T.C. Mem o. 2 01 4- 97

UNITED STAT ES TAX COURT

ESTATE O F BERNARD KESSEL, DECEASED, IRIS STEEL, E XECUTRIX, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 28 60 2- 10
. File d M ay 21 , 20 14
.
St ep he n J . Krass an d Lee Alan Sn ow, fo r pe ti ti on er. Rac he l L. Sch iff

m an , for res po nd en t.

MEMORANDUM OPINION KROUPA, Ju dg e: Thi s m at te r is be fo re the Co urt o n re sp on de nt ’s m ot io n fo r pa rti al su m

m ary jud gm en t. See Ru le 12 1. 1
All Ru le refe ren ces are t o the Tax C ourt Rul es of P ract ic e an d P ro cedur e, 1 (co nt in ue d...)- 2 -

[* 2] Bern ardKess el (Deced en t) h ada pe rs on al pe ns io n p lan tha t i nv es te d wi th Bern ardL. Mad of

f In ve stm en t Se cu rit ie s, LLC (M ad of f In ve st m en ts ). Deced en t’s Mad of f In ve st m en ts acco un t (M ad of f acc ou nt ) os te ns ib ly hel d a ss et s ap pr ai se d a t
m or e th an$4 .8 m il li on . Deced en t’s es ta te fil eda Fed eral est at e ta x re tu rnin20 07
an d re po rte d the Mad of

f acc ou ntas a$4 .8 m il li on ass etof t he est at e. The e st at e pa idth e fu ll am ountof t ax du e o n tha t v al ue bu t s ub se qu en tl y fil eda supp le m en ta l Fed eral est at e ta x re tu rncla im in g arefu ndon th e g ro un d tha t the Mad of f acc ou nt ha d azero va lu e. Res po nd en t d et erm in eda $3 39 ,14 3 d efi ci en cy inth e es ta te ’s Fed eral est at e ta x a ndde ni edth e es ta te ’s reque stfora $1 ,93 7,3 91 refu nd
. Res po nd en t as ks us 2 to de ci de two is su es . Res po nd en t fi rs t as ks us to id en ti fy th e Ma do ff ac co un t-- as 3 op po se d t o the Mad of

f acc ou nt ’s pu rp orte d h ol di ng s- -as th e p ro pe rty subjec t t o
(...co nt inue d) 1 an d a ll sec ti on refe ren ces are t o the Int ern al Rev enue Co de ineffe ctforth e d at e o f Deced en t’s d eath, u nl es s o th erwi se in di cat ed
. All m on et ary am ou nt s ar e ro un de d t o the ne ares t d ol lar. 2 The est at e reque st s p art ia l s umm ary jud gm en t i n i ts fav or inth e la st 3 pa rag rap h o f it s Ob

jecti on to Res po nd en t’s Mo ti on forPart ia l Su m m ary Ju dg m en t. W e d o n otreco gn iz e th e es ta te ’s reque stforpa rti al su m m ary jud gm en t as a m ot io n fo r pa rti al su m

m ary jud gm en t i n i ts fav or be cau se th e es ta te was re qu ire d t o fi le a se pa rat e m ot io n. Se e Ru le 54 . In an y ev en t, the est at e wou ldno t b e en ti tl edto pa rti al su m

m ary jud gm en t fo r th e rea so ns di sc us se d i nf ra.- 3 -

[* 3] Fed eral est at e ta x. We will de ny resp on de nt ’s m ot io n o n thi s p oi nt . Res po nd en t n ex t as ks us to ho ldth ata hypo th et ic al wil li ng bu y er an d wi ll in g se ll er o f th e Ma do ff ac co un t wo ul d n otreas on ab ly kno w or fo res ee tha t M r. Mad of f was op erat in g aPo nz i s ch em e atth e ti m e Dece de ntdi ed . W e wil l li ke wis e d en y

res po nd en t’s m ot io n o n thi s p oi nt .

