How Many Madoff 'Victims' Profited?

Last month we half jokingly suggested investors of Democrat sugar daddy Bernie Madoff would be bailed out by the feds. Well, what do you know they're lining up to apply for up to $500,000 from the Securities Investor Protection Corporation, arguably tip money for some who've been swindled hundreds of millions.

Still, an interesting quandary now faces many of those "victimized" by Madoff: Some of them profited from his crimes.

Uh oh.

The many Bernard Madoff investors who withdrew money from their accounts over the years are now wrestling with an ethical and legal quandary.

What they thought were profits was likely money stolen from other clients in what prosecutors are calling the largest Ponzi scheme in history. Now, they are confronting the possibility they may have to pay some of it back.

The issue came to the forefront this week as about 8,000 former Madoff clients began to receive letters inviting them to apply for up to $500,000 in aid from the Securities Investor Protection Corp.

Lawyers for investors have been warning clients to do some tough math before they apply for any funds set aside for the victims, and figure out whether they were a winner or loser in the scheme.

Hundreds and maybe thousands of investors in Madoff's funds have been withdrawing money from their accounts for many years. In many cases, those investors have withdrawn far more than their principal investment.

"I had a call yesterday from a guy who said, 'I've taken out more money then I originally put in, but I still had $1 million left with Madoff. Should I file a $1 million claim?"' said Steven Caruso, a New York attorney specializing in securities and investment fraud.

"I'm hard-pressed to give advice in that situation," Caruso said.

Among the options: Get in line with other victims looking for restitution. Keep quiet and hope nobody notices. Return the money. Or hire a lawyer and fight to keep profits that were probably fraudulent.

No one knows yet how many people will emerge as net winners in the scandal, but the numbers appear to be substantial. Many of Madoff's long-term investors have, over time, cashed out millions of dollars of their supposed profits, which routinely amounted to 11 percent to 15 percent per year.

Jonathan Levitt, a New Jersey attorney who represents several former Madoff clients, said more than half of the victims who called his office looking for help have turned out to be people whose long-term profits exceeded their principal investment.

"There are a lot of net winners," he said.

Indeed there are. Now the question may be were any of them aware of this scheme?

Still unanswered is whether Chuckie Schumer and the Democrats have returned a cent of the hundreds of thousands Madoff so generously lavished upon them.

Nobody seems to care.

The Feds, meanwhile are arguing his bail should be revoked since he was planning on distributing $173 million just as he was busted.

Accused Ponzi scheme king Bernard Madoff had $173 million worth of signed checks sitting in his office desk - which he was planning to mail out to others - when he was busted, prosecutors revealed this afternoon.

The feds cited those approximately 100 checks - which were drawn against investors' funds - in arguing that Madoff should have his $10 million bail revoked, and be jailed pending trial.

"The defendant has shown at this point he cannot be trusted," prosecutors from the US Attorney's Office wrote in a filing with a Manhattan Federal Court magistrate judge.