Ponzi Victims Will Be Tax Nightmare for IRS

Bankruptcy trustee says fraudster's wife received more than she'll admit to

(NEWSER) - The trustee in the Bernie Madoff case sued the swindler's wife today to demand the return of $44 million to bilked investors, Newsday reports. The complaint doesn't allege criminal activity by Ruth Madoff but says she directly received funds from her husband’s multi-billion-dollar Ponzi scheme. Ruth Madoff gave up all but $2.5 million of her assets in a forfeiture deal last month, but she's not protected from lawsuits. More»

Taxpayers may deduct up to 95% of Ponzi losses: commissioner

(NEWSER) - Victims of Ponzi schemes—including those perpetrated by Bernard Madoff and R. Allen Stanford—can claim big deductions on their taxes, the IRA commissioner told lawmakers today. The matter, unclear in the tax code, had been a concern for victims, the New York Times reports. The IRS “is issuing guidance articulating the tax rules that apply and providing ‘safe harbor’ procedures,” Douglas Shulman said. More»

(NEWSER) - Bernard Madoff pleaded guilty this morning to all 11 felony charges against him, saying he was "sorry and ashamed" for his criminal acts. The judge accepted the plea and revoked Madoff's bail, bringing cheers from spectators in the courtroom. Madoff was escorted out in handcuffs and will remain in custody until his sentencing on June 16. He faces a maximum prison term of 150 years. More»

(NEWSER) - Author and Nazi hunter Elie Wiesel, who lost $15.2 million in foundation money and a good chunk of his own fortune to Bernie Madoff, railed today against the “psychopath” financier, the New York Post reports. “He should be put in a solitary cell with a screen, and on the screen, for at least five years of his life, pictures of his victims,” said Wiesel, a Holocaust survivor. “Look what you have done to this old lady." More»

(NEWSER) - Washington may be loaning billions to automakers, but a Detroit lawyer? He has to pay an IRS bill of 5 cents, the Detroit Free Press reports. James Howarth was busy tallying the cost of paying his debt—which is "several hundred percent over the nickel," he said—when the IRS sent a second notice saying they owed him 4 cents. Howarth called an 800 line to clear things up, but hung up after "an inordinate amount of time on hold." More»