Madoff Reveals Assets | Avoid Ponzis, Use Payday Loans

Lost Assets

Payday loans are a much safer way to fill a budget hole during a crisis. Investing in a fund that promises a quick rate of return and seems too good to be true often is exactly that.

As many unfortunate souls discovered during the recent Bernard Madoff Ponzi scheme controversy, protecting one’s assets requires sound decision-making and a healthy degree of skepticism. Even then, sophisticated shysters can harm you. Investors both modest and mighty were taken by this deceptive Wall Street criminal, and now Mr. Madoff himself will step forward and reveal his list of his assets with the U.S. Securities and Exchange Commission. How much of investors’ money is left remains to be seen. The list will include investments, loans, lines of credit, business interests, brokerage accounts and other holdings.

Has he put $50 billion to sleep?

Madoff previously revealed to employees at his investment company that he had $200-$300 million left, according to the FBI. The new trustee in charge of Bernard L. Madoff Investment Securities LLC received court approval to use $28.1 million out of its accounts as the company is dissolved.

Why do they need to use more money? According to Richard Bernard, attorney of Madoff trustee for liquidation Irving Picard, “The estate requires the funding to get to the sale of certain assets.” However, use of those funds won’t diminish reparations victims receive, because the Securities Investor Protection Corporation (SIPC) will cover what Madoff’s firm does not. It’s a kind of safety net, but how far will it stretch? Consumers can use products like payday loans to help cover during emergency budget shortfalls, but when you’re talking billions of dollars, can there truly be guarantees? At least with a no fax payday loan, the amounts are small and lenders encourage customers never to borrow more than they can afford to repay. This is made very clear to all who use the product.

There must be a reckoning

Picard must continue to work at growing profits for the firm, as investors that had about $36 billion with Madoff await the return of their money. Madoff’s court date is set for January 12, unless he is indicted before then. Prosecutors and defense lawyers may also postpone the court date. According to Bloomberg coverage and FBI reports, the firm is liquidating under the SIPC, whose funds cover securities and cash claims up to $500,000 per customer. Bernard said there are more funds available, but did not specify.

How much business did Madoff’s firm do? By October, it was handling an average of 50 million shares a day on the NASDAQ. According to Bloomberg, it “took orders from online brokers for some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.”

Unfortunately, the lesson in this is difficult to swallow, particularly for those who were taken by Madoff. It’s a simple message, however. If something seems to good to be true, it probably is. Ponzi schemes, pyramid schemes or anything that falls into the “get rich quick” category should be treated with great caution. At any point during the process, things can turn out badly for the investor. If you need to deal with a short-term cash need in a hurry, short-term loan products like payday loans are much safer.

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