Whatever happen to the doctrine of the innocent buyer of stolen goods does not have to return them? It seems claw backs is a modern invention.
I'm not an attorney, but my understanding is that the concept of stolen property always being returned to the rightful owner is deeply seated in English Common Law - which is of course the foundation for US Law. If I unknowingly buy a stolen horse, and the rightful owner of the horse can prove it to law, then I am out the horse and the money that I paid for it. And it would be up to me to pursue a legal judgement against whomever I bought the stolen horse from.
So 12 years later after the biggest bull run in history they have to return profits? Big deal. If they invested that money they made many multiples return while some poor suckers are just getting back “x” Cents on the dollar 12 years later.
The liquidating trustee, Irving Picard (my hero)'s rationale as he explained it is very simple: Madoff ran a Ponzi scheme and did not invest one penny of his clients' funds in any genuine investment schemes that would have any potential possibility of earning positive returns, so he earned zero extra money for anybody so everybody who invested money with Madoff should have exactly the same amount of funds that they invested with Madoff back, anything in excess is the funds that Madoff defrauded from other investors aka victims and is not really genuine profit. Based on this principle, if any investors refuse to return any excess over what they invested originally with Madoff should be charged accessory to the fact and be thrown into jail the same as Madoff. Good for Mr. Picard for being able to recover 70% of the defrauded funds based on this principle. This is the highest recovery rate so far of any fraud schemes.
Did Enron or Luckin Koffee engage in Ponzi scheme? If your profit was made at the expense of other victims in a Ponzi scheme perpetrated by those companies then yes. The rationale that Irving Picard used is a very unique one that applies specifically in Ponzi schemes.
Irving Picard?? That's a character from Star Trek, played by Patrick Stewart. - - Ok, wait a minute... I'm thinking of Jean-Luc Picard. Nevermind.
There is no such doctrine. You’d usually need to return stolen goods to their original owner. You could then sue the seller/thief that sold you the stolen goods.
Yes but in a Ponzi scheme where all the funds are conmingled, HOW do you define and recognize goods that are stolen and separate them from the legit goods. That's the key. And that's where Ivring Picard's principle is genius. He basically defined an unambiguous and workable criteria that can be easily deployed in the recovery of defrauded funds in a Ponzi scheme.
If early investors of ponzi schemes are forced to return profits to the victims, this will encourage moral hazard. If there is less fear about losing huge money, then a lot of victims in future will simply pour in money without fear. Perpetrators of ponzi schemes will say "No need to fear. If this is ponzi scheme, early investors will bail you out." We will have more people losing money to ponzi schemes in future. I know this is politically incorrect to say. If victims go unpunished, then there will be more victims in future because of the moral hazard. Don't bail out people who take stupid risks. Let them learn their lesson and let their lesson be a lesson for future generations.