Those Who Lost Savings Find Little Comfort

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Those Who Lost Savings Find Little Comfort

Published: March 10, 2009

For those who lost everything to Bernard L. Madoff, news that he plans to plead guilty and face life in prison brings little comfort.



Times Topics: Bernard L. Madoff“While I am glad that Madoff is pleading guilty and will serve a life sentence, I hope he is incarcerated with other rapists, not fellow scam artists that can laugh about the frauds they perpetrated,” said Richard B. Shapiro, 55, a former real estate developer from Los Angeles who invested nearly his entire life savings with Mr. Madoff.

After learning of Mr. Madoff’s crime on Dec. 11, Mr. Shapiro said he went into a “deep depression,” did not leave his house for nearly a month, and lost 30 pounds fearing that his wife and children would be left homeless.

Prosecutors revealed on Tuesday some new details of the fraud and said that Mr. Madoff had not made any deal for a lighter prison sentence in return for his guilty plea.

The possibility of such a deal had provoked outrage from many victims, including Mr. Shapiro, who wrote dozens of impassioned letters to the court in recent weeks.

“I had no desire to live, no prospects of earning a living, no way to pay the bills,” he wrote in a letter submitted to the Federal District Court. He has put his house up for sale, cut back on discretionary expenses and is now back to working seven days a week after retiring four years ago.

“More importantly, I hope that as part of any plea, he has to disclose where the money is, where it went, and that his family is forced to live comparable to many victims; poverty and despair,” Mr. Shapiro said.

Many victims said they were still left with many questions about who else was involved and what happened to the money they had sent to the firm over the years.

“Is there anything left?” asked one victim from New Jersey whose family invested its entire retirement savings with Mr. Madoff. “I don’t understand how this fraud could have gone on so long without something left over.”

Others asked why Mr. Madoff was the only person named on Tuesday and what role, if any, the rest of his family and others played in the fraud. Many continued to fault the Securities and Exchange Commission and other regulators for not catching the scheme earlier.

“What is our government going to do for us considering the S.E.C., who we pay to catch fraud, dropped the ball?” said Diane Peskin, who has gone back to work as a substitute teacher in Bethlehem, Pa., after losing her family’s life savings with Mr. Madoff. “This man and the S.E.C. has destroyed thousands of people’s lives.”

Most of the victims are focused on recovering at least some of the money they lost.

The Securities Investor Protection Corporation and Irving H. Picard, the court-appointed trustee charged with liquidating Mr. Madoff’s former operations, have identified more than $1 billion in assets so far that can be divided among investors.

That figure includes securities owned by his brokerage firm, cash found in firm bank accounts and proceeds from the sale of some corporate property, like artwork and office equipment. Mr. Picard cannot seize the family homes that secure Mr. Madoff’s bail until his criminal case is resolved.

But by law, Mr. Picard must try to recover substantial withdrawals from the fraudulent accounts in the last several years. That has raised fears among investors who took more from their accounts than they had invested, thinking the money was a legitimate gain, and who could be sued for money they no longer have.

Stephen Harbeck, president of SIPC, said that checks would be sent out to at least 10 investors in the coming weeks. SIPC, a group financed by the securities industry that steps in when brokerage firms fail, will pay up to $500,000 per account to investors to help cover losses.

“Madoff is not my main concern now,” said Richard M. Friedman, 59, of Jericho, N.Y., who has filed a claim, hoping to recoup some of the $3 million he lost. “Whether he goes to prison for 10 years or 150 years, it is unrelated to the damage he caused in the lives of thousands of victims.”

Diana B. Henriques contributed reporting.