Beginning Next Week: InsideCounsel will become part of Corporate Counsel. Bringing these two industry-leading websites together will now give you comprehensive coverage of the full spectrum of issues affecting today's General Counsel at companies of all sizes. You will continue to receive expert analysis on key issues including corporate litigation, labor developments, tech initiatives and intellectual property, as well as Women, Influence & Power in Law (WIPL) professional development content. Plus we'll be serving all ALM legal publications from one interconnected platform, powered by, giving you easy access to additional relevant content from other InsideCounsel sister publications.

To prevent a disruption in service, you will be automatically redirected to the new site next week. Thank you for being a valued InsideCounsel reader!


Madoff victims can only file claims for actual losses

Appeals court said inflated profits were fictitious, Madoff’s attempt to hide scheme

A blow has been dealt to the victims in the ongoing Bernie Madoff saga—this time from an appeals court.

The court ruled yesterday that Madoff’s victims may only file insurance claims for money they actually lost, not the losses shown on fraudulent account statements that Madoff created to cover his illegal activity.

Quick refresher: In December 2008, Madoff was arrested for securities fraud after he masterminded one of the largest and longest-running Ponzi schemes in U.S. history. In the end, he cheated his clients out of between $18 billion and $20 billion, according to the trustee working to recover funds for victims. Madoff pleaded guilty to the charges in 2009 and is currently serving a 150-year sentence.

In 2010, several corporate entities including Jacobson Family Investments filed suit against Madoff’s primary policy holder, National Union Fire Insurance Company, for $50 million in losses. In addition to that, it sued excess coverage policies from several other Madoff insurers.

But an appeals court put the kibosh on the suits when it said the entities couldn’t claim more than $100 million in total losses because the losses reported by Madoff were based on false profits designed to cover his fraudulent activity.

"It is not reasonable to claim that the revelation that an asset, once thought to exist, did not exist, constitutes a 'loss,'" wrote Justice Angela Mazzarelli for a unanimous five-judge panel.

Read more about this story on Thomson Reuters.

For more InsideCounsel stories about the Madoff scandal, see:

Madoff trustee tries to block investor settlement

Former Madoff employee pleads guilty to decades of fraud

Madoff victims receive largest payout yet

Madoff trustee can pay victims $2.4 billion

Madoff trustee asks for $2.4 billion for victims

New York Mets settle with Madoff victims for $162 million

JPMorgan Chase faces $19 billion lawsuit from Madoff victims


Cathleen Flahardy

Bio and more articles

Join the Conversation

Advertisement. Closing in 15 seconds.