Junk accounting from Madoff victims

Several organizations that lost large sums of money with Madoff are now pretending their losses aren’t as bad as previously thought because profits Madoff said they made never existed in the first place. Sorry, but this is Looney Tunes accounting.

Sue, who is a CPA, says “they’re thinking like gamblers.” If they put $100 million with Madoff, and his bogus accounting told them its value had climbed to $150 million, then they had on their books at that full amount, and that is the amount they have to write off.

They can sue for the original amount of the investment plus whatever a reasonable return might have been.

3 Responses to Junk accounting from Madoff victims

  1. Sue Sun, Jan 04, 2009 at 6:52 pm #

    They’ve lost their capital plus the opportunity cost, a reasonable return for the use of capital that they would have earned had they put their money to use in a real investment.

  2. woody Mon, Jan 05, 2009 at 2:51 pm #

    Who are they going to sue? According to all sources, he’s broke. Even if he liquidated all his assests, it wouldn’t cover the base of what was invested, yet alone a reasonable ammount. Where is this ficticious money going to come from?

    • Bob Morris Mon, Jan 05, 2009 at 5:56 pm #

      They can sue the feeder funds that funneled money to Madoff, any banks that recommended the investment, and it also appears they can sue anyone who got money from Madoff as investment profits (which never actually existed.)

      Yes, if you got money from Madoff, you may have to give it back.