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The Madoff Exiles

Victims of the $65 billion Ponzi scheme feel cast out, denied justice, forgotten. They’re angry at just about everyone, including, in some cases, themselves.


"I feel like roadkill—just left on the side of the road."
Maureen Ebel Lost: $7.3 million  

Maureen Ebel started the year working five jobs. She took care of a friend’s elderly mother in the morning, then cleaned the woman’s house in the afternoon. She worked for another friend in her clothing store, drove people to the airport and on errands, and worked the cash register at a food stand. “I said, ‘If I can earn $25 tonight, that’s $25 I didn’t have before.’ ”

She sold some jewelry, an Oriental rug, a favorite painting. Friends gave her envelopes with cash, unsolicited, as much as $2,000. Every trip to the grocery store became an exercise in money-saving. “Two-for-one was my favorite thing: I’d go down the aisles, looking for canned goods.” With winter coming, she bought an electric blanket to keep the price of heat down. She has a gas fireplace, but the tank is empty, and she’s not sure she wants to spend $200 to fill it. “That’s something that makes you say, ‘Well.’ ”

She planned on enrolling in a class to reactivate her nurse’s license—she was 60 years old and had let it lapse years earlier—but then another friend called. “His secretary of eighteen and a half years got sick and could no longer work, and he said, ‘Would you like to try it?’ And I said absolutely, even though I didn’t know Excel, or Word, or PowerPoint, or QuickBooks. I said, ‘I can learn. I can make it work.’ ” Ebel makes $42,000 a year now. “I’m very grateful for my job,” she says. “But I sit in a windowless office from 8:30 in the morning until five at night. It’s the windowless part of it that gets to me.”

Ebel has spent a lot of time with her lawyer this year. She has felt by turns angry, depressed, and helpless. She’s been touched by the kindness of friends, but also shocked at how judgmental people can be. And she is consumed by the process of getting justice, even as she’s lost faith that such a thing is possible. “I’ll tell you what feels deep to the bone,” she says. “The failure of the government. The conspiracy. That’s the worst thing.”

For most of us, the Madoff matter is over. The man is in jail for the rest of his life, his associates have lawyered up, his wife is a pariah. But for those victimized by Madoff, the story is just beginning. There are several kinds of Madoff victims, of course. Some are wealthy beyond imagination and hardly affected at all. Others are clear hardship cases, people living in squalor after losing everything, and the government has reached out to many of them. But then there is a middle population—Ebel and thousands like her—who led quiet lives building savings only to watch it vanish. For these people, the Madoff fraud sent them into a spiral of downward mobility. They lost virtually all of their money, had to recalibrate their dreams, and suffered the public embarrassment of having fallen for one of history’s biggest frauds. Now this group is experiencing a second phase of victimhood, a wave of financial, legal, and emotional aftershocks. Perhaps most of all, they feel abandoned by the public and the officials who they believe should be helping them. Cast out and left to stew in their own anger and humiliation, they are a population in exile. “I feel like roadkill,” Ebel says. “Just left on the side of the road.”

If at first, the Madoff victims’ chief concern was seeing that he receive the maximum punishment, now their main focus is restitution. One of the fundamental principles of the American justice system is the notion of sovereign immunity—the idea that citizens don’t, in most cases, have the right to sue the government. Without such a rule, governing would be impossible. And yet if the Madoff victims have any hope of getting a significant amount of their investment back, suing the government is what they may have to do. Much of Madoff’s purported $65 billion fund probably never existed, and little of what was real is likely to be located. There are scores of Madoff-related lawsuits already pending, and whatever money is recovered is liable to be sliced and diced to the point of insignificance.

The best bet for Madoff investors seeking government relief was thought to be a nonprofit entity called the Securities Investor Protection Corporation. Congress created SIPC in 1970 as an investor’s first line of defense in the event that a brokerage company failed. Before Madoff, SIPC was considered to be the securities-industry equivalent of the FDIC, a body that would guarantee an investor’s money, in this case up to $500,000. SIPC may have been created by the government and partially overseen by the Securities and Exchange Commission, but it’s not a government entity, doesn’t oversee brokers, and is not technically even an insurer. It’s a fund replenished by broker fees designed to partially reimburse victims of securities crimes. So far, SIPC has received some 16,000 claims from Madoff investors.

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