Just When I Thought I was Out.....

They pull me back in!

MADOFF TRUSTEE: INVESTORS NEED TO RETURN 'PROFITS'

That's not your money!

The trustee attempting to unravel Bernie Madoff's Ponzi scheme is threatening legal action in a bid to recover a whopping $735 million from investors who unwittingly made money off the swindle.

Irving Picard, the court-appointed trustee of Madoff's defunct firm, sent letters this month to 223 investors ordering them to return money they withdrew before the $64 billion scheme collapsed, The Wall Street Journal reported today on its Web site.

(...)

In the letter, Picard said he wants the money to be divided evenly among all the victims.

But lawyers representing some of those investors expressed dismay over the letters - saying they plan to challenge their legality.

Stuffing Money Under the Mattress

Anne Applebaum has an article in Slate about how schemes like the Madoff fraud will erode trust and make doing business much more difficult. (here)

Worst of all, everyone who invests anywhere will think just that much harder, take that much longer, demand that much more documentation. And they will do so not only because of Madoff, but because of the subprime lenders, Wall Street investment banks, and Enron fraudsters who have worked so hard to erode our faith in the reliability of our system.

...

Madoff's pyramid scheme, far broader than anything MMM dreamed up, was made possible by our own tradition of lawfulness. And now he will help bring that tradition down. Here's a prediction: In the coming years, American capitalism will become slower, more cautious, less productive, and less entrepreneurial. We're still a long way from Eastern Europe of the 1990s or from the Latin America or Russia of the present. But maybe not as far as we think.

Who can you trust these days with your money? Is burying gold in your backyard the soundest investment strategy?

On a related note: It's troubling to me that the government of Canada sold off virtually all of its gold holdings. Is our entire Treasury based on questionable paper?