Madoff Victims Want Answers, Not Apologies

Lawyers for jailed swindler Bernard Madoff will be in court again next week, this time to argue Madoff be freed on bail until his sentencing.

But what's of more interest to investors is if they'll ever see any of their money again, as CBS News correspondent Priya David reports.

In court this week, a subdued Madoff said he was "deeply sorry and ashamed" for cheating investors in a two decade long Ponzi scheme. But those words that mean little to clients burned by Madoff who want answers, not apologies.

"He's refusing to identify where the assets or who his co-conspirators are," said Brad Friedman, and attorney representing Madoff Investors.

A court document filed Friday shows Madoff and his wife had almost $1 billion in personal wealth at the end of last year. His ownership of the business was by far the biggest chunk - $700 million. They had $45 million in stocks and bonds and $17 million in cash in the bank, plus homes in New York, Florida, and France worth $22 million. Throw in a $12 million partial ownership of a jet and boats worth about $9 million for a total of at least $823 million.

"There's gonna be a whole lot of forfeiture," said former federal prosecutor Victoria Toesing. "Madoff is going to have to give up anything that is related to his crime."

But all those assets add up to a small fraction of what Madoff took from clients - perhaps $20 billion, investigators now say. (On paper, Madoff fictitiously grew that money to $65 billion.)

Defrauded clients are starting to see a trickle of reimbursement from the Securities Investor Protection Corporation, a non-profit set up by brokerages for cases of fraud. The insurance fund pays up to $500,000 per account. So far, the SIPC has dispersed $6 million dollars to 12 investors. But president Stephen Harbeck says there are more than 5,000 claims.

"The victims here do have different agendas. People who gave money to the Madoff brokerage firm late in the day want us to use the real actual dollars put in minus real dollars put out," Harbeck said. "I can understand why people who have been in this scheme for a long time would prefer us to use the fictitious figures that Mr. Madoff was giving them, but that's not the way the law works."

Many victims like Bert Ross paid taxes on those fictitious earnings. Ross says he lost $5 million to Madoff, plus another $375,000 in taxes.

"Taxes on income I thought I had, which I never earned, because we never took money out. So that's phantom income. That money should be returned to us," Ross said.

Those victims may be in luck. According to a federal theft loss law, you could be eligible for a tax refund if you've lost money over the past three years because of fraud.

On the other hand, even if you got your money out before the Madoff scheme collapsed, you may be sued for making a profit.

It's called a clawback. The idea behind it is that everyone is a victim, and that some people shouldn't benefit because they got some of their money out early. Instead, the money should be returned and distributed fairly among everyone. But that could mean even more people could feel victimized because they're being sued to give money back.
  • Priya David

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