Small-time Madoff investors ask judge to decide what they should get
By Jeff Ostrowski | August 03,2012
WEST PALM BEACH, Fla. — For nearly 200 victims of Bernard Madoff, the battle to get their savings back didn’t end when a court-appointed trustee approved their claims that they lost $12.5 million to history’s biggest Ponzi schemer.
Unable to agree on how their payments will be calculated, the small-time investors — most of them residents of Palm Beach and Broward counties — have asked a Palm Beach County judge to settle the matter.
At issue are two competing methods of calculating losses to Madoff. One method is to rely on the account balance on investors’ statements just before Madoff’s scam collapsed. Using that calculation, the 191 investors in S&P Partnership and P&S Partnership are owed $63 million.
The other method is to calculate investors’ actual losses. So if someone wrote a check to Madoff for $50,000 and received $50,000 in payments over the years, that investor would be owed nothing. That’s the calculation used by trustee Irving Picard as he decides how much to return to Madoff’s victims. For the S&P and P&S investors, that yields a loss of $12.5 million.
Complicating the matter for the 191 investors: Their partnership agreements say they’ll be repaid for losses based on the balances on their account statements, not on the amount they invested.
The 191 investors can’t agree on which calculation to use.
“It breaks down on people’s self-interest,” said Helen Chaitman, a New York attorney representing the investors. “Everyone wants their money back, everyone’s been hurt, and everyone tends to see it only their way. It’s just human nature.”
Fearing she’d be sued if she took sides, Chaitman turned the matter over to Boca Raton attorney Erika Deutsch Rotbart. She filed a suit last week asking a Palm Beach County court to settle the matter.
While Madoff’s victims included celebrities and titans of industry, there are no household names among the S&P and P&S partners. Most put $50,000 to $100,000 into their Madoff investments, Chaitman said.
Madoff, who owned a house in Palm Beach, is serving a 150-year sentence at a federal prison in Butner, N.C. Madoff’s brother, Peter, who worked at his firm, faces up to 10 years in prison after pleading guilty to charges of conspiracy and falsifying records.