Friday, February 3, 2023

My name is Richard Lehman, I have been a tax lawyer for 54 years and it has been a privilege

After many years of mostly working in the international tax field, a guy named Bernie Madoff came onto the scene along with hundreds and maybe thousands of investors, who had been fooled by Madoff into thinking they were making significant profits when it was all a sham. 

Bernie Madoff was a thief. I have since found out that there are many Bernie Madoffs stealing money from their investors.

Bernie Madoff’s investors thought that they were making big profits. Instead they were losing money because Bernie Madoff never made profits; he only made money that never produced profits, except for Bernie Madoff.

I also found out that there were a lot of thieves financially ruining a lot of people and I would like to think that I was able to help many people recoup at least a portion of what they lost.

Bernie Madoff was the straw that broke the camel’s back, racking up almost fourteen billion dollars in stolen funds ($14,000,000,000).

However, as a result of the disaster that he caused, it led to something good. For the first time, the Internal Revenue Service decided to clean up their act and make major changes to the law.

The year was 2008 and there was chaos in the I.R.S. about how to deal with this.

Bernie Madoff took your money, did not invest it in anything except his pocket and harmed hundreds if not thousands of people in what is known as a “Ponzi Scheme” attributable to Mr. Ponzi who predated Bernie and did the same thing. Sadly, by 2008, Bernie had run out of money and crashed.

In 2008, the Internal Revenue Service was not ready to solve the disaster. However, they quickly did the best that they could and published two documents to at least help the victims of this scheme. The two documents provided some relief to injured parties. These two documents were sorely needed and well done. 

While they could not stop “Ponzi Schemes”, they have lessened the blow on injured parties. These two seminal documents spelled out the treatment for “Ponzi Schemes” in: 

  1. a revenue ruling, and 
  2. a revenue procedure that would govern the treatment of “Ponzi Scheme” victims.

The first document is a revenue ruling. (Rev. Rul. 2009-9) This ruling describes the proper income tax treatment for losses resulting from “Ponzi Schemes”.

The second document provided the procedures for a simplified, unified way of dealing with “Ponzi Schemes” and their investors. (Revenue Procedure 2009-20). These two documents are the heart of this review.

Report No 1: The FTX/ Sam Bankman-Fried Fraud

Report No 2: The Reasonable Prospect of Recovery

Report No. 3: The Safe Harbor

FTX Tax Survival Kit: https://www.lehmantaxlaw.com/ftx/