Madoff Profiteers Scramble From Threat of Clawbacks
New York law allows those who lost money to reclaim from those who gained
By Clay Dillow,  Newser Staff
Posted Mar 12, 2009 10:40 AM CDT
Disgraced financier Bernard Madoff, left, leaves court after a hearing.   (AP Photo)
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(Newser) – The threat that authorities will seek to recoup profits reaped through their investments in Bernard Madoff’s Ponzi scheme have some investors hurrying to put those funds in hard-to-reach places, the Wall Street Journal reports, like homes, trusts or life-insurance policies. So-called “clawback” lawsuits could allow those who were wiped out to access funds—both profit and principal—paid out to other investors.

Those who withdrew money in the 90 days before Madoff’s arrest in December are most susceptible to the suits, while those who invested through “feeder funds” are likely better-protected. And there are hundreds of such investors, the Journal notes, with some having withdrawn larger amounts over the past year to live on as the recession took its toll.