Could a Bernie Madoff Happen Again

Steve Heimoff had never heard of Bernie Madoff, but he lost his $two one thousand thousand nest egg to Madoff'due south Ponzi scheme. Courtesy of Steve Heimoff hide caption

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Courtesy of Steve Heimoff

Steve Heimoff had never heard of Bernie Madoff, but he lost his $ii million nest egg to Madoff's Ponzi scheme.

Courtesy of Steve Heimoff

Steve Heimoff remembers coming domicile from a eating house December 10, 2008, to find an email from a cousin with the words "Bad news" in the subject field line.

The $2 million retirement nest egg he had counted on was suddenly wiped out, as was much of the savings of his relatives, casualties of the multibillion-dollar Bernie Madoff scam that was dominating the headlines.

Long touted equally a Wall Street genius who racked up large gains no matter how the economy was doing, Madoff had merely been arrested, confessing to federal authorities that his investment house was a fraud.

Instead of trading stocks with his clients' coin, Madoff had for years been operating an enormous Ponzi scheme, paying off erstwhile investors with money he got from new ones.

By tardily 2008, with the economic system in free fall, Madoff could no longer attract new money and the scheme collapsed. Hundreds of investors, including numerous charities, were wiped out.

"I but stopped going to restaurants, I stopped buying clothing," Heimoff recalls. "I stopped going on vacations, I stopped going to movies."

Cut spending, contemplating suicide

Today, a court-appointed trustee has managed to recover about $xiii billion, which is near of the money Madoff'due south investors put into his funds. The trustee did that in part by selling off the Madoff family's personal avails, including their homes in the Hamptons, Manhattan and France and a 55-human foot yacht named Bull.

Just for investors such as Heimoff, the Madoff scandal has left permanent scars.

To Heimoff, the revelation that he was among the victims was perplexing at first. He had never heard of Madoff. He and his family had invested their coin with Stanley Chais, a California fund managing director who was known for dazzling returns.

"Nosotros were told it was extremely trustworthy," Heimoff remembers. "It was described to us a 'run a risk-free arbitrage' and that's all nosotros knew."

But as he would soon larn, Chais actually operated several "feeder funds" that invested their money with Madoff, and when Madoff's business firm complanate, then did they.

At 62, Heimoff was of a sudden forced to refinance his condominium in Oakland, California, and severely cutting back on spending. He contemplated suicide. Although he was able to scrape past on the money he had left, Heimoff worried most the future.

"My challenge was not getting along now ," says Heimoff, a wine writer and critic. "My fear was getting old and decrepit. I don't have kids, and my unabridged adult life, part of my motive for doing everything was a fright of beingness sometime and poor in America. That's non a affair that works out too well in this state."

Putting off retirement for 10 years

The Madoff scandal has left a long trail of wreckage that included suicides, lost homes and bankruptcies.

Madoff himself is serving a 150-year prison house sentence at the Butner Federal Correctional Circuitous in North Carolina. Six people who worked at his firm are now serving time, including his brother, Peter. Madoff'due south elder son Mark, a longtime broker at his male parent's house, hanged himself in his Manhattan flat in 2010, on the 2d anniversary of his father's abort. Similar others in the family, he had faced allegations that he knew about the fraud, something he denied.

Others afflicted past the scandal have washed their all-time to move on.

At 58, Michael De Vita was preparing to retire when he learned that the nest egg he had counted on was gone. So was his elderly female parent'due south. Instead, he was forced to render to piece of work for 10 more years, only retiring last August.

Michael De Vita and his mother Emma De Vita lost much of their retirement savings by investing with Bernie Madoff. Courtesy of Michael De Vita hide caption

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Courtesy of Michael De Vita

Michael De Vita and his mother Emma De Vita lost much of their retirement savings by investing with Bernie Madoff.

Courtesy of Michael De Vita

De Vita volition receive 60 to lxx percent of the money he invested with Madoff from the courtroom-appointed trustee, simply that only applies to the principal. He won't exist getting any of those fabulous returns that were supposedly edifice upwardly over the years, which means his retirement income will be less than a third of what he expected.

Nor will he receive much of the federal and state taxes he paid on his illusory Madoff earnings over the years.

In 1 sense is he fortunate: Every bit their bogus returns built upwards over the years, many Madoff clients withdrew funds from their accounts, to pay for retirement expenses or college tuitions, for example. If their withdrawals exceeded the money they deposited over the years, they've been slapped with lawsuits attempting to claw back the funds they received. It's been a painful, bitter experience for them.

De Vita was spared that considering he never took much money out of his funds.

As the years passed, De Vita has fabricated the best of his plight, turning himself into something of an investor advocate. He wrote a book about his experience and teaches a college course nigh the scandal. He also has been active in an organisation of Madoff victims and has lobbied state and federal officials on their behalf.

The Ponzi scheme lives on

Despite promises by lawmakers to aid, efforts to assist Madoff victims accept oftentimes led nowhere, he says.

"There was a lot of feelings dorsum at that time that people who were invested with Madoff, quote, got what they deserved. That the returns were as well proficient to exist true and therefore yous took reward of the organization and, you know what, ha ha, we gotcha," De Vita says.

While that may take been true with some of the investors, many more were similar him, ordinary people who trusted Madoff with their retirement funds and have paid a terrible price.

In Madoff's backwash, a few measures accept been taken to preclude another scandal, like the establishment of a Securities and Exchange Commission program to protect whistleblowers at financial firms, De Vita notes.

Merely Ponzi schemes take continued, albeit on a much smaller scale than Madoff's.

"What happened to us shouldn't have happened," he says. "Can it happen again? I am positive that it will happen again."

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Source: https://www.npr.org/2018/12/23/678238031/for-madoff-victims-scars-remain-10-years-later

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