• warning: include_once(CRM/Core/Config.php) [function.include-once]: failed to open stream: No such file or directory in /home/content/71/3913871/html/niapmicrosite/sites/all/modules/civicrm/drupal/civicrm.module on line 274.
  • warning: include_once() [function.include]: Failed opening 'CRM/Core/Config.php' for inclusion (include_path='.:/home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm:/home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm/packages:.:/usr/local/php5/lib/php') in /home/content/71/3913871/html/niapmicrosite/sites/all/modules/civicrm/drupal/civicrm.module on line 274.

Oops! - The path for including CiviCRM code files is not set properly. Most likely there is an error in the civicrm_root setting in your CiviCRM settings file (sites/default/civicrm.settings.php).

» civicrm_root is currently set to: /home/content/g/h/f/ghfghost/html/niapmicrosite/sites/all/modules/civicrm.

Please review the Drupal Installation Guide and the Trouble-shooting page for assistance. If you still need help installing, you can often find solutions to your issue by searching for the error message in the installation support section of the community forum.

Wall Street Journal: Madoff Trustee Wins Ruling on 'Net Winners'


A federal appeals court all but dashed the hopes of former Bernard L. Madoff investors trying to recover every dollar listed on their account statements when the giant Ponzi scheme collapsed.

In a ruling Tuesday, the U.S. Second Circuit Court of Appeals in Manhattan upheld a decision by trustee Irving Picard to approve claims from victims based on how much of an investor's principal deposits with Mr. Madoff were lost after the fraud was exposed in December 2008.

Those losses total about $17.3 billion, according to Mr. Picard, or less than one-third of the $64.8 billion shown on investors' final account balances.

The ruling is a defeat for roughly 2,000 former Madoff investors known as "net winners" because they withdrew more money than they invested with Mr. Madoff. Mr. Picard has filed more than 1,000 lawsuits against those investors to recover what he claims are phantom profits, and the appeals-court ruling is a major victory in that push.

A spokeswoman for Mr. Picard said his approach "is the fairest approach to the determination of claims, and we hope that the court's decision can be the final word on this issue."

Among the prominent "net winners" are the owners of baseball's New York Mets, who along with business partners and relatives have sought to collect $500 million in losses based on their account statements. The Mets owners also are fighting allegations by Mr. Picard in a $1 billion lawsuit that they overlooked signs of the fraud.

In a statement Tuesday, the Mets owners said through their real-estate firm, Sterling Equities, that the trustee's suit is "without factual or legal merit."

Mr. Madoff fabricated account statements sent to customers, with the amount of phony profits varying by investor. The three appeals-court judges ruled that only those who withdrew less than they initially invested, called "net losers," should be reimbursed.

Mr. Picard's method of evaluating claims was endorsed last year by a federal bankruptcy judge. The appeals court agreed that it would be unfair to base payouts on "impossible transactions," because such an approach would give equal weight to actual cash investments of some customers and the phantom profits of others.

"Indeed, if the Trustee had done otherwise, the whim of the defrauder would have controlled the process that is supposed to unwind the fraud," Dennis Jacobs, the chief judge of the Second Circuit, wrote in a 35-page opinion.

Tuesday's ruling also quashed at least for now efforts by "net winners" to use their final statement balances to collect as much as $500,000 apiece from the Securities Investor Protection Corp., or SIPC, which returns money to the customers of failed brokerage firms.

Helen Davis Chaitman, a lawyer who says she represents hundreds of Madoff customers, said the ruling "will destroy investor confidence in the capital markets because the promise of SIPC insurance is illusory."

She said she will appeal the ruling to the U.S. Supreme Court. Many legal observers, however, think it isn't likely that the high court would intervene in the case.

So far, Mr. Picard has far recovered $11 billion, some of it with federal prosecutors, or about 60% of the estimated losses in the Ponzi scheme.

The appeals-court decision has huge implications for the distribution of money following the Ponzi scheme. If the "net winners" had prevailed in court, that would have enlarged the number of people eligible to share in the Mr. Picard's collections—and reduced the amount available to each defrauded investor. A victory by net winners also would deepen the financial exposure of SIPC, which so far has committed $795 million to those who lost their principal in the Madoff fraud.

Some "net winners" still hope to collect from SIPC if they can win approval in bankruptcy court to have their claims adjusted for inflation. Those investors say the current approach, which values a $1 million investment made in 1980 the same as one made in 2005, is unfair.

"When we're dealing with deposits that are decades old, it's only logical to compare apples to apples," said Brad Friedman, a lawyer for Madoff victims at Milberg LLP. Stephen Harbeck, SIPC's president, said there is "no authority under the Securities Investor Protection Act that permits adjustments for inflation."

Other former Madoff investors are focused on legislation pending in Congress aimed at allowing "net winners" to receive SIPC insurance and curtailing Mr. Picard's ability to claw back money from them.

Tuesday's decision highlights "the need for prompt remedial congressional action," said David Bernfeld, a lawyer working with the Network for Investor Action and Protection, a group pushing the bill.

Meanwhile, former New York Gov. Mario Cuomo, who is mediating the dispute between Mr. Picard and the Mets owners, said the two sides still are talking. "A trial would be very long, very expensive, and if we can get a settlement it is probably a better thing that having to fight it out all the way," Mr. Cuomo said.

Write to Michael Rothfeld at michael.rothfeld@wsj.com