Bac kg ro un d A. Deced en t Deced en t o wne d B ern ardKess el , Inc . (BKI), a New Yo rkco rp or at io n. In 19 82 BKI cre at edth e Berna rdKess el Inc . Pen si on Pla n (P lan) , a qu al ifi edde fin ed be ne fitpl an . Deced en t was th e so le pa rti ci pa ntinth e Pl an . In19 92 th e Pl anbe cam e a cu st om er o f Mad of f In ve st m en ts when Deced en t op en edth e Ma do ff ac co un t o n b eh al f of th e Pl an . Deced en t u se d $ 61 0,0 00 of t he

4 Pl an ’s ass et s t o o pe n the Mad of f acc ou nt . The cu st om er ag reem en t b etweenth e

5 Pl anan d M ad of

f In ve stm en ts all owe d the Pla n t o a ss ig n i ts in te res t i n the Mad of f
acco un t wi th Mad of

f In ve st m en ts ’ pr io r writ te n c on se nt .
The Mad of

f acc ou ntwas M ad of

f In ve st m en ts acco un t No . X-ZA-XXX- 4 30 /4 0. In20 04 Deced en t wi th dr ew $1 .2 m il li on fro m th e Ma do ff ac co un t o n 5 be ha lf o f th e Pl anan d d ep os it edth e sa m e am ou ntin to Mad of f In ve st m en ts acco un t No . X-ZB-XXX-30 /4 0 (M ad of f acc ou ntII).- 4 -

[* 4] Deced en t d es ig na te d h is fia nc é, Iri s St eel , th e p rimary be ne fic iary

of 7 0% o f th e d eath b en efi ts pa y ab le un de r th e Pl an . Deced en t d es ig na te d h is so n, Ri ch ard Kes se l, the pri m ary be ne fic iary of 3 0% o f th e d eath b en efi ts pa y ab le un de r th e Pl an . B. Est at e Tax Return Deced en t d ie d t es ta te inNew Yorkon Sund ay , Ju ly 16, 2 00 6. Dece de nt ’s LastW il l an d Tes ta m en t ap po in te d M s. St eel to actas t he ex ecu tri x o f th e es ta te . Ms . Ste el co nt act edMad of f In ve st m en ts to de te rm in e th e v al ue of t he ass et s h el d in th e Pl an ’s acco un ts . Mad of f In ve st m en ts sen t a l et te r to Ms . Ste el de ta il in g the
nu m be r an d p ric e o f eac h p ub li cl y tra de d s ecurit y , m on ey

m ark etfun d andop ti on th e Ma do ff ac co un t p ur

po rte dl y he ld . Ms. St eel forward edth is co rres po nd en ce t o anap pr ai sa l s erv ic e, whi chth enpre pa redanap pr ai sa l re po rt s ta ti ng th atth e v al ue of th es e as se ts was $ 4,8 11 ,85 3. 6 Ms . Ste el ti m el y

fil eda Fo rm

47 68 , App li cat io n fo r Ext en si on of Ti m e To Fi le a Return a nd/o r Pay U .S. Est at e (an d Gen erat io n- Sk ip pi ng Tran sf er) Tax es ,

Mad of f In ve st m en ts als o re pr es en te d tha t M ad of f acc ou ntII h el d a ss et s 6 va lu edat $ 81 5,3 01 . The es ta te do es no t ch al le ng e th e d at e o f de ath v al ue of Mad of f acc ou ntII.- 5 -

[* 5] to ge th er wi th two ch eck s t ot al in g $ 1,5 70 ,50 9. Ms . Ste el th enfil eda Fo rm 7 70 6, Un it edSta te s Es ta te (an d Gen erat io n- Sk ip pi ng Tran sf er) Tax Return, wi th in th e ti m e p ro vi de d b y

th e 6 -m on th ex te ns io n a ndrep orte d tha t the est at e o wed $1 ,88 1,2 56 inFed eral est at e ta x. 8 The Mad of

f acc ou ntbe cam e p ay ab le to Ms . Ste el an d R ic ha rdKess el by
reas onof De ced en t’s d eath. Aft er Dece de ntdi edMs . Ste el an d/ or Ric hardKess el withd rew fu nd s fr om

th e Ma do ff ac co un t s ev enti m es . Thes e wit hd rawal s t ot al ed 9
m or e th an$2 .8 m il li on . 1 0 C. Mr. Ma do ff’s Po nz i Sc he m e Bern ardMad of

f was arre st edinlat e 2 00 8. Th e Sec ur it ie s an d Ex ch an ge Co m m is si on (SEC) i m

