$64B Bailout for Madoff Victims - Are They Victims?

After posting 10 Breakthrough PR Techniques from a Master, I received an email from the Madoff Coalition for Investor Protection, which represents "over 400 former professionals who were successful in their "pre-Madoff" lives."

The email was essentially a plea for pro bono PR help for "Madoff victims" who have been lobbying the public and Congress for months. I'll be honest: my initial reaction was indeed one of empathy. My instinct was to help them out. So I spent some time investigating. What I learned shocked the hell out of me.
These were no victims.

The "Madoff Coalition" isn't fighting to get their money back. Nope. They're fighting to get their fake profits from Bernie Madoff's Ponzi scheme. Per their email: "As for our viewpoint -- the main points are 1) for SIPC to pay investors based on their final statement. That issue has been consistent for us."

Well, as Stephen Harbeck, chairman of the SIPC (Securities Investors Protection Corporation) explains in a New York Times piece, that would amount to a whopping $64.8 billion taxpayer bailout of these so-called Madoff victims:

By law, SIPC covers only customers of failed brokerage firms. Those with valid claims receive a cash advance of up to $500,000 and a pro rata share of whatever assets the Madoff bankruptcy trustee can gather.

That is not true for several thousand direct investors who withdrew at least their entire original investment before the Madoff fraud collapsed.

In court filings, letters, e-mail messages and Web site postings, these victims insist the only valid measure of their loss is the amount shown on the final account statement they got before Mr. Madoff's arrest last year -- amounts that total $64.8 billion.

Mr. Harbeck is equally insistent that the courts have never allowed the losses in Ponzi schemes to be calculated that way -- and will not do so now, despite the unprecedented scale of the Madoff fraud.

"We are trying to do the best we can for the greatest number of people, consistent with the law," Mr. Harbeck said.

And as he sees it, the law is there to protect the thousands of people who got back far less than they invested in Mr. Madoff's Ponzi scheme -- victims whose claims total more than $20 billion so far.

"The people we said no to are people who had at least gotten all their money back" before the fraud collapsed, he said. "The people with valid claims had gotten nothing back at all."

Honestly, I don't know why the Madoff Coalition thinks they need my help. They're all over the Web and they've already managed to get a Congressional hearing on this insanity. If Congress bails them out, then we have truly lost our way. But that's just me. What do you think?