The Final Fiction: Madoff Clawback Suits and Their Implications for Capitalism in the Twenty-First Century

  • Colleen P. Eren


In December of 2008, former NASDAQ Chairman Bernard L. Madoff’s multibillion-dollar Ponzi scheme collapsed under the weight of client redemptions spurred by the financial crisis of 2007–2009. The story of Madoff’s devastating fiction seized international attention until his sentencing to 150 years. However, the Madoff Trustee’s clawback suits, which make claims on how fictitious profits should be treated—continues to be overlooked by the public and scholars. This paper argues for their significance to the very ideological bulwarking of finance capital in the twentyfirst century by providing a Marxist reading of these suits and their outcomes. The author applies insights from Capital Volumes II and III, while situating the suits and the debates surrounding their use within the cultural logic of capitalism in the twenty-first century. This logic, as shown through clawback suits, is more and more willing to consciously and brazenly embrace the obliteration of lines between Marx’s concept of fictitious capital and real capital.


  1. 1.
    Associated Press. (2008, December 18). Madoff Victims May Be Out in the Cold. NBC News.Google Scholar
  2. 2.
    Blodget, H. (2009, April 1). Fairfield Greenwich Group’s Amazing Due Diligence Practices. Business Insider.Google Scholar
  3. 3.
    Cherry, M., & Wong, J. (2009). Clawbacks: Prospective Contract Measures in an Era of Excessive Executive Compensation and Ponzi Schemes. Minnesota Law Review, 94, 368.Google Scholar
  4. 4.
    Davis, L., & Wilson, L. (2011). Estimating JP Morgan Chase’s Profits From the Madoff Deposits. Risk Management and Insurance Review, 14(1), 107–119.CrossRefGoogle Scholar
  5. 5.
    Eren, C. (2017). Bernie Madoff and the Crisis: The Public Trial of Capitalism. Stanford: Stanford University Press.Google Scholar
  6. 6.
    Esoimeme, E. (2016, April 27). Wealth Management, Tax Evasion and Money Laundering: The Panama Papers Case Study. Law Digest, 11.Google Scholar
  7. 7.
    Graulich, T., Resnick, B., & Coco, K. (2015). Fatally Foreign: Extraterritorial Recovery of Avoidable Transfers and Principles of Comity in the Madoff Securities SIPA Liquidation Proceeding. Harvard Business Law Review Online, 53. Available at
  8. 8.
    Haiven, M. (2011). Finance as Capital’s Imagination? Reimagining Value and Culture in an Age of Fictitious Capital and Crisis. Social Text 108, 29(3), 93–124.Google Scholar
  9. 9.
    Harvey, D. (2013). A Companion to Marx’s Capital (Vol. 2). Brooklyn: Verso Books.Google Scholar
  10. 10.
    Henriques, D. (2017). Wizard of Lies. New York City: St. Martin’s Griffin.Google Scholar
  11. 11.
    Hurt, C. (2009). Evil Has a New Name (And a New Narrative): Bernard Madoff. Michigan State Law Review. Available at http://digitalcommons.
  12. 12.
    Larson, E. (2016, June 4). Koch Brothers Cling to Madoff Cash. Chicago Daily Herald.Google Scholar
  13. 13.
    Lazarini, C. (2017, February 1). Trustees of the Upstate New York Engineers Pension Fund vs. Ivy Asset Management. No. 15-3124 (2nd Cir., December 8, 2016). Securities Litigation Commentator. Available at
  14. 14.
    Madoff Victim Fund (MVF). (2013, November). Frequently Asked Questions. Available at
  15. 15.
    Meacci, F. (1998). Fictitious Capital and Crises (MPRA Paper No. 11761). Available at
  16. 16.
    Orwell, G. (1983). 1982. New York: Houghton Mifflin Harcourt.Google Scholar
  17. 17.
    Partow, C. (2014, July 9). Madoff Trustee Cannot Recover Foreign Funds. SDNY Blog. Available at
  18. 18.
    Perelman, M. (1990). The Phenomenology of Constant Capital and Fictitious Capital. Review of Radical Political Economics, 22, 66–91.CrossRefGoogle Scholar
  19. 19.
    Schmitt, R., & Westbrook, J. (2010, March 11). Madoff Victims Find Allies in D.C. Bloomberg News.Google Scholar
  20. 20.
    Securities Investor Protection Corporation (SIPC). (2019, February 22). Tenth Pro Rata Interim Distribution of Recovered Funds to Madoff Claims Holders Commences; Totals Approximately $464 Million. Press Release. Available at
  21. 21.
    Sepinwall, A. (2012). Righting Others’ Wrongs: A Critical Look at Clawbacks in Madoff-Type Ponzi Scheme and Other Frauds. Brooklyn Law Review, 78, 1–64.Google Scholar
  22. 22.
    Smith, R. (2016, November 23). Koch Brothers are Winners in Fight Over Madoff Riches. New York Times.Google Scholar
  23. 23.
    Sorkin, A. R. (2012, May 28). Madoff Case is Paying Off for Trustee ($850 an hour). New York Times.Google Scholar
  24. 24.
    United States Government Accountability Office (GAO). (2012). Customer Outcomes in the Madoff Proceedings. Available at
  25. 25.
    Walder, N. (2009, June 11). Madoff Victims Blast Trustee’s Valuations of Their Investments. Available at
  26. 26.
    Weiss, D. C. (2015, October 20). $1B in Legal Fees for Recovery of Madoff Losses is a ‘Good Return on Investment,’ lawyer says. ABA Journal.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  • Colleen P. Eren
    • 1
  1. 1.William Paterson UniversityWayneUSA

Personalised recommendations