Madoff - Victim Payback Method in Plain English

Definition for each icon you may see in your document Action
Alert! Unclear. Bring this specific section to the attention of your attorney or document author for
clarification.
Clear. No further clerical assistance needed.
Plain English applied here.
This legend defines symbols you will find throughout your plain English document.
DISCLAIMER
By accepting this document, you’re stating you understand UnlockDocs is strictly a clerical service,
and does not provide a legal interpretation of your document. This Plain English Guide in no way
supersedes the information in your original document, or replaces the value that only an attorney
or document author can provide. You are strongly advised to seek counsel from a professional,
whether attorney, licensed agent, or other document author, for further clarification. If any
conflicts appear between words or phrases, your original document and attorney or document
author prevails, and remains your ultimate authority.
Page 1 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
Bernard Madoff was sentenced on June 29, 2009. However, the Court gave us until
September 28, 2009 to determine if it’s possible to repay his victims individually in the exact
amount each is owed.
We’re committed to distributing Madoff’s forfeited assets to the victims quickly. We’re still
reviewing Madoff’s assets along with the trustee in charge of liquidation.
Page 2 of 18
However, as explained below, it’s difficult to sort through the defendant’s records and the
fraud has gone on for a very long time. We’re asking the Court to agree it isn’t feasible to
assess what each victim is owed in a reasonable amount of time. If the Court officially agrees,
we can pay Madoff’s victims back with his forfeited property and money through the
remission process. [Cancel the original debt and restructure what is to be paid. - UD]
According to law, Madoff must repay his victims. To get this started, the Court determines
what is owed, and establishes a schedule for repayment at the time of sentencing.
The Government then produces the victim’s payments from the defendant’s assets, and
attaches the details to a court order.
Page 3 of 18
In some cases, it isn’t this simple. There are times when the Court may decide the restitution
method isn’t realistic because there are too many victims, or the case is too complicated to
sort out in a reasonable amount of time. When this happens, the Court can allow the
Government to use the remission method. These two methods are explained below.
The law demands compensation for victims in a fraud case.
Page 4 of 18
However, compensation doesn’t have to occur at sentencing if the Court sees that:
1) The number of victims is too high

2) Facts are so complicated that it would require a very long time to sort out
When this happens, the DOJ is allowed to instead use the defendant’s seized assets as the
basis for payoff. That’s what we’re asking to do in this case.
The Attorney General has the power to compensate victims with property seized from the
defendant using the method of remission.
Page 5 of 18
The law states that the victim must first prove:

1. There was a loss, and the amount.
2. The loss was a direct result of the defendant’s illegal act.
3. Victim didn’t knowingly participate in the crime.
4. Victim hasn’t already been compensated for the loss.
5. Victim doesn’t have the right to repayment through other means.
The DOJ stands by the policy that victims should be compensated fully, and in a timely
fashion. In a remission procedure, when we seize property in a fraud case, the goal is to
distribute funds proportionately. In Exhibit A, you will see that the chief of the Asset
Forfeiture and Money Laundering Section (AFMLS), Richard Weber, has agreed to work with
us on this.
Page 6 of 18
To do this, the victims file a petition with the court requesting the amount owed.
The amounts are verified and recommendations are made. In a complicated case such as
Madoff’s, this process might be managed by a Special Master or trustee.
Sometimes the amount owed is more than the amount seized. When this happens, the DOJ
grants a proportionate amount to each victim. Priority can be given to those experiencing a
serious financial hardship. All payout decisions are made solely by the Attorney General after
considering recommendations by the chief of the AMFLS.
Page 7 of 18
On March 12, 2009, Madoff pled guilty to a variety of fraud offenses, including false SEC
filings and stealing from an employee benefit plan. He’s guilty of running a multi-billion
dollar scheme to defraud thousands of investors. Madoff did this by lying, holding onto funds
rather than investing them as promised, and using investor’s money for his own use and to
give to others. The scheme lasted from at least the 1980’s until December 11, 2008 when he
was arrested.
The crime involved more than $177 billion. Under the law, any property gained from the
defendant’s crime is automatically forfeited once convicted.
Page 8 of 18
June 26, 2009, the Court agreed to order Madoff to forfeit property. Three days later, Madoff
was sentenced to 150 years in prison, and the forfeiture was officially made a part of this
sentence. Specifically, the Court determined:
1. There would be 2 money judgments against Madoff personally.

2. He would forfeit specific property detailed in the order.
3. He would give up claims to any property he owned.
In addition, to compensate his victims, the Court gave us a 90 day timeframe to determine:
1. How possible it was to compensate the victims through restitution.