m ed ia te ly iss ue d apre ss rel eas e st at in g tha t i t h adch arg ed Mr. Ma do ff wit h s ecu rit ie s fr au d fo r a m ul ti -b il li on -d ol lar Po nz i s ch em e. The
Ms . Ste el subm it te d the ch eck s t o p ay th e es ti m at edFed eral est at e ta x. 7 The est at e h adanunpa id$3 10 ,74 7 F ed eral est at e ta x b al an ce. Res po nd en t 8 as se ss edad di ti on s t o t ax of $ 12 ,43 0 a nd$1 8,6 45 on th is unpa idba lanc e. The es ta te subs eque nt ly sub m it te d a$3 67 ,15 2 p aym en t t o re sp on de ntinful l sa ti sf act io n o f th e unp ai d F ed eral est at e ta x b al an ce, the ad di ti on s t o t ax an d the accrue d i nt eres t. It i s u nc le ar fro m

th e li m it edreco rdex act ly who was re sp on si bl e fo r whi ch 9 withd rawal s. Ove r th e sa m e p eri od , Ms . Ste el an d/ orRic ha rdKess el als o d ep os it ed 1 0 $2 60 ,00 0 i nt o the Mad of f acc ou nt .- 6 -

[* 6] SEC an no un ceditwas s eek in g e m erg en cy rel ie f fo r in ve st or s, i nc lu di ng an as se t fr eeze an d the ap po in tm en t o f a rec ei ve r fo r Mad of f In ve st m en ts . The Uni te d S ta te s At to rn ey forth e So uthe rnDis tri ctof Ne w York(US Att orne y ) co m

m en ceda cri m in al pro ceed in g a ga in stMr. Ma do ff al le gi ng frau d,
m on ey lau nd eri ng , m ak in g fa ls e st at em en ts , per jury andth eft . The US Att orne y al le ge d, am on g m an y

othe r th in gs , th atMr. Ma do ff eff ect edhi s Po nz i s ch em e b y fai li ng to pu rch as e se cu rit ie s an d i nv es t the in ve st or s’ fun ds as h e h adrep res en te d. Mr. Ma do ff ad m it te d tha t h e p erp etrat edhi s Po nz i s ch em e th ro ug h M ad of f In ve st m en ts . Mr. Mad of f was sen te nc edto 15 0 years i n p ris on . The Secu rit ie s In ve st orPro te ct io n C or po rat io n (S IPC) fil edanap pl ic at io n fo r a p ro te ct iv e d ecre e, se ek in g l iqui da ti on of M ad of f In ve st m en ts . Irvi ng Pic ard
was ap po in te d the tru st ee (M ad of f trus te e) fo r Mad of

f In ve st m en ts in ve st or s an d th e cre di to rs of t he Mad of f In ve st m en ts ge ne ral est at e. 1 1 The Pla n trie d t o re co ve r th e as se ts rep orte dl y he ldinth e Ma do ff ac co un t. The Plan s ou gh t t o re co ve r $3 ,22 1,0 57 insec ur it ie s p os it io ns refl ect edonth e The Mad of

f tr us te e cl as si fie s i nv es to rs who se withd rawal s ex ceed edth ei r 1 1 de po si ts as “ ne t wi nn ers ” an d i nv es to rs who se de po si ts ex ceedth ei r withd rawal s as “ ne t l os ers .” The M ad of f trus te e’s fi rs t m an da te was t o m ak e who le th e “ ne t lo se rs .” In ve st or s co ns id ered“ ne t wi nn ers ” h av e a g en eral cred it orcla im ag ai ns t th e Ma do ff In ve st m en ts ge ne ral est at e fo r frau d. Th es e “ ne t wi nn ers ” are eli gi bl e fo r di st rib ut io n fr om

th e b an krup tc y

est at e o nc e th e h ig he r pr io rit y cla im s o f th e “ ne t l os ers ” are sat is fie d.- 7 -

[* 7] Mad of

f acc ou ntst at em en t fo r th e m on th imm ed ia te ly befo re Mr . Mad of f’s
arre st . The Ma do ff tru st ee d en ie d the Pla n’s cl ai m be cau se Mad of

f In ve st m en ts ha d n otactua ll y

pu rch as edsec ur it ie s fo r th e Ma do ff ac co un t an d the acco un t h ada po si ti ve ne t equi ty of $2 ,72 1,3 37
. 1 2 1 3 D. Defici en cy

