NEW YORK — Investing a dollar and getting 10 cents back in return is a bad deal even in today's market. But recovering 10 cents on the dollar might be optimistic for investors who gave their cash to Bernard Madoff.
Moreover, they face a years-long process to get any money back as investigators search to find Madoff's assets. Dozens of lawsuits and the possibility the fraud was committed over decades makes the chance of recovery even more difficult.
Madoff has become one of the most vilified people in America since news broke Dec. 11 that he had confessed to running a giant Ponzi scheme, paying returns to certain investors out of the principal received from others. He's estimated to have duped investors out of as much as $50-billion.
Experts agree that the first of any recovery payments might be years in the future.
"It will probably take between one and three years," said Dana Basney, director of due diligence and forensic accounting services for CBIZ MHM, LLC in San Diego.
Victims of past frauds had to bide their time before receiving any payments. Bayou Management's hedge fund collapsed in 2005 in a $450-million fraud. Customers are only now close to receiving funds. It wasn't until July 2008 that a bankruptcy judge approved funds to repay them, and investors are looking at getting back just 34 cents for every dollar they invested.
Investors and creditors of Enron Corp. were still receiving payments in 2008, seven years after the giant corporation crumbled. They have collected about 50 cents on the dollar.
But Madoff investors aren't expected to get even the 34 cents that Bayou's investors received. Investors are likely to get "pennies on the dollar, if that," said Stuart Gerson, a Washington lawyer.