Lawrence R.

Velvel
Dean, Massachusetts School of Law
500 Federal Street
Andover, MA 01810

March 10, 2009

The Honorable Denny Chin

United States District Judge
Daniel Patrick Moynihan
United States Courthouse
500 Pearl Street
New York, NY 10007-1312

Dear Judge Chin:

I am a member of and am writing you on behalf of the Steering Committee of

MadoffSurvivors. MadoffSurvivors is a Google group with approximately 300 members.
They were investors with Bernard Madoff, and their accounts were wiped out by the
revelation on December 11, 2008 that Madoff was running a Ponzi scheme. Our
estimate, and it is only an estimate, is that the amount of money lost by MadoffSurvivors
collectively is probably in the neighborhood of 500 to 700 million dollars.

The members of MadoffSurvivors are not the billionaires, “centamillionaires,”

hedge funds, and banks that the celebrity-driven mass media focus on, thereby causing
the public to believe that the victims of Bernard Madoff are all wealthy plutocrats.
MadoffSurvivors are, instead, “little” people. They are people who usually started with
little or nothing, as members of the working class or lower middle class, as immigrants,
as children of holocaust survivors. They are people who worked like dogs all their lives,
finally saved up enough money to make an investment in Madoff, and now find
themselves wiped out. Many -- perhaps even most -- are elderly, in their late 60s, 70s, or
80s. Many had no other savings or income except what they had in or received from
Madoff. Many are completely devastated, financially and psychologically. They are
selling their homes in order to obtain money to live. They are attempting to reenter the
work force, sometimes in menial jobs, in their 60s, 70s and 80s, in order to obtain money
for food and shelter. (There is, as you may know, one man in his 90s who is reported to
have taken a job in a supermarket passing out fliers, we believe, in order to sustain
himself.) They are the victims of both a terrible crime and a terrible tragedy.

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 The crime and tragedy of which they are victims were not caused by Bernard
Madoff alone. They also were caused by a widely circulated public statement by the SEC
in December 1992 that there was no fraud involved, and by the subsequent conduct of the
SEC from 2000 onward in failing to properly investigate Madoff when given a plethora
of tips by Harry Markopolos and, it now appears, by some others as well. The SEC’s
failure to pursue the (accurate) charges of a Ponzi scheme made by Markopolos is well
known. The SEC’s public statement of December 1992 that no fraud existed, a public
statement that was never retracted despite all the tips the SEC later received, is rarely if
ever mentioned by the media, but was the cause of huge numbers of people keeping
already-invested money in Madoff, putting initial monies in Madoff, and/or putting more
money in Madoff. It is an unhappy fact, but a fact nonetheless, that the government
itself, by publicly placing the imprimatur of honesty on Madoff in December 1992, and
never retracting it thereafter, caused untold numbers of people to invest in and lose
billions of dollars in Madoff, and enabled Madoff’s fraud to grow from less than half a
billion dollars in 1992 to what Madoff claimed to be 50 billion dollars in 2008. The SEC
contributed to disaster by incompetently failing to protect citizens who depended on it for
protection -- for the very protection that was a fundamental reason for passage of the
federal securities laws in the 1930s.

To the members of MadoffSurvivors, as to other “small people” victimized by

Madoff, it is critical that the government uncover, and recover, every possible dollar of
Bernie Madoff’s stash, and the stashes of his family members and guilty non family
employees, so that as much as possible can be returned to the devastated victims of his
fraud and of the government’s negligence or even, possibly, complicity. Very few people
believe that all the many billions Madoff took in has been spent by him or his family, or
redeemed by prior investors. Rather, it is widely believed, perhaps even universally
believed, that there are billions of dollars, perhaps tens of billions of dollars or more,
stashed away in banks in countries which in the past have served as secret repositories of
ill gotten wealth (Lichtenstein, the Cayman Islands, etc.), in banks in Israel, in illiquid
real estate in a number of foreign countries, and in other investments. There is also a
deeply unhappy suspicion that branches of various mafias or cartels could have been
involved and could have been siphoning off billions of dollars.

For these reasons, the Steering Committee of MadoffSurvivors urges that no

sentence be pronounced upon Madoff until, and if legally possible there should even be a
suspension of a plea until, the government -- including the Department of Justice, its
component the FBI, the SEC, and any other relevant federal bodies -- is willing to
formally attest that Madoff, his family members, and his culpable employees have fully
told it where every dollar stolen from investors by Madoff has gone, insofar as it is
possible to know this, from 1960 or 1962 -- whichever the year Madoff began taking in
money from investors -- until the present time; to formally attest to the identity of the
persons, institutions, banks, partnerships, trusts, real estate or other property which have
or do possess the stolen money or in which it is invested, and will formally attest to and
identify every step it used to recover the money; and will formally attest to and identify
all evidence of guilt in its possession, as well as remaining locations of the money or the

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property in which it is invested, in order to aid the efforts of desperately injured investors
to obtain more complete restitution through private actions.

With regard to the foregoing, we note that not only should Madoff family
members be required to give up their wealth because it is attributable to a fraud, but it
was impossible for family members not to have known of the fraud. For at minimum they
had to be aware that Madoff was telling many people that the reason he was not charging
investors more for his investment “services” was that he was content to have the broker-
dealer arm of his company make huge amounts of commissions executing the claimed
trades, and they also had to be aware that the broker-dealer arm, which they supervised,
was not in fact executing the purported trades and making the commissions. As well, the
family members had to have lied to the SEC about vital matters, or else the SEC
necessarily would have discovered early on that Madoff was running a huge unregistered
investment management business, had thousands of customers rather than none or only a
handful, and had different sets of books.

If conditions discussed above are met, so that every penny obtainable by the
government to repay victims of Madoff’s fraud will have been identified and collected,
then the Steering Committee of MadoffSurvivors would not object to some reduction in
the sentence meted out to Bernard Madoff.

Judge Chin, it is a fact, and it often is no secret, that people victimized by Madoff,
plus many not victimized by him but aware of the situation -- like investigative reporters
and even federal legislators -- have completely lost faith in the federal government in
connection with this matter. The incompetence of the SEC, actions by the Trustee that
people think niggardly, the failure to date of the IRS to provide guidance or to show
lawful generosity towards victims, the now-three-months-long silence on so many
relevant matters by so many in government, have exacted their toll. As well, to those
who think about the matter, it is obvious that you occupy a position very similar to that
initially occupied by Judge Sirica in the Watergate matter. Like him, you could take
action that opens the gates for truth -- and, in this case, for recovery by victims -- or you
could choose, as he did not, to act in a way that will allow much truth to remain hidden.
Obviously, it is the request of MadoffSurvivors that you opt for truth, recovery, and
transparency.

Sincerely yours,

Lawrence R. Velvel
On Behalf Of
The Steering Committee
of MadoffSurvisors

cc: Honorable Lev Dassin, Esq.