2. If so, what that amount would be.
Page 9 of 18
The ongoing process to identify victims and their losses includes:

1. Locating records
2. Evaluating submitted victim claims
However, evaluating this fraud is extremely difficult for many reasons:

1. It went on for a very long time
2. It covered a wide range of schemes
3. Accounting records are weak
Microfilm containing pertinent information dating back to 1979 had to be put into digital
form for analysis. So far, it has uncovered:
Victims: 2,336
Losses: $13 Billion
The investigation continues.
Page 10 of 18
The Trustee has had great difficulty evaluating claims. For example, 15,870 victims have
submitted claims to the Trustee. However, Madoff’s records show 8,094 accounts for years
2000-2008. As of the date of his arrest, he shows 4,902 active customer accounts.
The Trustee has received claims from most of the customers listed with active accounts.
50% of these customers lost money.

50% of these customers made a profit.
83 active customers were actually investors in charge of their own client’s funds.
60% of those investors filed on behalf of their clients.
Some of those clients also filed on their own behalf.
Page 11 of 18
The investigation by the Government continues, as well as the Trustee’s evaluation of claims.
The investigation includes locating assets that can be used to compensate victims. The Court
ordered Madoff to pay millions through his own personal assets. To date:
I. US Marshals are in the process of selling three of Madoff’s real estate properties.
1. Co-op apartment – Manhattan, NY

2. House – Montauk, NY
3. House – Palm Beach, FL
II. US Marshals are in the process of auctioning Madoff’s yachts and cars.
Page 12 of 18
The Trustee located hundreds of millions of dollars of assets in the corporation.

The Trustee is also suing specific persons and entities for additional funds.
It’s now clear 90 days isn’t adequate to locate, liquidate, and distribute compensation to the
victims. We can’t make the September 28, 2009 deadline.
Based on all these things, we ask the Court to declare the usual method of restitution to be
unrealistic. This case has too many victims, and is too complicated.
1. Madoff victimized thousands of people.

2. Madoff took billions of dollars from them over many decades.
3. Company records don’t clearly define victims, or how much was taken from each.
4. The Government can’t create a list of victims and losses by September 28, 2009.
Page 13 of 18
The Government suggests that these victims can be fairly compensated through remission
using controls established by the DOJ. This has been done in other large-scale fraud cases.
Using this method, we can oversee a process that will return as much of the amount owed to
the victims as possible. The US Attorney’s Office and appropriate agencies will evaluate the
victims’ claims and oversee repayment under the DOJ regulations.
The DOJ regulates how to compensate victims fairly. This has been done in a number of ways
in the past, including proportionate payouts.
Page 14 of 18
As done in the past, someone needs to review each petition for validity and to establish a fair
payout. In this case, we’re looking at different ways to maximize each victim’s compensation
including the possibility of placing Irving Picard, the current Trustee, in charge of the process.
The DOJ and Trustee would communicate regularly, working side by side to avoid overlap and
to conserve resources.
For all these reasons, the Government asks the Court to declare it impossible to use the
restitution method in this case.
The formal order is attached as Exhibit B.
Page 15 of 18
[SUMMARY ONLY]
This letter is in response to a request from the Assistant US Attorney.

DOJ intends to authorize the return of net proceeds from Madoff’s property to Madoff
victims, according to regulations.
The Attorney General has the power to do this.

Victims will have to meet certain eligibility requirements.
The US Attorney for the Southern District of New York is locating all profits made through this
criminal act.
Page 16 of 18
We look forward to working with you to ensure everything seized is used to compensate
victims appropriately.
Restitution is impossible, and would take too long.
Page 17 of 18
Therefore, this motion is officially granted.
The Government may now move forward with remission.
Page 18 of 18

Madoff - Victim Payback Method in Plain English

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Madoff - Victim Payback Method in Plain English

Uploaded by

Copyright:

Available Formats

Definition for each icon you may see in your document Action

Clear. No further clerical assistance needed.

Plain English applied here.

The law demands compensation for victims in a fraud case.

1) The number of victims is too high

The law states that the victim must first prove:

1. There would be 2 money judgments against Madoff personally.

1. How possible it was to compensate the victims through restitution.

The ongoing process to identify victims and their losses includes:

However, evaluating this fraud is extremely difficult for many reasons:

The investigation continues.

50% of these customers lost money.

1. Co-op apartment – Manhattan, NY

The Trustee located hundreds of millions of dollars of assets in the corporation.

1. Madoff victimized thousands of people.

The formal order is attached as Exhibit B.

This letter is in response to a request from the Assistant US Attorney.

The Attorney General has the power to do this.

Restitution is impossible, and would take too long.

Therefore, this motion is officially granted.

The Government may now move forward with remission.

You might also like