Protecting Madoff Investors

Jacob Stein Esq.
January 5, 2009 — 1,521 views  
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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

Jacob Stein Esq.


Mr. Stein is a partner with the law firm Boldra, Klueger and Stein, LLP, in Los Angeles, California. The firm's practice is limited to asset protection, domestic and international tax planning, and structuring complex business transactions. The firm's goal is to provide the highest quality legal work that is usually associated with only the biggest law firms, in a boutique firm setting. Jacob received his law degree from the University of Southern California, and his Master's of Law in Taxation from Georgetown University. Mr. Stein has been accredited by the State Bar of California as a Certified Tax Law Specialist and is AV-rated (highest possible rating) by Martindale-Hubbell.