Investors with Bernie Madoff, who were "lucky" enough to withdraw funds from Madoff anytime before the most spectacular ponzi explosion up to 2 to 4 years prior (depends on treatment), and were hoping they could tiptoe away from the whole mess, are starting to realize they will soon have two options: 1) repay the money or 2) not repay, end up getting sued and only then have to pay it back.
Under the civil jurisdiction of fraudulent conveyance, which is how Madoff's ponzi will be treated for civil purposes, the liquidating trustee is about to start distributing claims to withdrawing parties, giving them a pro rata claim of recovery in the ponzi, however in exchange for refunding any money they withdrew over the past couple of years.
This is already drawing significant anger by numerous investors, who unfortunately don't have a legal leg to stand on. Entities such as the Lucerne Foundation, Collingwood Enterprises and Douglas Rimsky have petitioned trustee Irving Picard in NY Bankruptcy Court to push back the July date to distribute claims. Ironically, if those lucky enough to have withdrawn their money do not file proper claim forms, they will likely end up being sued by the liquidating estate, making their life even unbearable.
A more detailed overview of the fraudulent conveyance dilemma for Madoff investors, courtesy of Information Arbitrage.
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