|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
Madoff Flameout May Burn Those Who Got Out Early, Too, Trustee May Probe Redemptions Going Back As Far As Six Years; 'Fair Game'
Staff Writer
FinancialWeek/Reuters. December 17, 2008
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EXCERPT: Disgraced money manager Bernard Madoff’s suspected $50 billion fraud scheme looks set to burn even those who pulled their investments out long before the scandal rippled into the global financial system. Such investors may have counted themselves fortunate, withdrawing their money years ago to buy a house or to pay for a daughter’s education, and may have even sighed with relief because they ended ties with Mr. Madoff long before the scandal erupted late last week. But they, too, could face trouble, lawyers say. Because of a legal concept known as “fraudulent conveyance,” they could be forced to return their profits and even some of their initial investments to help offset losses incurred by others entangled in the long-running Ponzi scheme. “There were no profits. It was just other people’s money,” said Brad Alford, who runs investment adviser Alpha Capital Management LLC in Atlanta. Mr. Alford is well versed in fraudulent conveyance after one of his clients withdrew money from a $450 million scheme by Connecticut hedge-fund company Bayou Group a year before it collapsed in scandal. “We ended up settling with the estate, giving back all the profits and half of our principal.” Bankruptcy-receivership practices make all investors vulnerable, he added. “Once they can go into bankruptcy they can go back six years. Anything past your principal, I’m guessing, is fair game to be brought back in.” […] “In this case, because of the magnitude of the losses and the scope of the great number of people who were defrauded, this could be a situation where people say ‘you know we are just going to draw the line here at six months or at one year or at this,’” he said. “But that’s not certain. You really are working with people who have obligations,” he said. |
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