I am Allan Lipman. I am licensed to practice law both in New York and Florida and have designed this seminar specifically for the Madoff investor who has received cash payments and has a home in both New York and Florida. I have titled this seminar “Domicile Choice by the Madoff Investor With Homes in New York and Florida—Its Possible Impact on Attempts to Claw Back Cash Received.”
For technical, audio and visual reasons and for your convenience, my presentation has arbitrarily been divided into four parts. The presentation is approximately 30 minutes in length and should be listened to and viewed in its entirety. None of my remarks are intended as legal advice. My purpose is simply to alert you and your professional advisor that your choice of domicile may have some impact on attempts by the Bankruptcy Trustee and possibly others to claw back some of the cash payments you have received.
Let me explain why I created this website.
I am a native of Buffalo, New York. After graduating Harvard Law School, I returned to Buffalo to practice law. By 1977, I had prepared estate plans for many clients in Western New York, but some clients were purchasing homes in Florida where they stayed during the winter months. Some clients changed their domicile to Florida and by doing so, they avoided New York taxes and were able to take advantage of the Florida homestead laws. They often retained a Florida attorney to prepare a Florida Will and other Florida estate plan documents that superseded what I had prepared for them. In order to retain and continue to serve these clients, I decided during the record setting Buffalo Blizzard of 1977 to become a Florida attorney as well as a New York attorney and took the Florida Bar exam. Since then, although I have retained my New York domicile, my wife and I have spent time in Florida each winter. A significant portion of my practice is counseling New York/Florida snowbirds on how to effectively change their domicile and defending any attacks on their domicile change by New York State domicile auditors.
Over the years I have participated in many seminars and written articles addressing snowbird domicile issues and in 1995 published a book on that subject entitled “How Smart Snowbirds Save New York Taxes—A Tax and Estate Planning Guide for the Dual Florida/New York Homeowner.” I updated the hard copy from time to time. That became somewhat onerous and I decided to publish the entire book on a complimentary basis at this website. The website you are now viewing not only contains the complete updated text but also replaced some of the endnotes that cited relevant citations with the entire text of statutes and legal opinions.
On several occasions, I have been retained by clients who wanted me to advise them whether they had effectively changed their domicile to Florida before consummating a transaction that would result in a substantial gain. They wanted to avoid—not evade—the New York capital gains tax. In some instances I found that there were additional steps that they should take to provide evidence to show their subjective intent to become Floridians if the domicile issue was later contested. On other occasions, I have been retained by clients who had homes both in New York and Florida but had remained New Yorkers and wanted to become Floridians before the capital gain transaction was consummated.
What does all of this have to do with you and Madoff’s Ponzi scheme?
If you were a Madoff investor and never received any money back, this seminar is probably of limited interest to you. But if you are presently are a Madoff investor or were ever a Madoff investor and received any funds back, what I have to say should be of some importance.
Most of you are probably already aware that the Madoff Bankruptcy Trustee may attempt to claw back some of the payments received by some investors so that the funds recovered can be placed in the "pot" and divided up in some fashion at some later date for the benefit of all investors who lost money—less, of course, trustee and legal fees and other expenses.
Madoff is reported to have confessed that his company accepted approximately $50 Billion from you and other investors. The Bankruptcy Trustee has recently reported that there was less than $1 Billion left when he took over. Where did the other $49 Billion go? A few billion may have gone to Madoff and so called “feeders” and others as commissions and other types of fees.
Although it is only a guess, my hunch is that it will turn out that since the Ponzi scheme began that over $45 Billion went back to Madoff investors like yourself. Some of this may have been in the form of annual cash payments that purportedly were profits from dividends, interest and capital gains on the fictitious investment portfolios that were managed by the Madoff company. Returns of 10% to 12% were reportedly not unusual. Others may have withdrawn cash to pay income taxes, estate taxes, make charitable contributions, purchase homes, yachts, works of art or make gifts to family members. Others may have simply closed out their accounts and placed the cash received elsewhere. A few may have suspected that the return on their investments was too good to be true but most, like you had no reason to think anything was amiss.
The Bankruptcy Trustee may attempt to claw back some of the cash amounts received by Madoff investors at least to the extent they exceeded the amount invested. It is not clear whether he will target all or only some of the investors. The Bankruptcy Trustee has already disclosed the mailing addresses of some 13,000 present, former and potential Madoff investors who were apparently on the mailing list of the Madoff company. If and when more information becomes publicly available that discloses the cash funds paid out to you and other investors, the race will likely begin by lawyers for investors who received nothing back to commence class actions. Ws With a potential $45 Billion or so out there—you can be sure that there will be an attempt to take back and spread out not only the amounts received in excess of the original investment but all of the cash received back. This may even include cash received that was subsequently reinvested with Madoff by the investor or his or her spouse, other members of the family or their trusts and family limited partnerships.
One theory may be that Madoff was acting as an agent for multiple principals and all funds were held in a fiduciary capacity in a common type of trust fund to be shared by all of the investors under some equitable contribution formula. Other imaginative causes of action are also likely to surface. Some theories may be successful—some may not. Some may be foreclosed by the relevant statute of limitations.or preempted by the bankruptcy laws.
If and when you are named in one or more of these lawsuits, will you be in a better position if you are domiciled in New York or you are domiciled in Florida or will it make no difference?
