AS NEW PONZI SCHEMES ARE REVEALED AND INVESTORS ARE DEFRAUDED ONCE AGAIN, MEEK RENEWS EFFORTS TO PASS PONZI SCHEME LEGISLATION TO HELP INVESTORS RECOUP LOST FUNDS

WASHINGTON, DC – U.S. Rep. Kendrick B. Meek today called for renewed efforts to pass strong legislation to protect investors, including many retirees and seniors who have invested their life savings, who have been defrauded by the recent string of Ponzi schemes.

Meek reiterated his call in the wake of revelations surrounding the cases of former Ponzi scheme mastermind Marc Dreier, who operated a nearly $400 million Ponzi scheme, and prominent Florida attorney Scott Rothstein, who sold hundreds of millions of dollars in fictitious legal settlements to investors.

Nearly one year ago, Rep. Meek introduced Ponzi scheme legislation in the wake of the Madoff Scandal and other Ponzi schemes involving Allen Stanford and George Theodule, a South Florida businessman who preyed upon Haitian-American investors. The bill, H.R. 1159, would amend the Internal Revenue Code to provide tax relief to individuals harmed by Ponzi schemes who have paid taxes on "phantom" earned income. Rep. Meek has also met with IRS Commissioner Douglas Shulman in his Washington, DC office to discuss ways to aid victims of these schemes.

"There is nothing we can do to fully undo the damage done by these predatory criminals, but this legislation goes a long way towards providing much needed tax relief for innocent victims of Ponzi schemes," said Meek. "Too many Floridians have watched their life savings vanish in the blink of an eye. Although their initial investments cannot be recovered, taxes paid on made-up income can."

Individuals who invested in these now exposed Ponzi schemes earned yearly income from these investments and paid taxes to the Department of Treasury on that income.  While the principle investment made by these individuals is lost, Meek's bill would provide some measure of relief to individuals and allow them to recoup taxes paid on their perceived income, which was in fact nonexistent income.

Under current law, the carryback period for theft losses arising from a Ponzi scheme is limited to three years (five years for 2008), which restricts the ability of older investors to adequately recoup their losses, including taxes previously paid on their phantom income.  Meek's legislation would extend the carryback period up to 10 years, which helps older investors who lost retirement savings meet their future needs on their own terms.

U.S. Rep. Kendrick B. Meek represents the 17th Congressional District of Florida which includes parts of Miami-Dade and Broward Counties. He serves as the lone Florida Democrat sitting on the House Committee on Ways and Means.

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