Dan Rattiner's Stories

Bernie Madoff: Unclaimed Funds, Auctions & $65B Restitution

Every so often the federal government runs an ad in a daily paper listing unclaimed funds. This is the money that the feds send out as checks, which are never cashed. If you’re on the list, it’s your lucky day.

A friend of mine who looks at these ads called me recently to say I was in one, and as a result I got sent a check for about $85 owed me. You get taken off the list when they find you. You get added to the list if new stuff comes along.

Bernie Madoff got added to this list a few weeks ago. I learned of this in an article in The New York Post that said their bushytailed reporters had seen it. Lucky Bernie. Of course the Post contacted State U.S. Attorney Preet Bharara. The money will be tractor-beamed into the pile of funds and possessions that Bharara has been collecting for the victims of Bernie Madoff. The Post also learned from Bharara that Bernie and his wife have recently turned out to be the owners of a wayward diamond tennis bracelet worth $350,000 and a solid gold money clip. So that goes into the pot, too. And there is still more. Bernie and his wife appear on a list of unclaimed funds from J. P. Morgan Chase, and are also listed as being owed stock dividends from Marathon Oil.

So far, Bharara has rounded up about $4 billion. This includes about $4.5 million raised from a series of auctions in 2010 and 2011 that included, among other things, furs, white gold earrings, cufflinks, golf clubs used at a private club in Bridgehampton, a silk New York Mets jacket with Madoff’s name on the back given him by the owner of the Mets, a 2001 Mercedes-Benz used primarily at the summer home in Montauk, and also a long-range telescope Bernie had in his living room to look out at ships at sea. All this Bharara intends to distribute to the victims next year.

This is all separate from $10.7 billion in money rounded up by the court-appointed trustee, Irving Picard, from people doing business with Bernard Madoff Investment Securities LLC over the years. That money has already been distributed.

The total therefore so far reimbursed to the victims is about $11.1 billion. The amount swindled in the Ponzi scheme that unraveled in 2008 was about $65 billion—or approximately the gross domestic product of Bulgaria. So it’s almost 20 cents on the dollar. There are more than 50,000 claimants from around the globe.

When a rich man of this magnitude goes down—I think Madoff is the largest such failure—it sure does take a long time to round up all the things he owned.

At the time of the collapse—Madoff is serving several hundred years in prison—Madoff and his family owned an apartment on Fifth Avenue, a house in Palm Beach and a house in Montauk. All three properties were ultimately sold by the government—the Montauk house, after spirited bidding, to Steven Roth of Vornado for
$9.4 million (above its appraised value), the other two for less than their appraised value, after more than a year.

You can make of that what you want. I like to think that everybody loves Montauk, but New York City and Palm Beach not so much.

For a man who was dealing in tens of billions of dollars (sort of), Madoff’s homes were not particularly lavish. The Montauk house is a modest affair of only 3,000 square feet. It has 4 bedrooms, a fireplace in the living room and a small swimming pool measuring 15 by 30 feet. But it is oceanfront, on the Old Montauk Highway, and down a short driveway through a stand of trees. Sort of a hideaway.

If the collapse of his firm to zero from $65 billion resulted in only $11 billion collected so far, where is the other $54 billion? Some say he buried it under the house in Montauk.

That would explain why that house was sold quickly and for a lot. But so far, nothing has turned up.

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