Some Madoff victims in double bind

Victims of a massive Wall Street Ponzi scheme may be among those obliged to return money under a court-approved redistribution plan, court analysts say.

Attorney Irving Picard, appointed by the federal court to retrieve funds for victims of New York trader Bernard Madoff’s allegedly illegal investment operations, is expected to use a clawback provision, mandating investors who collected dividends over the years to return all or part of the money, the Los Angeles Times reported Monday.

A Ponzi scheme is an investment ploy that uses new investor funds as dividends in lieu of legally earned dividends from investment growth.

Madoff was arrested in December on an alleged scheme that is widely reported to have lost $50 billion.

The legal basis for the trustees being able to clawback is the allegation that the transfer of any of the proceeds to anyone in a Ponzi scheme is a fraudulent conveyance, said Los Angeles attorney Bob Klueger.

But retired Santa Monica, Calif., aerospace engineer Bob Braslau, considers himself a victim, even though he did take some money out of his Madoff investments.

I do feel in jeopardy, Braslau said.

People are going to be frantic in trying to recover their money, he said.