Madoff Help News & Assistance

Ron Stein

Being a Madoff Victim is not a pleasant place to be. It’s a nasty situation, and it can feel like a lonely and confusing one as well. With lives turned upside down, many folks are wondering what to do and anxious about the future. People are looking for help, for information, for support. If you’re one of these, you’ve come to a good place. Welcome to the community of Madoff Help – we’ll try to provide insight, clarity, and even a bit of humor. You’re not alone anymore.

So where to start? First, settle down. That old claims filing deadline – March 4 – has been crossed off as irrelevant. The real date is 7/2/09. That gives you time to get your materials together, and for all to stop panicking and hopefully get a better sense of options going forward as new information and guidance comes to light.

The reality is that the situation, even after the recent Trustee meeting, remains largely murky, so patience is necessary. Certain things are, however, becoming clear: SIPC, for example, will be required to honor up to a $500,000 (not $100,000) commitment to each account type. That’s good news. The downside is that the claim reimbursements are limited to the money that was put into the account minus whatever was taken out, unless Congress tells SIPC differently. If your money grew over the years, only your principal is eligible for a SIPC claim. If the money taken out exceeded the money going in, you may become a victim once again via “clawback.” Pretty crummy. Keep in mind that much, including the clawback issue, is up in the air.

Unless Congress steps up – which, frankly, they should – investors will probably have to look to the IRS for additional recourse. The chaos is creating a field day for attorneys and accountants – but you’ll probably need them, even if you feel it’s adding insult to injury. We’ll help you there, too.

While there is plenty of information on the Madoff Help site that can assist you, there are six key steps to help you get started coping with what will most likely be an arduous process. Unless your situation is extremely cut and dry – meaning you began an investment in Madoff in 2008 under $500,001 — ultimately getting the right team of professionals together – accounting, legal, financial, and supportive – will probably be important. And there are important deadlines that you need to consider, so don’t delay.

1. Tax Refund Claim: Notice of amending returns of 2005 by April 15
2. SIPC claim forms in by July 2, 2009.
3. Find an attorney
4. Take a financial inventory
5. Get emotional support
6. Get active and advocate!

1. 2005 Tax Refund Claim Deadline. Simple – talk to your accountant, or find one familiar with the Madoff situation. There’s a good chance you may be entitled to amend your earlier returns and be entitled to an IRS refund. Especially if you’re an April filer, talk to your accountant right away so you don’t lose the opportunity to amend your 2005 tax return under the statute of limitations by at least submitting a “protective claim”. (Click here for claim form and instructions). While the problem here is complicated by the fact that the IRS has not provided guidance on this murky issue, get your protective refund claim in now, at least.

2. The SIPC Deadline of March 4 July 2.The Madoff Trustee has formally rendered irrelevant the original March 4 deadline. July 2 is what counts. If you invested directly with Madoff or received individual investment statements from Madoff, you should have received your SIPC claim forms in the mail by now. Even if you invested via a “feeder fund” the Trustee encourages you to file a claim. (If you haven’t received a form, go to madofftrustee.com and download these forms).

At the very least complete the claim form and submit it and the most current Madoff statement. The Trustee has stated that the simplest claims will be processed first, and quickly. Even if you’re not sure if you’re entitled to a SIPC reimbursement or if you don’t have all the initial investment and/or redemptions information together, most of the pros we’re talking with suggest that at least get the claim form and statement in. The Trustee has asked that you provide as much narrative as you can even if you don’t have all the details, and that they can piece the situation together from the records they’ve assembled. If you need help, ask your accountant to help you complete the form. One thing for sure, if you don’t get the claim form in, you won’t receive any SIPC claim!

3. Talk to a qualified attorney.Unfortunately, the entire Madoff situation is complicated even for the pros. Investors who have been receiving income or taken distributions may be subject to “clawback” – the demand for return of redemptions — and should receive legal guidance in the near future. If you’re an investor who placed your investments through a “feeder fund” – or other hedge fund – you should contact an attorney immediately regarding your rights in this regard. See our section on choosing an attorney.

4. Take a financial inventory with an objective financial specialist. For many investors, the Madoff losses will impact their retirement plans, income needs, and estate plans. Investors should sit with an objective, non-commission financial planner – not just their current stockbroker or insurance agent — to determine if they have sufficient resources, evaluate current assets and assist them re-allocating those assets, and help guide them through whatever life changes are necessary. This specialist should be able to work with your existing legal and financial professionals. This is a critical peace-of-mind step. Go to our section on finding a financial professional for more information

5. Get emotional support.Many investors are experiencing extreme grief, anxiety, shame and anger over their situation. Despite diminished resources, it is important that investors reach out to support groups, therapists, and grief specialists to help them through these very difficult emotional times. For many people, it’s too much of a burden to take on alone. See grief specialist Bobbie Comforto’s piece. You’re especially encouraged to participate in the Madoff Help community and share your experiences with others.

6. Get Active, Angry and Advocate!
Turning your frustration, consternation and anger into something productive could be the best thing for you, and other MV’s as well. Madoff was clearly a scoundrel, but pathetic oversight by the government and related regulatory agencies enabled this to happen. Elemental compliance audits would have revealed this fraud early on. Congress and the governing entities can help make this right. Advocate early, and advocate hard. (Contact information and letter templates are available in our Advocacy Section).
Yes, the whole situation stinks, and there’s not much clarity right now. But patience and diligence must overcome the feelings of despair that many victims are struggling with. Don’t allow your anxiety to prevent you from taking important action now and perhaps losing more than you already have or miss out on an opportunity to recoup some of those losses. Take advantage of the professionals you trust or others you can research from the site, and get started right away. Also, become an active part of the Madoff Help community – your input and experiences can be invaluable to helping others in similar situations.

Best of luck, and please get back to us with any thoughts or ideas.

Ron Stein

Contact us at: info@madoff-help.com