Association of Certified Fraud Examiners Dallas:Ft. 23rd Annual Fraud Conference Tim Murray Slide Show

Victims Organizations Legislative Initiatives
Attempts to Right the Wrong
Thursday, May 16, 2013
Initial Shock
Bernard Madoff is arrested on one count of securities fraud
for allegedly operating a multi billion dollar Ponzi scheme on December 11, 2008, one day after he confesses to his sons. questions that will impact the rest of their lives Are there any securities left in their accounts Will SIPC be there to provide immediate funds Are any assets left at Madoffs rm, if so, how long to
accumulate assets, and who gets compensated What action will the government take assist investors
Shocked investors starved for information seek answers to
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Thursday, May 16, 2013 2
Source: www.madofftrustee.com
Grim Reality
Shocked investors starved for information seek answers to
questions that will impact the rest of their lives Are there any securities left in their accounts?
Will SIPC be there to provide immediate funds?
Indirect investors (those invested through feeder funds, funds of funds,
and self-directed retirement vehicles) are determinedby the Trustee not to be customers. Some direct investors ultimately receive funds (though hardly immediate) but all account statements are ignored by the Trustee.
No, decades of account statements prove to be fake. Madoff never

executed any trades in the investment advisory business.
Are any assets left at Madoffs rm, if so, how long to accumulate
assets, and who gets compensated? Any remaining assets estimated to be work several hundred million
dollars, may become available through litigation, but this could take years.
What action will the government to assist investors?

Multiple pieces of legislation have been proposed. None have gotten out
of Committee.
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Victims Groups
Who are the members
Anyone who invested with Madoff either directly or
indirectly through feeder funds Proof of investment required (to exclude press and attorneys
Purpose of the groups
Share information Solicit members who are willing to talk to the press Organize multiple congressional letter writing
campaigns Organize members when events occur
Public Websites (e.g., www.investoraction.org)

Provide information and guidance about legislation and
litigation Serve as a conduit to share media reports
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Madoff Survivors and NIAP

Shortly after the frauds discovery, the U.S. attorney obtains
and publishes a list of direct investors, including investor names and address, the beginning of a media onslaught.
January of 2009 Madoff Survivors is formed as an on-
line forum for Madoff victims, using the Google Groups platform. NIAP (Network for Investor Action and Protection) was formed in
late 2009 as a 501 c3 and 501 c4 (which allows for lobby efforts). The book The Club that No One Wanted to Join was born of that group. Both work to educate the investing public about the risks associated with investing in the securities industry, details of the Madoff situation, and to secure legislative action to ensure fairness for all ponzi scheme victims. NIAP has been working with a DC lobbying rm working probono to assist in legislative initiative on the hill.
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Madoff Customers Mobilize

Massive letter writing campaign aimed at House
and Senate Banking Committee members.
Media forums and information sessions Frequent electronic and media interviews Website development to share information with
investors, the public and the press
The Club No One Wanted to Join Attend hearings
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Government to the Rescue
Many pieces of legislation have been put forward by well-meaning (?) legislators. Hearings are held, legislators grandstand for cameras, but not one bill has left Committee
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Government Assistance
Madoff fraud victims and other victims of Ponzi
schemes enjoyed a rare but welcomed ruling:
In March 2009, the IRS Commissioner approved Rev Proc.
2009 -- a safe harbor treatment for investments that were then deemed to be fraudulent This allows Ponzi crime victims to recover 5 years of back taxes paid on those fact 1099s but ONLY ve years.
When SIPC denied the majority of the claims tax
returns were amended and refund claims to the IRS for theft losses increased by some 300 million. Thus the broker-dealer community's responsibility was passed on to the American taxpayer and the states Departments of Revenue.
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Too Good to be True?

Those complicit in Madoffs crimes did receive outsized
returns. While the innocent investors received returns lower than American Mutual, Fidelity, Vanguard and others for the same period. Madoff knew that frauds that pay extraordinary returns attract attention and do not last for decades. from 120% to more than 550% from 1996 through 1998, and 950% in 1999. According to a June 28, 2009, MSNBC article, that would make the Picowers the biggest beneciaries of Madoff's scam, exceeding even Madoff himself. (Picowers widow settled with federal authorities for $7.2 billion.)
Jeffry Picowers accounts showed annual returns ranging
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Too Good to be True?

