Fake Madoff profits, it turns out, are not covered by AIG insurance policies.
AIG does not need to compensate two former Bernard Madoff clients who say they lost millions to the convict's Ponzi scheme, a U.S. district judge ruled. The money allegedly lost, the judge said, never existed in the first place.
The lawsuit, filed more than a year ago, alleged that AIG had to pay Robert and Harlene Horowitz up to $30,000 under their AIG insurance policy, to compensate for $8.5 million they claimed they lost. But, as Reuters reports, U.S. district judge Paul Crotty has taken AIG's side, deciding the $8.5 million existed only the Horowitz's account statement and not in actuality. In fact, the Horowitzes withdrew more from their Madoff account than they put in, Reuters reports.
Madoff, who is currently serving a 150-year sentence in Federal prison for a $65 billion scam (which Bloomberg says cost investors $20 billion), might not have been sentenced so harshly had he committed his crime in France. Bloomberg reports today that Jerome Kerviel, a trader who allegedly caused his former employer Societe Generale a $6.5 billion loss, would likely serve no more than two years in prison if convicted.
Kerviel, who has admitted to lying about the extent of huge bets his was placing at the bank, would probably serve 10 or 20 years if he were tried in the U.S., Ira Sorkin, the lawyer who represented Madoff, said.