Monday, November 4, 2019

Taxation of Ponzi Clawbacks and Tax Refunds from a Ponzi Scheme

Richard Lehman presents FREE webinars for professionals and their clients.

Dates of "Taxation of Ponzi Clawbacks and Tax Refunds from a Ponzi"
  • Wednesday, November 06, 2019 | 10:30 AM EST
  • Wednesday, December 11, 2019 | 10:00 AM EST
  • Tuesday, January 28, 2020 | 11:00 AM EST


  1. Explore a world where you can be a millionaire one day and broke the next. Welcome to the world of Bernie Madoff.
  2. Identify the techniques available for defrauded investors to recover funds in the form of taxes they will not have to pay for a financial theft loss.
  3. Discover the procedures that investors who made money in fraudulent investment schemes must face years after the investment has crashed.
  4. Recognize that there are alternative methods of recovery of taxes paid from a Clawback.
  5. Learn what is the “Safe Harbor” and Ponzi Scheme tax recovery.

Friday, October 25, 2019

For professional advisors and victims of Ponzi scheme losses and Clawbacks

The new Trump tax plan affects Ponzi Scheme losses to one degree or another. 

I offer many online educational videos and content to teach professional advisors and victims of Ponzi scheme losses and Clawbacks of ponzi scheme profits and principal, on how to maximize their tax refunds from such losses and clawbacks.

Tuesday, July 2, 2019

Changes Resulting From The Trump Tax Bill

The Tax Law Still Allows A Tax Recovery Of Financial Theft Losses

My experience of a small sample accountants and lawyers has revealed that many do not know that there still is a business tax deduction for Ponzi Scheme losses and similar financial frauds that were invested in for profit.

There also still is a “Clawback” or “mitigation” deduction available for investors that have made money in the Ponzi Scheme and must now repay to the investors that have lost money, the profits and at times the original invested principal of investors who profited from the fraudulent business scheme.

Consequently, there will continue to be a valuable deduction that can be as high as 50% of a tax on income; to those in the states and cities with high state and local taxes.

The tax benefits available to investors who innocently profited from the fraud and now must pay back the profits made in the theft and in some instances, the investors’ principal (capital) would be subject to a “Clawback”.  The Trustee must protect the innocent investor who lost money because of the fact there never was any profit at all, since the invested funds were paid to the fraudulent thieves.  This is called a “Clawback”.


Code Section 165(c)(2) and 1341 of the Internal Revenue Code provide great help for the defrauded investor.

There are three items that have changed in this area of the law as a result of the “Trump Tax Bill.”  The first is that starting in 2018 there is no longer the right to carryback losses from financial theft.  Deductible losses resulting from a financial theft may only be claimed in the year of the discovery of the theft and future years.

The second change is that tax rates have been lowered so that tax refunds that stem from post year 2018 financial theft losses, (not been discovered until after the year 2018 and after), may be refunded in a lower tax bracket than that which was available prior to 2018.

The third change in the law is the fact that the tax information Form 4684 that is used to report the theft loss has been clarified.

While a fraudulent theft loss in a trade or business or a for profit endeavor has been modified, that Code Section still provides for the deductible theft loss for a victim of a financial theft.  Code Section 165(c)(2) still provides for the deductible theft loss for a victim of a financial theft that amounts to a criminal act.

For your convenience we have posted the full article. The original is posted on Richard S. Lehman's website here:

Thursday, May 23, 2019

The Ponzi Clawback And The Value Of The Mitigation Procedure

A Ponzi Scheme Clawback of profits is typical in many Ponzi Schemes.

Ponzi Scheme Trustees appointed to achieve fairness among defrauded investors have successfully recovered billions of dollars from Ponzi Scheme investors who withdrew funds from the Scheme even though there were indeed no real profits at all in a Ponzi Scheme. Everyone but the promoter eventually loses money. The promoter usually goes to jail and losses money.

 Those investors lucky enough to have escaped the Ponzi fraud and taken their profits early in the scheme, remained profitable until the Trustee “CLAWED BACK” their false profits.

 A Ponzi Scheme “Clawback” is accomplished when a Trustee obtains refunds from those who benefitted from the early “profits distributions” by the Ponzi Scheme.

 Clawbacks of Ponzi Scheme profits from the innocent investor who first benefitted from the Scheme can receive a unique treatment from a tax standpoint. This is because of a special Internal Revenue Code Section that applies to clawed back profits. READ FULL ARTICLE HERE

Wednesday, March 27, 2019

This video has been completely updated to reflect the new Trump Tax Cut And Jobs Act of 2017

The Trump bill eliminated the loss carryback rules, it did not eliminate the rules under the Mitigation Section. 

Taxpayers who are forced to repay false profits may still reduce the income falsely reported in the prior years, if that provides a larger tax refund than the refund that would be available if the "clawed back" funds were only allowed to be deducted in the year of payment.

This tax benefit cannot be overlooked.

Starting in 2018, it is critical to compare the amount of refunds on a Clawback of profits with the value of deducting the Clawback amount in the year it is paid back.

Richard S. Lehman, Esq.
Located in the Dorot & Bensimon P.L. Domestic & International Tax Law Office
2000 Glades Road, Suite 312
Boca Raton, FL.  33431
Phone: 561-368-1113
Skype: LehmanTaxLaw