Dozens of Madoff investors have asked a federal court to amend the payback formula that was put in place back in March by a federal bankrupcty judge.
In the plan laid out back in March, investors would be entitled to recoup a portion of their losses in proportion to their initial investments. However, during the past few months, it has come to light that dozens of investors had actually already been paid back MORE than their initial investments.
This unforseen problem may lead to a situation where these select investors have to pay back monies that they have already received in order to spread those monies out among the other investors who were not as fortunate to recoup their initial investments.
The ruling back in March was made based on the decision that all “profits” reported by investment statements issued by Madoff were fictitious and that investors would only have a claim to those monies that they initially invested instead of the fictitious balances reported on their fictitious statements.
We’ll have to wait and see what the courts say about this one, but I have a feeling that these select investors will not have their request granted. In a scheme where many people lost a great deal of money, no one investor should make out better than any other. Whatever amount of money is available to be distributed should be distributed in proportion to each investors’ initial investment, as was originally put forth back in the March plan.
All this talk still brings me back to my original thoughts on the Madoff scam, which you can read here: Lessons Taught By Madoff’s “Victims”
