Saying he wants to help some of the not-so-rich victims of Bernie Madoff’s Ponzi scheme, Senator Chuck Schumer today unveiled a proposed change in the tax code to give so-called indirect investors some of the tax breaks that wealthier, direct investors are already getting.
Schumer is calling his proposed bill the “Madoff Investors’ Bill of Rights,” contending that it’s aimed at helping middle-class New Yorkers.
And it might not hurt Schumer’s own image, either. As the Voice previously reported, Madoff and his family have given tens of thousands of dollars to Schumer’s election campaigns, according to Federal Election Commission records.
Schumer is also fighting a reputation of being more of a champion of Wall Street than almost any other Democrat.
As the Times noted almost exactly a year ago in trying to figure out what caused Wall Street’s meltdown, Schumer “has embraced the industry’s free-market, deregulatory agenda more than almost any other Democrat in Congress, even backing some measures now blamed for contributing to the financial crisis.” The paper also said a review of his record shows that Schumer “repeatedly took other steps to protect industry players from government oversight and tougher rules.”
His “bill of rights” for the Madoff investors could garner him some favorable publicity. The indirect investors had entrusted their money to feeder funds that then invested directly with Madoff. So the more small-time investors may not have even heard of Madoff until the $60 billion racket collapsed a year ago. Under Schumer’s proposal, those indirect investors would be eligible to claim breaks for fraud and theft losses.
Thousands of investors haven’t gotten a penny back, while many direct investors have been allocated hundreds of millions in government insurance.
People who invested with Madoff had paid taxes on fictitious investment gains. In April, the IRS began allowing direct investors to write off the losses, entitling many of them to tax refunds. For now, indirect investors don’t have that option.