Trustee, Irving Picard indicated that out of the less
than 5,000 Madoff brokerage accounts there were 245 special accounts that belonged to family and friends, including Picower, Stanley Chais and others.
The Club no One Wanted to Join Madoff Victims in Their Own Words pgs. 214 215
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List of Proposed Legislation

Bill Number HR 2798 HR 1159 HR 3817 S. 3166 HR 5032 HR 5058 HR 6531 HR 757 Date of Introduction 2/10/2009 2/24/2009 10/15/2009 3/15/2010 4/15/2010 4/15/2010 12/16/2010 02/17/2011 Bill Sponsor Arcuri NY Meek FL Kanjorski PA Schumer NY Ackerman NY Pascrell-NJ Garrett NJ Garrett NJ Objective or Bill Name Increase SIPC Coverage Net Operating Loss Carryback 5 yrs to 10 yrs The Investor Protection Act of 2009 Ponzi Scheme Victims Bill of Rights Act of 2010 Ponzi Scheme Investor Protection Act of 2010 Ponzi Scheme Victims Tax Relief Act of 2010 Equitable Treatment of Investors Act Same as 111-6538, but for new Congress Equitable Treatment of Investor Act (Marker Legislation for 113rd) Congress no new bill as yet) 12
HR 6659
12/20/2012
Garrett NJ
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Equitable Treatment of Investors Act

The Equitable Treatment of Investors Act amends
The Securities Investors Protection Act (SIPA) of 1970.
The last signicant amendment was in 1980 when

the limit of protection was set at $500,000 -- an amount equal to $1.4 million in todays dollars.
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Key Elements of the Equitable Treatment of Investors Act

NET EQUITY BASED ON LAST STATEMENT What your broker owes you less what your owe your
broker, as per the SIPA. This essential to a system that does not include the
possession of actual security certicates but only a "book entry" system based on the essential trust of account statements
TREATMENT OF CERTAIN COMMODITY FUTURES
CONTRACTS Adds claims for commodity futures contracts where now none exists There is currently no protection in place as the customers of
MF Global are painfully aware.
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RELIANCE ON FINAL CUSTOMER STATEMENT Customers of registered brokers are entitled to rely on
their customer statements as evidence of what their broker owes them. SIPA was put in place to insure the reasonable expectations
of investors.In a world where customers no longer hold physical securities, how could it be any other way
COMPENSATION FOR TRUSTEE AND ATTORNEY Gives
the court authority to approve fees and costs as in a regular bankruptcy
TIMING OF SIPC ADVANCES SIPA calls for timely payouts in fact, timely occurs 7 times in the statute.
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PROHIBITION ON CERTAIN RECOVERIES
The trustee may not recover property transferred by the debtor
to a customer
APPOINTMENT OF TRUSTEES
Provide a list of qualied candidates to the Court who will make
the nal decision. As it stands, SIPC chooses the same trustees over and over.
COMMISSION AUTHORITY TO REQUIRE SIPC ACTION

The SEC may require SIPC to discharge its obligations In the
event of the refusal to commit its funds or otherwise to act for the protection of customers of any member of SIPC.
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List of Passed Legislation
And we all should be very concerned about the safety of our investments Now and in the future.
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Legislation
Cong Scott Garrett (R-NJ) has been the most
active.
Working with NIAP and the lobby rm, he has written
letters and demanded answers from the SEC and SIPC and caused the General Accounting Office to undertake an investigation into SIPC.
Whats ahead?
NIAP is now partnered with the Stanford Victims Coalitions there is strength in numbers.
For status updates, and additional information,

visit www.investoraction.org
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Contact & Social Media Tim Murray
Network for Investor Action & Protection http://www.investoraction.org/ Investor Protection Channel on YouTube www.tinyurl.com/InvestorProtection Google tp1murray Email tp1murray@me.com
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Association of Certified Fraud Examiners Dallas:Ft. 23rd Annual Fraud Conference Tim Murray Slide Show

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Association of Certified Fraud Examiners Dallas:Ft. 23rd Annual Fraud Conference Tim Murray Slide Show

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Victims Organizations Legislative Initiatives

Attempts to Right the Wrong

Thursday, May 16, 2013

Shocked investors starved for information seek answers to

No, decades of account statements prove to be fake. Madoff never

What action will the government to assist investors?

Purpose of the groups

Public Websites (e.g., www.investoraction.org)

Madoff Survivors and NIAP

January of 2009 Madoff Survivors is formed as an on-

Madoff Customers Mobilize

The Club No One Wanted to Join Attend hearings

Government to the Rescue

When SIPC denied the majority of the claims tax

Too Good to be True?

Jeffry Picowers accounts showed annual returns ranging

Too Good to be True?

List of Proposed Legislation

Equitable Treatment of Investors Act

The last signicant amendment was in 1980 when

Key Elements of the Equitable Treatment of Investors Act

TREATMENT OF CERTAIN COMMODITY FUTURES

Key Elements of the Equitable Treatment of Investors Act

COMPENSATION FOR TRUSTEE AND ATTORNEY Gives

the court authority to approve fees and costs as in a regular bankruptcy

Key Elements of the Equitable Treatment of Investors Act

COMMISSION AUTHORITY TO REQUIRE SIPC ACTION

List of Passed Legislation

For status updates, and additional information,

Contact & Social Media Tim Murray

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