Madoff Charged in $50 Billion Fraud at Investment Advisory Firm

Investors in Bernard L. Madoff's giant $50 billion self-declared Ponzi scheme may have a lot more to lose than they think.

Those who redeemed all or part of their investments in Madoff's investment advisory business could be forced to return the money if it is found they had an inkling fraud was taking place. An investor can only keep money that was withdrawn if it was done in good faith.

"If the person requested the redemption and got it because they thought the fund was going under, it was not taken in good faith," says Stephen J. Nelson, a corporate attorney and partner at the Nelson Law Firm LLC.

"There will be some effort to claw money back from investors who redeemed at least in the last two or three years," he says. "The doctrine the plaintiffs will use to do that is fraudulent conveyance. But how the facts will shake out, no one knows."

Lawyers will be looking at who got money and who didn't to figure out if money that was transferred was done so fraudulently. "It appears that there were no profits, so investors might have gotten back money they weren't entitled to. It could have been someone else's money," says Nelson. "My guess is that this will end up in the bankruptcy court."

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[Source: WAR ON YOU FORUMS