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Page 1 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
Bernard Madoff was sentenced on June 29, 2009. However, the Court gave us until
September 28, 2009 to determine if it’s possible to repay his victims individually in the exact
amount each is owed.
We’re committed to distributing Madoff’s forfeited assets to the victims quickly. We’re still
reviewing Madoff’s assets along with the trustee in charge of liquidation.
Page 2 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
However, as explained below, it’s difficult to sort through the defendant’s records and the
fraud has gone on for a very long time. We’re asking the Court to agree it isn’t feasible to
assess what each victim is owed in a reasonable amount of time. If the Court officially agrees,
we can pay Madoff’s victims back with his forfeited property and money through the
remission process. [Cancel the original debt and restructure what is to be paid. - UD]
According to law, Madoff must repay his victims. To get this started, the Court determines
what is owed, and establishes a schedule for repayment at the time of sentencing.
The Government then produces the victim’s payments from the defendant’s assets, and
attaches the details to a court order.
Page 3 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
In some cases, it isn’t this simple. There are times when the Court may decide the restitution
method isn’t realistic because there are too many victims, or the case is too complicated to
sort out in a reasonable amount of time. When this happens, the Court can allow the
Government to use the remission method. These two methods are explained below.
Page 4 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
However, compensation doesn’t have to occur at sentencing if the Court sees that:
When this happens, the DOJ is allowed to instead use the defendant’s seized assets as the
basis for payoff. That’s what we’re asking to do in this case.
The Attorney General has the power to compensate victims with property seized from the
defendant using the method of remission.
Page 5 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
The DOJ stands by the policy that victims should be compensated fully, and in a timely
fashion. In a remission procedure, when we seize property in a fraud case, the goal is to
distribute funds proportionately. In Exhibit A, you will see that the chief of the Asset
Forfeiture and Money Laundering Section (AFMLS), Richard Weber, has agreed to work with
us on this.
Page 6 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
To do this, the victims file a petition with the court requesting the amount owed.
The amounts are verified and recommendations are made. In a complicated case such as
Madoff’s, this process might be managed by a Special Master or trustee.
Sometimes the amount owed is more than the amount seized. When this happens, the DOJ
grants a proportionate amount to each victim. Priority can be given to those experiencing a
serious financial hardship. All payout decisions are made solely by the Attorney General after
considering recommendations by the chief of the AMFLS.
Page 7 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
On March 12, 2009, Madoff pled guilty to a variety of fraud offenses, including false SEC
filings and stealing from an employee benefit plan. He’s guilty of running a multi-billion
dollar scheme to defraud thousands of investors. Madoff did this by lying, holding onto funds
rather than investing them as promised, and using investor’s money for his own use and to
give to others. The scheme lasted from at least the 1980’s until December 11, 2008 when he
was arrested.
The crime involved more than $177 billion. Under the law, any property gained from the
defendant’s crime is automatically forfeited once convicted.
Page 8 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
June 26, 2009, the Court agreed to order Madoff to forfeit property. Three days later, Madoff
was sentenced to 150 years in prison, and the forfeiture was officially made a part of this
sentence. Specifically, the Court determined:
In addition, to compensate his victims, the Court gave us a 90 day timeframe to determine:
Page 9 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
Microfilm containing pertinent information dating back to 1979 had to be put into digital
form for analysis. So far, it has uncovered:
Victims: 2,336
Losses: $13 Billion
Page 10 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
The Trustee has had great difficulty evaluating claims. For example, 15,870 victims have
submitted claims to the Trustee. However, Madoff’s records show 8,094 accounts for years
2000-2008. As of the date of his arrest, he shows 4,902 active customer accounts.
The Trustee has received claims from most of the customers listed with active accounts.
83 active customers were actually investors in charge of their own client’s funds.
60% of those investors filed on behalf of their clients.
Some of those clients also filed on their own behalf.
Page 11 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
The investigation by the Government continues, as well as the Trustee’s evaluation of claims.
The investigation includes locating assets that can be used to compensate victims. The Court
ordered Madoff to pay millions through his own personal assets. To date:
I. US Marshals are in the process of selling three of Madoff’s real estate properties.
II. US Marshals are in the process of auctioning Madoff’s yachts and cars.
Page 12 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
Based on all these things, we ask the Court to declare the usual method of restitution to be
unrealistic. This case has too many victims, and is too complicated.
Page 13 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
The Government suggests that these victims can be fairly compensated through remission
using controls established by the DOJ. This has been done in other large-scale fraud cases.
Using this method, we can oversee a process that will return as much of the amount owed to
the victims as possible. The US Attorney’s Office and appropriate agencies will evaluate the
victims’ claims and oversee repayment under the DOJ regulations.
The DOJ regulates how to compensate victims fairly. This has been done in a number of ways
in the past, including proportionate payouts.
Page 14 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
As done in the past, someone needs to review each petition for validity and to establish a fair
payout. In this case, we’re looking at different ways to maximize each victim’s compensation
including the possibility of placing Irving Picard, the current Trustee, in charge of the process.
The DOJ and Trustee would communicate regularly, working side by side to avoid overlap and
to conserve resources.
For all these reasons, the Government asks the Court to declare it impossible to use the
restitution method in this case.
Page 15 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
[SUMMARY ONLY]
The US Attorney for the Southern District of New York is locating all profits made through this
criminal act.
Page 16 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
We look forward to working with you to ensure everything seized is used to compensate
victims appropriately.
Page 17 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending
*Motion/RESTITUTION - MADOFF* Action
Page 18 of 18
PEG_Madoff Restitution 090109
Copyright © 2009 UNLOCKDOCS.COM. All rights reserved. Patent Pending