A blow has been dealt to the victims in the ongoing Bernie Madoff saga—this time from an appeals court.
The court ruled yesterday that Madoff’s victims may only file insurance claims for money they actually lost, not the losses shown on fraudulent account statements that Madoff created to cover his illegal activity.
Quick refresher: In December 2008, Madoff was arrested for securities fraud after he masterminded one of the largest and longest-running Ponzi schemes in U.S. history. In the end, he cheated his clients out of between $18 billion and $20 billion, according to the trustee working to recover funds for victims. Madoff pleaded guilty to the charges in 2009 and is currently serving a 150-year sentence.
In 2010, several corporate entities including Jacobson Family Investments filed suit against Madoff’s primary policy holder, National Union Fire Insurance Company, for $50 million in losses. In addition to that, it sued excess coverage policies from several other Madoff insurers.
But an appeals court put the kibosh on the suits when it said the entities couldn’t claim more than $100 million in total losses because the losses reported by Madoff were based on false profits designed to cover his fraudulent activity.
“It is not reasonable to claim that the revelation that an asset, once thought to exist, did not exist, constitutes a ‘loss,’” wrote Justice Angela Mazzarelli for a unanimous five-judge panel.
Read more about this story on Thomson Reuters.
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