Victims Who Didn’t Even Know They Were Investing With Bernie
|Matt Nager for The Wall Street Journal|
Jack Cutter gained attention when he had to take low-paying jobs after losing money in the Madoff scandal. He is faring better now.
The court appoint individual who is trying to recover funds for the Madoff Ponzi scheme victims is doing a pretty good job, but only for direct investors.
Only direct investors with Mr. Madoff's firm are eligible for payments from Irving Picard, the court-appointed trustee winding down Mr. Madoff's firm. Investors like Ms. Webel who invested through feeder funds haven't received anything. Mr. Picard has filed more than 1,000 lawsuits and recovered more than $11 billion for Madoff investors. In September, he distributed $2.4 billion to former Madoff clients, satisfying the claims of 1,074 account holders—about half of the allowed claims.
But what about indirect investors? First of all, who are they? Indirect investors are men and women who paid investment advisors to invest their money, and instead of getting competent investment advisory services all they got was to have their money funneled to Mr. Madoff. And we all know what he did with it. So can they get any relief? No.
Only direct investors with Mr. Madoff's firm are eligible for payments from Irving Picard, the court-appointed trustee winding down Mr. Madoff's firm. Investors like Ms. Webel who invested through feeder funds haven't received anything.
Ms. Webel has a pretty sad story, one has to feel for her.
the 62-year-old Ms. Webel can't afford fertilizer for her 80-acre farm, a necessity in the arid
soil. The money she set aside for her kids is gone. And the name Madoff has
become all too familiar. When Mr. Madoff's Ponzi scheme was disclosed, the
money she thought she saved over the years disappeared. Colorado
"Our kids are now deep in debt," Ms. Webel said. "We couldn't afford to pay their bills, so they had to take out huge loans, and they will have to be saddled with that for 40 years. And our retirement funds are gone."
And what about the so-called investment advisor that gave her money to Mr. Madoff and collected a fee for doing less than nothing?
The Securities and Exchange Commission sued Agile Group's founder, Neal Greenberg, in 2010, saying its funds were falsely marketed as suitable for investors who were retired or nearing retirement. Last year, Mr. Greenberg agreed to pay $330,000 without admitting or denying the charges. A lawyer for Mr. Greenberg declined to comment.
And no, while $330,000 is a lot of money to most of us, it was probably just a small piece of change to Neal Greenberg, who walks away with no jail time, no criminal record, and is probably back in the investment management game.
For the rest of us, giving Mr. Madoff a lifetime sentence was too light, he should have gotten more time in jail.