Even investors who withdrew full amounts from Madoff will lose, have to return money.

Quote from Cutten:

Can you give examples of where investors who withdrew early were served with court orders to return cash?

In normal theft, the unwitting recipient of stolen money (e.g. a shopkeeper) is never liable to return the cash. It would seem strange to give everyone in the country a perpetual risk of bankruptcy on the off-chance that they were at one point paid money by a thief.
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Madoff's fraud has been declared "a ponzi scheme". This reminds me of Ponzi scheme "12dailypro" that had collected $300 million in 1 year. When FBI shut it down, investors who had earned high profits earlier were receiving "Chargebacks" to their credit cards and Banks accounts.

FBI was withdrawing money from "profitable investors" and giving it to "new investors" to minimize losses. Everything was in a Big mess. This had happened some 3 years back so now I am not sure what actually had happened.
 
Quote from Cutten:

Can you give examples of where investors who withdrew early were served with court orders to return cash?

In normal theft, the unwitting recipient of stolen money (e.g. a shopkeeper) is never liable to return the cash. It would seem strange to give everyone in the country a perpetual risk of bankruptcy on the off-chance that they were at one point paid money by a thief.
More...

The legal ruling on fraudulent conveyance was done in the Bayou hedge fund Ponzi scheme.

"In a decision that could spell trouble for innocent hedge fund investors, a federal bankruptcy judge in New York ruled that investors in the now infamous Bayou Hedge Funds—which were found to have operated a massive Ponzi scheme—qualified as creditors, and therefore could be subject to the fraudulent conveyance provisions of the Bankruptcy Code."

http://www.mondaq.com/article.asp?articleid=59568
 
Quote from wilburbear:

.....Their withdrawals were made at higher percentages than they actually owned, in what we now know was a depleted fund.......
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Good point; however if the party doesn't exist anymore, such as dissolved hedge fund, and people took the money and left its jurisdictions may have better luck. Cough offshore corpora accounts which help hiding its true owner. cough. :D
 
Quote from wilburbear:

I've seen multiple hedge fund frauds up close and personal.

Investors who withdrew money before the fraud became known, will also experience heavy losses because they will have to give back money. Their withdrawals were made at higher percentages than they actually owned, in what we now know was a depleted fund.

I've personally received such checks after legal action.
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http://www.bloomberg.com/apps/news?pid=20601087&refer=home&sid=a3kFmYaaw5sY
 
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