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Madoff Victim Fund


from the Special Master


During the time since our update earlier this year, MVF has continued to focus virtually all its activities on reviewing claims from victims, and this has yielded very significant progress. As of December 4, 2015, MVF has reviewed 51,071 claims (nearly 80% of the 64,123 total claims) with claimed losses of $45.1 billion (roughly 58% of $77.53 billion in total claimed dollar losses). There are approximately 13,052 claims yet to be reviewed with claimed losses of approximately $32.4 billion. The number of claims reviewed has increased almost 50% from 34,257 reviewed claims at the time of our May update.

Recommendations, Not Decisions. When MVF reviews claims we determine whether or not we will recommend approval of the claim based on whether the claim is (i) complete; (ii) appears to meet the MVF Plan eligibility standards; and (iii) documents the actual dollar amount of eligible loss. However, as we have previously noted all final claim decisions are made by the U.S. Department of Justice after reviewing recommendations submitted by the Special Master.

Once we submit a formal report on specific claims, DOJ decides whether to accept, reject or modify MVF’s recommendation. Thus, the MVF determination is a preliminary step, not a final decision. Indeed, there are many factors that can result in DOJ adjusting claim eligibility or the recommended amount of eligible loss. Nonetheless, we provide this information on the aggregate results of MVF’s ongoing claims review because we believe that the overall statistics are a useful indicator of approximate overall results.



Recommendations to ApproveAs of December 4, 2015 there were 20,241 claims (approximately 40% of those reviewed) involving eligible losses of approximately $2.7 billion that I will recommend to DOJ for approval. Since our update in May, we have added almost 10,000 new claims with aggregate eligible losses of $1.4 billion to the number of recommended claims, essentially doubling both numbers from where they were in May.

When these 20,241 claims were initially submitted to MVF they claimed losses of $7.75 billion. Thus, the $2.7 billion in eligible losses that will be recommended to DOJ is running at approximately 35% of the losses claimed on these approved claims(1).

This initial group of recommended claims is approximately 8X the total number of allowed claims in the Madoff bankruptcy proceedings. If the experience to date holds through the remaining claims, the number of recommended claims could grow another 50%. Thus, MVF believes its cash resources will be spread over a very wide base of victims, although it is still premature to estimate the likely final aggregate eligible losses.

Recommendations to Deny. Out of the claims reviewed so far, MVF plans to recommend that 1,314 claims do not satisfy MVF’s eligibility standards, and another 5,342 are duplicate filings. These 6,656 claims (approximately 13% of reviewed claims) covering $12.5 billion will be forwarded to DOJ with a negative recommendation. This is an increase of approximately 2,100 claims in the “recommended for denial” category since May. Each claim that MVF believes is not eligible will receive a formal notification of that fact from MVF so that the claimant will have an opportunity to appeal if they disagree with the determination, or have additional documentation that would affect eligibility.

Deficient Claims. There are currently 24,174 incomplete or “deficient” claims (47.3% of the total reviewed) with aggregate claimed losses of $24.9 billion (55% of claimed losses reviewed). These claims are potentially eligible, but they are missing one or more elements of documentation required to complete the claim. For example, a claim might show the amounts invested in Madoff Securities, but might not contain a final account statement demonstrating that the money was not withdrawn before Madoff’s collapse.

Though these claims are incomplete, we have been able to determine that at least $10.2 billion of this amount will not become eligible losses, even if all these claims were ultimately recommended. Thus, we currently believe that the maximum potential aggregate eligible loss on these claims, even if they all become complete, is $14.7 billion. If the ratios of the claims reviewed to date continue, the total number of incomplete claims could exceed 30,000.

The total number of incomplete claims is up slightly from 22,799 incomplete claims involving $21 billion in claimed losses in May. Since incomplete claims cover slightly more than half of all claimed losses, moving these claims into either “approved” or “denied” status will be vital to the amount of eventual payouts. We are now experiencing a steady stream of claimants supplying missing information, and this enables us to move many claims from “incomplete” to “recommended for payment” status.

Maximum Eligible Losses. At the time of our update in May, MVF had identified $18.5 billion out of the original $77.5 billion in claims that we will recommend should be denied, while the eligible losses on claims recommended for approval were $1.3 billion. Thus, if MVF’s denial recommendations were accepted, the maximum possible approved claims base at that time would have been approximately $58.8 billion.

Since May we have identified another $9 billion in claimed losses that should not be approved, and another $1.4 billion in eligible losses on claims that we will recommend for approval. Thus, since May there has been over $10 billion in convergence between the maximum possible approved claims and the interim claim denominator. By the end of the claims process, these two numbers must converge into a single approved claims denominator, so this progress is very important in getting to the stage when distributions can begin.


Deficiency Notices. MVF has now sent out more than 20,600 informal deficiency notices (“IDNs”) to advise claimants of areas where their claim was not complete, up from 11,700 IDNs at the time of our May update. To date over 9,200 claimants have supplied missing information after receiving an IDN, compared with only 2,389 responses as of our May update. This is nearly a four-fold increase in supplemental information filings, and it has led to an increase of nearly $500 million in claims recommended for approval. If you have received an IDN and have not yet responded, please provide the requested information to help clear up obstacles to completing your claim.

Next Steps. Our immediate objectives are to finish reviewing the remaining claims, as well as to continue assisting claimants whose filings are incomplete, as these two categories represent initial claimed losses of more than $45 billion. As those processes continue, we will simultaneously be preparing our formal reports to DOJ with our recommended action on specific claims. We will continue our updates as the reporting and approval process proceeds, and we remain committed to putting ourselves in a position to distribute as much cash to as many victims as possible at the earliest time.


Richard C. Breeden
Special Master

1. This variation between claimed losses and MVF’s determination of eligible loss reflects many different factors, and varies considerably from claim to claim. The average size of the claims remaining to be reviewed is considerably higher than the average of the claims reviewed to date, so this ratio of recommended eligible losses to initial claims may not hold constant through the remaining claims.