NEW YORK — A clearer picture is emerging of how much money might be available to pay back victims of the Bernard Madoff fraud, but while the pot is big it is nowhere near enough to repair all the damage.
It includes nearly $1 billion held by Madoff's company and potentially more than $100 million in personal assets that include luxury homes, cars and boats.
Several banks, hedge fund managers and others who led clients to Madoff may wind up paying huge settlements to resolve negligence lawsuits. Banco Santander, Spain's largest bank and one of the biggest losers in the scheme, has already offered 1.3 billion euros to defrauded customers.
Additionally, some U.S. investors will be able to receive up to $500,000 from an industry fund for people whose money has vanished in a brokerage failure, the Securities Investor Protection Corp.
The reality for many victims, though, is that they will be in a long line of investors fighting to recoup a fraction of what they lost.
"Whether the losses are $30 billion or $60 billion, there is not enough money out there to satisfy all these victims," said Anthony Paccione, an attorney with the New York law firm Katten Muchin Rosenman LLP.
As of this past week, some 6,700 people have filed claims for a share of whatever is recovered. Thousands more are expected to apply by a July deadline. Many lost $1 million or more.
For the swindled, the promise of someday recovering a few thousand dollars of their life savings is cold comfort at best.
"You gather up some money in an honest working way, and it's all gone," said Joanne Meerow. Her husband, Burt, invested the proceeds of the sale of his office equipment testing business in a hedge fund that, in turn, gave all its holdings to Madoff.
"We do not have very much of a hope at all of getting anything back," Burt Meerow said. "It is the death of your future. When you are 70 years old, you can't just go out and start over."
An army of lawyers is already out looking for money, but each potential source of cash seems to come with a question mark.
Victims could recover substantial sums from the Internal Revenue Service by claiming their Madoff losses as thefts, a move that would entitle many to a refund on taxes paid in the past five years. Some estimates say those refunds could be worth billions.
Prosecutors are seizing as much as they can of Madoff's personal fortune, and have begun demanding millions of dollars in payments from his relatives. Madoff's net worth, however, is unclear. He claimed assets of around $123 million, not counting shares of his own company, which also did legitimate business on Wall Street but whose value is now uncertain.
The Securities Investor Protection Corp., which guarantees brokerage accounts somewhat like the Federal Deposit Insurance Corp. guarantees bank deposits, will have strict limits on how many people it can help.
Under fund rules, payouts are limited to $500,000 per account, and SIPC probably won't cover those who invested with Madoff indirectly through a hedge fund. It could spend as much as $2.4 billion, if each of Madoff's 4,800 direct investors qualify for the maximum payment.
The simplest pool of refund dollars may be come from assets held by Madoff's collapsed company. The court-appointed trustee overseeing its liquidation said that so far he has found about $943 million that can be distributed to customers.
That total could grow once the trustee begins the task of trying to roll back the Ponzi scheme. The law may now require people who got out before the scheme collapsed to give that money back, and the Madoff trustee, Irving Picard, has said he plans to initiate several so-called "clawback" lawsuits to recover false profits.
How much cash that effort will generate is unknown, though it could amount to billions of dollars. The courts have had a mixed record trying to untangle Ponzi schemes. In some lucky instances, investors have gotten back a majority of what they put in. In others, they've received pennies on the dollar. The amount could depend on how hard Madoff investors resist demands that they return ill-gotten gains.
Picard has said that any assets recovered by the trustee will be divided among the victims on a prorata basis, meaning everyone will get back the same percentage of their principal investment.
No one, he said, will be entitled to claim a profit.
Ironically, however, a handful of Madoff clients could theoretically end up doing better than if they had purchased legitimate stocks. The Dow Jones Industrial average has lost 39 percent of its value in the past 12 months. By comparison, a person who pulled $800,000 out of the market at this time last year and gave it to Madoff, then received $500,000 back from the Securities Investor Protection Corp., would be down only 38 percent.
Unlike a bankruptcy proceeding, there won't be a pecking order of creditors that will entitle some to receive their money before others, but the rules for the SIPC fund will create many instances where some investors get a big chunk of money back, while others _ those who invested through large hedge funds _ will get relatively little.
So what percentage of the total losses might be recovered in the end?
It's hard to say, if only because investigators still don't know exactly how much investors gave to Madoff in the first place.
Prosecutors said that not long before his arrest, Madoff sent clients statements saying they had $64.8 billion in their accounts.
That figure, though, was fiction. Madoff had lied to investors for decades about how much their investments were worth. The amount of real money at stake is still being tallied.