The trustee has to prove that the transferee lacked good faith, which includes “when the information the transferee learned would have caused a reasonable person in the transferee’s position to investigate the matter further.” The companies which were required to repay Madoff money had “uncovered facts suggesting that [Madoff] was engaged in fraudulent activity” as part of their due diligence. https://www.govinfo.gov/content/pkg/USCOURTS-ca2-20-01333/pd...

It's infuriating for sure, but unfortunately it's the reality. If you gained from a Ponzi scheme that means you literally were given other peoples' money (directly).

I fully empathize with the absolutely epic degree it must SUCK to get a call and be told "yeah that 10% you've been earning for the past 20 years was actually someone else's money, you need to give it back."

Assuming you cashed out, wouldn't it be something like "that 10% you earned 10 years ago" because if you never cashed out then you're not liable.

My reply would be along the lines of: "Sorry lost it all in MtGox/FTX/Crypto/Vegas/Horses"

I mean, if the courts say you owe the money, you owe the money. If you lost it, looks like you got some debt to repay somehow.

The court would argue you didn’t complete due diligence and are liable for your mistake due to a crime taking place.

>>I would be beyond furious if I was expected to help make someone else whole.

I mean, if you unknowingly buy stolen property, it will be just taken from you if the police finds out. I don't see how that's different.

I don't think there's a limit when it's part of a criminal scheme.

> I would be beyond furious if I was expected to help make someone else whole.

Such are the wages of being a beneficiary of a ponzi scheme. It would be a good incentive to do better research.

How are you supposed to get enough insight from any working fund manager to determine whether something is a ponzi? It’s not like they give you access to the books.

Mutual fund and ETF holdings are public information. Random fund manager? Good luck.

Pretty sure even private hedge funds have to disclose to their clients exactly what they hold, not Madoff's "just trust me bro" promise.

Madoff operated for close to twenty years before being exposed. He was regularly lauded for being the best by well informed people. What is an amateur supposed to do?

If the argument is, “Nobody is that good, you should know better”, does that mean Buffet’s scheme will start crumbling any day now?

Well yeah that's why Ponzi schemes suck. Why should it be acceptable to profit from a Ponzi scheme? It's not your money at that point, whether you realise it or not.

> What is an amateur supposed to do?

You have two options.

1. Don't be unlucky. [1]

2. Or, you can make sure your society has socialized old age pensions, and that it puts in the work necessary to keep them solvent, and its citizens taken care of once they are past their working years.

[1] The easiest way to not be unlucky is to buy into a boring, diversified index fund. Berkshire may be a fraud, but it's unlikely the entirety of the SP500 is.