Home > General, Markets > Crime “pays” for Madoff investors

Crime “pays” for Madoff investors

March 11, 2009

jail

Rocky sadly notes that it’s now more profitable to invest with a BIG crook, than to invest in a BIG company.

Bloomberg News reports that Representative Gary Ackerman (D, NY) introduced a bill giving preferential tax treatment to de-frauded investors in Bernie Madoff’s Ponzi Scheme.

“The bill would extend to 13 years the time for which investors may obtain refunds on taxes tied to the phony profits,” the New York Democrat said in a statement. Current rules limit investor refunds to the past three years.

Rocky highlights the economics of this new Government bailout:

Investors who bought $1,000,000 of stock or preferred shares in:
(1) Washington Mutual
(2) IndyMac Bank
(3) Fannie Mae
(4) Freddie Mac
(5) Lehman Brothers
(6) Enron
(7) Worldcom
have been COMPLETELY wiped out.

These investors receive no tax credit for any retained earnings reported by these companies. It’s a 100% capital loss. Gone. Zilch. Nada. Diddly-squat. Zip. Goose egg. Hill of beans. ZERO!

In contrast, investors who gave $1,000,000 to Bernie Madoff, will receive a $500,000 insurance payment from the SIPC. They also keep any income received before the Bankruptcy Preference Claim period. And, they get an unlimited tax deduction for qualified “theft” losses. (This is under the current law. Rep. Ackerman wants to give a special new tax hand-out to Bernie’s investors.)

Rocky’s suggestion to Rep. Ackerman: Go ahead and change the tax code — but eliminate the current $3,000 per year capital loss limit for EVERYONE.

If the Government wants to be Rocky’s partner on 100% of the profits, it should be his partner on 100% of the losses too.

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  1. Sam
    March 11, 2009 at 8:19 pm

    hmmmm… could this be a way around the looming tax hikes? investing in a ponzi sceme is the new tax shelter. sweet.

  2. allocator
    March 11, 2009 at 9:24 pm

    Rocky,

    I think you’ve hit upon a great new risk management strategy, and I want in on it. But for some reason I can’t seem to find any “Invest With Me, I’m a Crook” ads.

    Damn, investing’s hard. 🙂

    Cheers,
    George

  3. A fan
    March 12, 2009 at 9:20 am

    High profile cases get special treatment. Compare money paid to victims of terrorism on 9/11 versus similar previous cases. But in general, both the public and politicians are more sympathetic in cases where people was clearly defrauded, compared with cases where management made errors or engaged in poor long-term planning.

  4. Naomi
    March 12, 2009 at 2:33 pm

    to all who say the money has evaporated..it is not true..
    the money is in Israeli banks especially LEUMI bank..
    can anyone do something to get a portion of those stolen 50 billion dollars?..
    cant they talk to Israel or something..

    It is well known that this Madoff was not and would not deposit the money in american banks..he is not stupid..it is fair to get those poor investors a part of their money even by prosecuting Israeli banks..
    Big pink elephant in the room and nobody talks about!!!!!

  5. March 12, 2009 at 3:53 pm

    To Naomi:
    If you have ANY usable evidence of this (other than repeating unsubstantiated allegations and innuendo), please forward it to rocky (at) rockyhumbert.com …

    Rocky will promptly deliver your “evidence” to the Bankruptcy Trustee and US Attorney(through the proper channels) …. and those funds will be recovered.

    Unlike the Swiss banks, Israeli banks routinely cooperate with the US in these sorts of investigations.

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