victims of failed brokerages drew fire from Madoff victims and Congress during a hearing Wednesday on efforts to improve the protection system.
"We need your help now," Jeannene Langford, a California design consultant who lost her life savings to Madoff, told the House Financial Services subcommittee on capital markets.
"You'd think that by this week . . . our financial regulators . . . would have helped as many victims as they could," said Rep. Gary Ackerman, D- N.Y. "Sadly, you'd think wrong."
Madoff was arrested Dec. 11, 2008, for a scam that victimized charities, celebrities, retirement funds and average investors. He pleaded guilty in March, and is serving a 150-year prison term.
Court trustee Irving Picard is seeking Madoff assets to repay victims. He's collected $1.4 billion so far, and has filed lawsuits seeking nearly $15 billion. But there are $19.4 billion in estimated losses.
The Securities Protection Investor Corp., a financial industry-funded company Congress created to aid investors of failed brokerages, is authorized to pay up to $500,000 to each burned customer. But some Madoff victims told the subcommittee they're unlikely to get needed help:
Helen Davis Chaitman, a New York lawyer for hundreds of fellow Madoff victims, argued that SIPC, the Securities and Exchange Commission and Picard have improperly based repayments on the amounts each client actually invested, less any withdrawals. She argued payouts should be based on the higher totals in Madoff's books, reflecting phantom gains that clients believed were real.
Joel Green, general counsel of Upsher-Smith Laboratories, a Minnesota-based pharmaceutical firm, said it contributed more than $8 million to a Madoff-invested retirement plan for more than 600 present and former employees. Instead of receiving up to $500,000 for each plan member, it stands to get $500,000 total, which Green said "won't go far."
Subcommittee Chairman Paul Kanjorski, D-Pa., said Congress is weighing proposals to strengthen and expand SIPC protection. But he warned, "We just can't guarantee that everyone is insured."