Not ic e an d P et it io n Afte r th e Ma do ff tru st ee d en ie d the cla im , th e es ta te subm itte d aFo rm 84 3, Cl ai m forRefu ndan d R eque stfor Abat em en t, re qu es ti ng a $1 ,93 7,3 91 refund
. The est at e al so subm it te d asupp le m en ta l Fo rm 70 6, wh ic h re po rte d the da te of de ath v al ue of t he in ve st m en t ac co un t as zero . 1 4 Res po nd en t d en ie d the est at e’s reque stforrefu ndan d d et erm in edth e v al ue of Deced en t’s t ax ab le est at e was gre at er tha n the est at e h adrep orte d. Th e es ta te ti m el y fil eda pe ti ti on all eg in g, am on g o th er thi ng s, tha t the fai r m ark etva lu e o f

The $5 ,52 3,9 32 withdrawnfro m th e in ve st m en t ac co un t was gre at er tha n 1 2 th e $ 2,8 02 ,59 5 d ep os it edin to th e Ma do ff ac co un t. Inothe r wor ds , Deced en t, Ms
. St eel an d/ orRic ha rdKess el co ll ect iv el y withdrew $ 2,7 21 ,33 7 m or e th anth ey ha d de po si te d i nt o the Mad of f acc ou nt . The Mad of

f tr us te e h as bro ug htanadve rs ari al pro ceed in g a ga in stth e 1 3 es ta te , Ms . Ste el , th e Pl anan d the Pla n’s tru st ee t o s etasi de cert ai n tran sf ers with res pe ctto th e Ma do ff ac co un t (c lawba ckact io n) . The cl awb ackact io n s eek s t o reco ve r th e p aym en ts of f ic ti ti ou s p ro fit s b ecau se th e as se ts reco ve redso far b y th e Mad of f trus te e are in su ffi ci en t t o re im bu rs e al l M ad of

f In ve st m en ts in ve st or s. The est at e d idno t ch an ge th e d at e o f de ath v al ue of M ad of f acc ou ntII. 1 4- 8 -

[* 8] th e Ma do ff ac co un t was zero rathe r th an$4 .8 m il li on , as the est at e h ad rep orte d, wh enDeced en t d ie d. Re sp on de ntfil eda m ot io n fo r pa rti al su m m ary jud gm en t. 1 5 Dis cu ss io n Thi s m at te r co m es be fo re u s i n the wake of m is fo rtu ne wrou gh t b y Mr. Mad of f’s Po nz i s ch em e. Iness en ce, we m us t d eci de th e reg ret tabl e que st io n o f whe th er the est at e m

us t p ay Fed eral est at e ta x fo r Deced en t’s o wni ng th e Ma do ff
acco un t, wh ic h d idno t ac tu al ly hol d the ass et s i t h adpurp orte d t o. We firs t ad dr es s o urst an dardforgrant in g s umm ary jud gm en t. We the n fi ndth atth ere a re
m at eri al fact s i n d is pu te as t o wh ethe r th e Ma do ff ac co un t i s the pro pe rty to b e va lu edforFed eral est at e ta x a ndas t o wh ethe r a h y po th et ic al wil li ng bu y er an d wil li ng sel le r of

th e Ma do ff ac co un t wo ul d re as on ab ly kno w of o r fo res ee M r. Mad of f’s Po nz i s ch em e atth e ti m e Dece de ntdi ed
. I. Summ ary Ju dg m en t W e b eg in with o ursu m

m ary jud gm en t s tand ard . Summ ary jud gm en t i s in te nd edto ex pe di te li ti ga ti on an d a vo idun ne ces sa ry an d e xp en si ve tri al s. See , e.g ., FPL Grp., In c. & Subs . v. Co m m is si on er, 1 16 T.C. 73 , 74 (20 01 ). W e wil l The pa rti es ha ve ag reedto fil e a p art ia l s ti pu la ti on of s et tl edis su es ex cep t 1 5 fo r th e ref un d d en ia l cl ai m

co nc ern in g the da te of d eath fa ir m ark etva lu e o f th e Mad of f acc ou nt .- 9 -

