The US Court of Appeals for the Second Circuit upheld a lower court finding Thursday that Maddoff investors who profited must pay back their earnings, even if they were not aware of the Ponzi scheme.
The investors involved were people who, at the time of the collapse of Bernard L. Madoff Investment Securities LLC, received more money than their principal investment. However, unknown to them at the time was the fact that these profits were truly other people’s investments. The investors claim they are entitled to keep the “profits” under the affirmative defense given by § 548(c) of the Bankruptcy Code.
