Wall Street Speculators Seek To Profit from Madoff Victims' Losses

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About 16,400 claims have been filed by people seeking restitution, but so far the bankruptcy trustee has approved only 2,355. Most claims were rejected, according to Harbeck, because the investors had apparently taken more money out of their Madoff investment account than they originally put in.

According to Harbeck, the trustee has no choice but to ignore the victims' account statements and their supposed profits over the years and pay attention only to how much cash was put in, and how much was taken out.

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"We don't let Bernie Madoff decide who wins or who loses in this matter," said Harbeck of SIPC. "He made up these statements out of thin air and the only realistic measure of how to measure the claims is on a net basis of money in versus money out."

Anger of Madoff Victims

Many of the victims are furious with that method of deciding claims, including Richard Friedman of New Jersey whose 85-year old mother, Shirley, has now been sued by the bankruptcy trustee for money she took out over 17 years.

"She's in poor health, she doesn't have a lot of money left, and we're very concerned that with this law suit it could literally put her out on the street," said Friedman.

Friedman said the plight of his mother may affect his decision to take the offer of $.30 on the dollar for his own account, from which he did not withdraw more than he put in.

"Now that my mother could be completely wiped out, it would give me the money to be able to take care of her," Friedman said. "What am I going to do? I'm sort of being forced against the wall."

The bankruptcy trustee and SIPC say investors have the option of applying for "hardship" status in such cases.

"No one is seeking to get blood from a stone," said Harbeck. "There are people out there who took out money to live on over a period of time, they don't have the financial wherewithal to pay it back, even if they did receive unwittingly money stolen from others."

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Nevertheless, Friedman's mother is one of hundreds of Madoff victims who have been sued by Picard in recent weeks for "clawback" money.

The clawback deadline for Picard's suits is Saturday December 11 at midnight.

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