The Mystery Madoff Victims Who Left $2.5 Billion on the Table
By Erik Larson
March 4, 2016 — 5:00 AM EST
Ever since Bernie Madoff’s Ponzi scheme collapsed in 2008, it’s been much-rumored that investors included tax dodgers shielding money from the IRS, drug dealers who laundered proceeds through the con man and wealthy moguls hiding assets from ex-spouses.
After all, the scheme wiped out $20 billion of investors’ money, but the victims’ claims for repayment total just $17.5 billion.
Who would walk away from $2.5 billion, and why?
Part of the answer may be far less mysterious or dubious than thought.
Almost half of the unclaimed money can be traced to a couple of Caribbean-based hedge funds. Their reason, while unknown, may have amounted to a calculated decision that any recovery on their $1.2 billion of claims would be tiny compared with what they might be forced to give back if they got tangled up in U.S. courts, according to lawyers familiar with the recovery process.
As for the remaining $1.3 billion in unclaimed money, experts are left to ponder. Unlike the two funds, these are likely individual investors who had a variety of reasons to shy away from the claims process, especially at a time when victims were expecting to recover only 4 or 5 cents on the dollar, legal experts say.
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http://www.bloomberg.com/news/articles/2016-03-04/the-mystery-madoff-victims-who-left-2-5-billion-on-the-table