Martin Lee @ Sg
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Court Rules on Madoff Losses

In an appeal ruling, the court has affirmed the method of determining how much investors can recover of their money lost in the Madoff ponzi scheme.

Fictitious profits would not be counted as monies to be returned to investors. Only the original capital should be counted in determining how much money is owed to investors.

Earlier investors who had redeemed their investments with profits would need to return their profits.

If this kind of approach is taken for the various scams that had occurred in Singapore, those early investors would have needed to return their profits.  This will put a strong deterrent on people who invest into schemes knowing that they are Ponzi like in nature. But I think this is something that will never happen here.

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5 comments
Steve F says 7 years ago

I think it’s fair as well. Early investors often get commissions for recommending others. They effectively prop up and support the scams through this behaviour. Timing should not affect justice although normally it does.

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Lee Mei May says 7 years ago

The situation in Singapore/Malaysia is open to these scams as dubious schemes are allowed to operate freely until they are not able to meet their obligations and by that time the operators of the scheme had already creamed off the money. There are so many companies that operate schemes which uses later investors’ fund to pay off earlier investors that this kind of businesses run into billions of dollars. The authorities should have the right to query how these companies are making the money to pay their investors and use this right stringently. Goldcos which have no income other than the profit from selling the gold should be scrutinised thoroughly as so many have failed leaving their customers high and dry such as Tig Net, TGL, et el.

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Jason says 7 years ago

Hope it will never happen here, else the local Singaporean will always think that every of their investment will be protected. This will prompt even more ponzi or scam scheme to be started here like profitable land because investor will lax thinking Govt will help to recover their investment will things go wrong.

Majority of local Singaporean likes to assume that whatever investment that is sold in Singapore MUST be approved and monitored by MAS. No choice, we were brought up in an overly protected society in the past.

We have to learn to do our own diligence when comes to making an investment and not driven by greed.

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    Martin Lee says 7 years ago

    Dear Jason,

    My point is not on the protection to investors. There is nothing much to recover from if the defaulted company has no assets left. But the early investors who made money would have to return their profits. I think this is fair.

    Next time there is a ponzi with returns that sound too good to be true, people will be skeptical in investing as they know they will need to return all their profits if it really turns out to be a scam.

    Reply
      Jason says 7 years ago

      Dear Martin,

      Every action can generate several implication. If Govt assist to recover the money, a precedence has been set. When the next potential ponzi came to town, people will lax, driven by their own greed and on the back of their mind, they thinking Govt will recover their losses, and will fall into the same kind of scam again.

      Ponzi scheme is not new. It happen over and over again by people still fall into it. Why? Because of GREED. Only when people feel the pain, they will be careful when investing and they can share their valuable experience with their family and children.

      Look at US, this is not the first bail out by their Govt when their banking or investment firms created serious mistakes in investment and after these several bail out, it has resulted the country to go bankrupt. You can see the history of US Govt bailout here:

      http://www.propublica.org/special/government-bailouts

      The money recovered from the Madoff should be donated to the charities and helping the poor people in US.

      Reply
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