Protecting Madoff Investors

» Articles » Accounting Articles » Article

March 25, 2014

It is bad enough that most of the people who invested with Madoff will lose a significant amount of their wealth. It is also possible, in fact, likely, that many of the investors who received distributions from Madoff or pulled their money out in time may have to return the money.

When the inevitable bankruptcy engulfs Bernard L. Madoff Investment Securities, the bankruptcy trustee will have the ability to require a return of previously paid distributions to share them with other victims of the Ponzi scheme.

The bankruptcy trustee's ability to seize distributions from what turned out to be a Ponzi scheme is based on the theory of a fraudulent conveyance and may nab even those investors who were innocent victims of Madoff's scheme. This may impact even those investors who received distributions years ago.

The ability of the trustee to get at a person's assets will depend on a number of factors, including the state in which the investor lives and whether the investor is married or single.

A lot of Madoff investors live in Florida, and their residences may be fully protected by Florida law. However, a lot of Madoff investors may be New York "snowbirds" who cannot claim Florida as their state of residence. For these investors and all others, the long reach of the bankruptcy trustee should be a call for immediate action.

Even in a high-profile case like this one, assets may be shielded with proper asset protection planning. Read more at

The material appearing in this web site is for informational purposes only and is not legal advice. Transmission of this information is not intended to create, and receipt does not constitute, an attorney-client relationship. The information provided herein is intended only as general information which may or may not reflect the most current developments. Although these materials may be prepared by professionals, they should not be used as a substitute for professional services. If legal or other professional advice is required, the services of a professional should be sought.

The opinions or viewpoints expressed herein do not necessarily reflect those of Lorman Education Services. All materials and content were prepared by persons and/or entities other than Lorman Education Services, and said other persons and/or entities are solely responsible for their content.

Any links to other web sites are not intended to be referrals or endorsements of these sites. The links provided are maintained by the respective organizations, and they are solely responsible for the content of their own sites.