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Legislative Update: August 2016

Dear NIAP members, Madoff and other Ponzi-Scheme Victims,

Even as victims are feeling increasing pressure from the Madoff trustee who has shown limited flexibility in the mediation efforts, new legislation has been introduced in Congress to provide protection for Madoff, Stanford and certain other fraud victims.

HR 5852, introduced on July 14th by Rep. Blaine Luetkemeyer (R-MO), and co-sponsored by Rep. Carolyn Maloney (D-NY), and House Rules Committee Chairman Rep. Pete Sessions (R-TX), is a slightly scaled-back version of HR3482 and S1725, previously introduced by Rep. Scott Garrett (R-NJ), Rep. Maloney, and Senator Schumer. The legislation has been referred to the House Financial Services Committee.

The “fresh bill”, maintains the key protections of the earlier legislation: it reasserts the SEC’s plenary authority over SIPC, utilizes final account statements as determinants of net equity, protects against the clawback of innocent investors, and provides a funding mechanism for SIPC to finance payments to claimants should the SIPC Fund balance be reduced by more than 50%.

NIAP and the Stanford Victims Coalition (SVC) have continued to work behind the scenes with legislators and staffs to advance the legislation, and the SVC’s victims and leadership continue extensive grassroots involvement with representatives of Stanford victims who hold key positions in key committees. Representative Scott Garrett and his staff have been enormously committed to moving the legislation forward, and should be thanked for the heroic efforts in trying to move the legislation forward against the resistance of SIPC and other entrenched interests.

The bill’s new leadership — Legislators Pete Sessions and Blaine Luetkemeyer — provide fresh faces along with significant clout, and will be working with Leg. Carolyn Maloney to help move the bill forward, hopefully as Congress returns in early September from the summer recess.

Furthermore, the newly expanded lobby team is hopeful that this bill now has overcome the key obstacles in the House. We will need to fund these lobby efforts, something which will be discussed in subsequent communications.

Even before last year’s Senate public hearings, we continued to maintain a low public profile in these efforts, and will likely continue to do so, particularly around the involvement of our new lobby partners. We ask that investors be extremely discreet in this, and also be prepared to assist in the contingency funding necessary to help propel the bill to passage, to be discussed subsequently. (Clients of two attorneys are already extensively involved.)

I have been asked by numerous victims currently engaged in lawsuits with the Trustee regarding advice as to whether to settle and the prospects of passage of the legislation. I/we cannot dispense such advice. This we can say: our lobby team remains cautiously optimistic about passage and we – and our friends at the SVC – are continuing to press the fight. Your patience is appreciated.

Best wishes to all,
Ron Stein, CFP

For more information contact NIAP at:
Phone: (800) 323-9250
Email: admin@investoraction.org

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Madoff accomplice Daniel Bonventre jailed for 10 years

Image caption Bonventre and four others Madoff associates were found guilty of fraud in March. A ex- associate of Bernie Madoff has been sentenced to 10 years in jail for aiding the disgraced Wall Street financier in his $65bn (£42bn) fraud scheme. Daniel Bonventre, 67, was also ordered to forfeit $155bn (£99bn). More in The Telegraph Leader here.

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The federal ‘rescue’ is failing Bernie Madoff’s victims

Seven years ago today, Bernie Madoff was arrested for orchestrating the most devastating Ponzi scheme in US history. Unfortunately, many of Madoff’s victims still haven’t seen the restitution they were guaranteed under federal law. More in the New York Post here.

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EX-MIT Dean and Son to Serve Prison Time for Hedge Fund Scam

A former Massachusetts Institute of Technology associate dean and his son have been sentenced to 3¾ years in prison for a hedge fund scam that cost investors more than $140 million. More on ABC News here.

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Madoff trustee sues Israeli universities, hospitals for $95m

Irving Picard, the trustee appointed to liquidate the assets of convicted Ponzi schemer Bernard Madoff and return money to his victims, has filed a $95 million lawsuit against some of Israel’s largest educational and medical institutions. More in The Times of Israel here.

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Madoff Investors to Get Over $1 Billion in Added Recoveries

Two judges on Wednesday approved a $1 billion-plus payout to victims of Bernard Madoff’s massive Ponzi scheme, including those who invested with New York money manager J. Ezra Merkin. More in the Wall Street Journal here.

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ALERT: H.R. 1982 – New Co-sponsorettlement of H.R. 1982

H.R. 1982: Restoring Main Street Investor Protection and Confidence Act – Congressman Steven Palazzo [R-MS4] has signed on to co-sponsor H.R. 1982. The bill now has 50 cosponsors (40 Republicans, 10 Democrats).

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Jury Says Ernst & Young Liable for Madoff Investor’s Losses

A Washington state court jury on Friday found Ernst & Young liable for millions of dollars in losses a Washington investment firm took from the collapse of Bernard Madoff’s Ponzi scheme. More in the Wall Street Journal here.

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Financial funds linked to Bernard Madoff agree to settlement of $497 million

Two financial funds linked to the Ponzi scheme have agreed to a court settlement to the tune of $497 million. The tentative settlement between the court trustee and Primeo Fund and Herald Fund SPC will only augment the fund size,which is said to total $10.3 billion and which is being used at the moment to repay Ponzi scheme investors and customers. The announcement was made by Irving Picard, the court trustee on Monday. But the agreement still needs the approval of the US Bankruptcy Court. According to Geoffrey North, the court appointed lawyer for Picard, the agreement will help to avoid delay and coststhat are generally the results of a long drawn and controversial court case. More in the Daily News here.

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Thybo Asset Management Settles Madoff Clawback Claim for $46M

Thybo Asset Management, a family office turned hedge fund of funds, has agreed to settle a Madoff-related clawback claim instituted in 2009 by bankruptcy trustee Irving Picard. According to the settlement, which was filed with the U.S. Bankruptcy Court in New York on Friday, Thybo agreed to pay $46.6 million of the original $62 million sought by Picard in allegedly fraudulent transfers during the six years prior to the collapse of the ponzi scheme orchestrated by Madoff through his Madoff Investment Securities LLC. At the same time, Thybo will be allowed a total claim of $186 million against the Madoff estate, from which the $46.6 million will be deducted. More on FinAlternatives here.

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