- Claimants from 119 countries reported aggregate unrecovered net investment losses of more than $40 billion
- The final totals are expected to shrink considerably before payments commence
- "This fraud was of epic, and truly global, proportions”
- The countries with the largest number of claimants are USA, Germany, Italy and France. Eight of the ten countries with the largest number of claims are in Europe
Richard C. Breeden, the Special Master on behalf of the U.S. Department of Justice administering the Madoff Victim Fund (“MVF”), has announced preliminary results for the first stage of the MVF claim process. As of the close of the claim period on April 30, MVF received more than 51,700 claims from investor victims of the fraud at Madoff Securities. Claimants from 119 countries reported aggregate unrecovered net investment losses of more than $40 billion. MVF is the official vehicle for distributing slightly over $4 billion in forfeited assets recovered by the U.S. Attorney for the Southern District of New York from actions against persons involved in the fraud at Madoff Securities.
The claims received have not yet been reviewed to eliminate ineligible, duplicate or overstated claims, which MVF expects to be substantial. In particular, MVF received numerous filings on behalf of banks and other managers of pooled investment vehicles that are not generally eligible to participate. As a result, the final totals are expected to shrink considerably before payments commence. However, the flood of claims submitted to the MVF gives a new indication of the size and global reach of the Madoff fraud.
Special Master Richard Breeden said: “The MVF claims showed a strikingly larger group of victims -- with much larger losses -- than anyone previously knew to exist. Other than the Gobi desert and the polar icecaps, few places on earth seem to have escaped the scourge of this fraud. This fraud was of epic, and truly global, proportions.”
- MVF has received more than 51,700 claims.
- Claims came from victims in 119 countries.
- Projected total claims of more than $40 billion in net investment loss.
- Aggregate net losses are split almost evenly between U.S. and non-U.S. victims.
- Victims submitted more than 3 million pages of backup documentation
MVF received more than 43,500 claims from individuals who did NOT file a claim in the Madoff Securities bankruptcy proceedings. Overall, MVF has received more than three timesas many claims as were filed in the Madoff bankruptcy proceedings (and roughly 20 times more claims as were allowed in the bankruptcy proceedings).
Based on preliminary review, approximately 77.5% of claims were submitted by individuals reporting losses of up to $500,000, while approximately 9.5% of claimants reported losing from $500,000 to $1 million. Approximately 13% of victims reported losses in excess of $1 million.
Mr. Breeden noted: “We have to eliminate ineligible or overstated claims before we can have an accurate picture of the losses. Nonetheless, it appears that at least twice as many investors as previously thought lost money in the Madoff fraud, with losses running many billions larger than previously documented. By far the greatest number of victims report that they have not recovered anything since the fraud. For many of those individuals, the forfeiture program can be a true lifeline.”
The wide dispersion of claims from around the world indicates that the Madoff fraud may be the most global fraud in history.
- MVF received claims from victims in 119 countries or autonomous jurisdictions.
- In 50 jurisdictions investors reported an average loss of more than $500,000 per claim.
- In 28 jurisdictions investors reported an average net loss of more than $1 million per claim.
- The largest number of claims from any one country came from residents of the United States, with roughly 58% of claimed losses. However, almost 62% of the persons filing claims reside outside the United States.
- Victims in 24 countries reported a higher average loss per person than occurred in the United States.
The ten countries with the largest number of claimants were (in descending order):
- United States
- The Netherlands
- United Kingdom
Claims came from countries on every continent other than Antarctica. There were 26 countries or jurisdictions in which there were at least 100 claimants. In addition to the United States, Canada and Mexico in North America, MVF received claims in the Americas from Brazil, Argentina, Chile, Uruguay, Paraguay, Venezuela, Colombia, Peru, Ecuador, Bolivia, Guatemala, Panama, Costa Rica, El Salvador, Honduras, Nicaragua and Belize. MVF also received claims from numerous Caribbean states.
Eight of the ten countries with the largest number of claims were in Europe. However, there were claims from virtually every member state of the European Union. Claims also came from Russia, Kazakhstan and Georgia.
In the Asia/Pacific region, claims came from victims in China, Malaysia, Thailand, Singapore, Hong Kong, Taiwan, South Korea, the Philippines, Indonesia, Vietnam, Cambodia and both Australia and New Zealand. Claims also came from victims in India and Pakistan.
In the Middle East and Africa, claims came from victims in Kuwait, the United Arab Emirates, Qatar, Bahrain, Saudi Arabia, Oman, Lebanon, Turkey, South Africa, Kenya, Egypt, Zimbabwe, Zambia, Mozambique, Angola, Nigeria, Ghana, Senegal, Benin, Cote d’Ivoire, Liberia, Mauritius, Morocco, Algeria and Madagascar.
Locations that are often thought of as particularly low tax jurisdictions were also well represented. Claims came from such locations as Monaco, Gibraltar, Andorra, Lichtenstein, the Channel Islands, the Isle of Man, Cyprus, Malta, the British Virgin Islands, Bermuda, the Bahamas, Curacao and the Cayman Islands. Since many of these claims relate to persons who actually reside in other countries, our initial claims data per country may understate the number of victims in certain countries.
Many victims have not yet recovered anything
Mr. Breeden noted that more than 36,000 claimants reported to MVF that they have not received even $1.00 in recoveries from any source. “Tens of thousands of victims have not had any prior recovery for their losses, and for many of them, MVF is the only potential source of a recovery. We hope to make a meaningful difference for all victims, and especially for those who have not previously recovered any of their losses.”
After all claims are reviewed, Mr. Breeden and MVF will recommend specific action on each claim to the Department of Justice, which makes all final decisions. The DOJ retains the discretion to amend its requirements or standards at any time, or to deny any claim that does not meet its criteria. The timing of distributions from MVF will be determined after claims are reviewed.