Feb 20, 2009 7:29 pm US/Eastern
Misery Loves Company: Madoff Victims Gather In NYC
Madoff Trustee Briefs Investors On Claims, Says Financier May Have Never Even Invested Their Money
NEW YORK (CBS) ―
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Bernard L. Madoff walks down Lexington Ave to his apartment on Dec.17, 2008, in New York City.
Don Emmert/AFP/Getty Images
Stunning new details were released Friday on the $50 billion scam allegedly hatched by disgraced financier Bernard Madoff. Investor outrage grew as victims got together and fond out that Madoff never even invested their money.
The trustee in charge of untangling the mess left behind by Madoff told a packed auditorium of the investors there was no indication the disgraced financier had bought securities for his clients for over a decade.
"We have no evidence to indicate securities were purchased for customer accounts" in the past 13 years, said Irving Picard, the court-appointed trustee overseeing the liquidation of Bernard L. Madoff Investment Securities LLC.
"They say misery loves company, but it doesn't really make me feel a lot better," says Madoff investor Sharon Lissauer.
Lissauer and numerous other victims got a better idea what's left for them Friday after the disaster that may wind up being the world's dirtiest Ponzi scheme.
"I thought it was a very informative meeting," said investor Burt Ross, who lost $5 million, but was glad to know he'll be getting a few hundred thousand back.
"I have that money spent. I'm gonna pay off the mortgage on my house so I can't wait to get that check in the mail," Ross said.
Despite learning that some of their missing funds will be returned to them, many say they won't believe it til they see it.
"I don't know. I don't know how long it will take," said Lissauer. "I'm not very hopeful."
The Securities Investor Protection Corporation, or SIPC, is funded by the brokerage industry and will reimburse investors who lost up to half a million dollars.
Madoff clients who lost more than that will share what's left of his fraudulent empire. Investigators say there is now no evidence Madoff actually bought any stocks or securities for his clients.
Instead, he just took the money.
Detailing the scope of the probe, Picard said his office and criminal investigators are reviewing a mountain of evidence, including 7,000 boxes of records at a Queens warehouse that go back more than a decade. Sheehan added that investigators are reviewing "thousands and thousands of e-mails" from Madoff's operation.
And the aftermath of this unprecedented collapse could get even uglier because Madoff's victims could soon be pitted against each other, subject to what's called a "clawback."
"If a guy put in a million dollars and he took out two million, he basically has his principal of a million dollars back plus a million dollars in a Ponzi scheme of other people's money," says Madoff investor Yale Fishman.
Susan Labriola's 91 year-old mother made a profit, but it all went to the government.
"All of that money was used to pay income tax with," says Labriola. "And so now she finds herself in the position where she will be possibly owing money."
Even the IRS could find itself caught in this mess. For years, it taxed Madoff's victims on profits that were never real.
The trustee's office has received more than 2,300 claims so far and they expect that number to double.
Anybody who considers themselves a Madoff victim has until July 2 to file their claim.
(© 2009 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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