Why Mystery Madoff victims would rather leave $2.5 billion unclaimed after ponzi scheme collapsed. Who owns these Hedge Funds

Photo: Reuters
Bernie Madoff's Ponzi scheme collapsed leaving $20billion to be returned to investors, but $2.5billion has not been claimed

Total of $20billion is waiting for investors caught out by Bernie Madoff  ...$17.5billion has been returned or is being claimed - leaving $2.5billion, eight years after!

Affected Funds 'knew or should have known' about Ponzi scheme but ignored lawsuit ...one lost $1.07bn and withdrew $1bn two years before Madoff was arrested

Another lost $147million and never asked for it back, had withdrawn $180million just months before Madoff was busted

When Bernie Madoff's Ponzi scheme collapsed in 2008, investors who had lost out to the fraudster came forward to collect their share of the $20billion pot he had accumulated.

Eight years later, $17.5billion has either been handed back to victims or is in the process of being claimed - leaving a rather large sum unaccounted for.

In true Madoff-style, the truth behind the mystery $2.5billion has a murky explanation. Around $1.2billion of that massive sum can be traced back to two Caribbean hedge funds, Bloomberg reported.
The reason the people who invested in those funds did not attempt to claim their money back is not known.

However, when claims were first filed for a share in the Madoff fund, affected investors were only getting back four or five cents on the dollar.

This has now changed to somewhere nearer 50 cents, but legal experts say people with dubious financial histories may have been unwilling to expose their accounts to officials for such a meager payout.

Richard Scheff, a former federal prosecutor, said: 'What's the downside of putting a claim in and seeing what happens, unless somebody doesn't want their own affairs being scrutinized?'

Harley International (Cayman) Ltd., managed by Euro-Dutch Management Ltd., invested more than $2billion in Madoff's scheme.

ew around $1.07billion two years before the law caught up with Madoff, but has not asked for the remaining $1billion to be returned.

Irving Picard, the trustee responsible for returning the $20billion to its rightful owners, sued now-liquidized Harley in 2009.

Photo: Bloomberg/Getty
Eight years later and $17.5billion has either been handed back or is in the process of being claimed - leaving a rather large sum unaccounted for. Pictured, Irving Picard, who is responsible for returning the $20billion to investors who lost out to Madoff

Picard claimed the fund 'knew or should have known' Madoff was a fraud and demanded the $1.07billion taken out of the fund was handed over to the authorities. 

Harley ignored the suit and never claimed for the missing $1billion. A judge awarded Picard the money but he has not been given it and at present looks unlikely to ever receive it. 

A lawyer for Picard, Elizabeth Scully, told a court in 2010 that Harley 'made a strategic decision not to appear in this jurisdiction'.

A legal representative for Harley refused to say why no claim had been made.

Anthony Inder Rieden, Euro-Dutch's CEO, told Bloomberg 'it shouldn’t be too difficult to figure out why Harley didn’t file a claim'. 

British Virgin Islands-based hedge fund Vizcaya Partners chose not to claim $147million from the Madoff liquidation, according to court records seen by Bloomberg.

Like Picard, it ignored a lawsuit concerning $180million withdrawn from the Madoff scheme in the run-up to his arrest.

Vizcaya later paid a $25million settlement and did not comment on why no claim had been made for the rest of its investment.

It is not a crime in itself to not submit a claim for lost investments. 

So far, more than $11billion has been returned to investors.

Madoff's Ponzi scheme spanned decades, leading customers to believe they were earning a total of more than $64billion in profits.

The 77-year-old pleaded guilty after his scheme was foiled in 2008 and is serving a 150-year prison term.

Credit: Dailymail

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