Senate reviews Madoff scheme’s California impact
Victims of jailed financier await opportunity to testify before Legislature on losses

LOS ANGELES – The California State Senate will hear testimony tonight from everyday Californians who fell victim to the financial scheme orchestrated by jailed financier Bernard Madoff, many of them elderly residents who lost their life savings with no source of future income.

Under the chairmanship of Senate Majority Leader Dean Florez (D-Shafter), the Select Committee on Investment Malfeasance will meet Thursday at the Skirball Cultural Center in Los Angeles to hear firsthand the damage this scheme caused Californians and explore how they may seek redress. 

At least 429 individual Californians – not including businesses or charities – fell victim to the global Ponzi scheme which robbed investors of some $65 billion dollars and earned Madoff a lifetime in prison.  Many small investors lost their life savings and now face the loss of their homes as well.

On top of those losses, hundreds of Californians have been dutifully paying taxes to the state on income they believed they had made as a return on their investments, which they now know does not exist.

“People see Bernie Madoff and his penthouse as the face of this scheme, but the victims who have lost it all are more likely to be your next door neighbor or your grandparents,” Florez said.  “Those are the voices we want to hear from, and the taxpayers whose rights we are seeking to protect.”

California law makes no provision for recovering taxes paid on “phantom income.”  State law currently does not allow victims to carry-back these losses as a “theft loss,” and even under provisions being discussed by the Internal Revenue Service a theft loss could only be counted against income from the past five years or future income in the next 20 years.  Many of those who have lost the most in this scheme are elderly individuals for whom their investment savings was their main source of future income.

The panel will look at the impact of these losses on the state’s revenue, how IRS-proposed provisions affect California taxpayers and whether or not the California Franchise Tax Board will mirror the IRS’s actions.

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WHO:                    Senate Majority Leader Dean Florez (D-Shafter)
                                Madoff scheme victims and state and private tax experts

WHAT:                  Hearing into California impact of Madoff scheme

WHEN:                  TONIGHT! Thursday, May 28, 2009

                                7:00 p.m.

WHERE:            Skirball Cultural Center; 2001 N. Sepulveda; Los Angeles, CA  90049

For Immediate Release                                          Jennifer Hanson
May 28, 2009                                                          916-651-4016