[* 9] gr an t a m ot io n fo r su m m ary jud gm en t o nl y

if i t i s s ho wn tha t the re i s n o ge nu in e d is pu te as t o a ny m at eri al factan d tha t we m ay ren de r a d eci si onas a
m at te r of law. See Ru le 12 1( b) ; El ec. Art s, In c. v. Co m m is si on er, 1 18 T.C. 22 6, 23 8 (2 00 2) . The m ov in g p arty be ars th e b ur de n o f pr ov in g tha t the re i s n o ge nu in e d is pu te as t o a ny m at eri al fact , andwe vi ew al l fa ctua l m at eri al s an d in fere nc es inth e li gh t m os t fa vo rab le to th e n on m ov in g p arty . Dahl st ro m v. Co m m is si on er, 8 5 T.C. 8 12 , 82 1 (1 98 5)
. II. Id en ti ty of th e Pro pe rty To Be Val ue d W e n ow ad dr es s re sp on de nt ’s arg um en t tha t the Mad of f acc ou ntex is te d o n th e d at e Dece de ntdi edan d tha t i t-- rathe r th anit s p ur po rte d h ol di ng s- -m

us t b e th e pr op erty va lu edforFed eral est at e ta x p ur po se s. W e ag ree wi th th e fi rs t l eg of r es po nd en t’s ar gu m en t-- th atth e Ma do ff
acco un t ex is te d o n the da te Deced en t d ie d. Th e Co urt o f App eal s fo r th e St at e o f New Yorkha s h el d tha t the ev en tu al di sc ov ery of Mr. Ma do ff’s Po nz i s ch em e d id
no t d is so lv e a Ma do ff In ve st m en ts acco un t b efo re Mr . Mad of f’s Po nz i s ch em e be ga n t o u nr av el . Simki n v . Bla nk , 96 8 N.E.2d45 9, 4 64 (N.Y. 20 12 ). Thi s C ou rt
m us t fo ll ow a d eci si on by a Stat e’s hi gh es t co urt co nc ern in g a n i ss ue of t ha t St at e’s la w bec au se th e St at e’s hi gh es t co urt i s the be stauth or ity on it s o wn l aw.- 10 -

[* 10 ] See Co m

m is si on er v . Est at e o f Bo sc h, 3 87 U.S. 45 6, 4 65 (19 67 ). The C ou rt of App eal s fo r th e St at e o f New York i s New Yo rk ’s hi gh es t co urt. W e d is ag ree, h owe ve r, with the sec on d l eg of r es po nd en t’s ar gu m en t-- th at th e Ma do ff ac co un t m

us t b e th e p ro pe rty val ue d fo r Fed eral est at e ta x p ur po se s. W e b eg in with the rel ev an t s tatu te s an d re gu la ti on s. Th e Fed eral est at e ta x i s im po se d o n the tra ns fer o f th e ta xabl e es ta te of e ve ry de ced en t wh o i s a c it iz enor res id en t o f th e Uni te d S ta te s. Sec . 20 01 (a). Th e v al ue of atax ab le est at e is a func ti on of t he va lu e o f a d eced en t’s g ro ss est at e. Sec. 2 05 1. A d eced en t’s g ro ss es ta te in cl ud es all pro pe rty to t he ex te ntof t he de ced en t’s i nt eres t i n the pro pe rty atth e ti m e th e d eced en t d ie d. Se c. 20 33 . A dece de nt ’s gro ss est at e m ay in cl ud e real pro pe rty, tan gi bl e p ers on al pro pe rty and/o r in tang ib le pe rs on al pro pe rty. Sec. 20 .20 33 -1 (a), Es ta te Tax R eg s. Th e v al ue of e ve ry it em of p ro pe rty inc lu di bl e in a de ced en t’s g ro ss est at e is ge ne ral ly its fai r m ark etva lu e atth e ti m e th e d eced en t di ed . Id. s ec. 2 0.2 03 1- 1( b)
. The crea ti on of l eg al in te res ts inpro pe rty is g en eral ly gov ern edby Stat e law, whi le Fed eral law d et erm in es whatin te res ts so crea te d s ha ll be tax ed . Esta te of Gam bl e v . Comm is si on er, 6 9 T.C. 9 42 , 94 8 (1 97 8) . Pers on al pro pe rty un de r New Yorklaw i nc lu de s ev erythi ng th atm ay be own ed , exc ep t re al pro pe rty. N .Y. Gen . Con st r. Law sec . 39 (McKi nn ey 20 03 ). Cert ai nl y , th e o wne r of th e Ma do ff- 11 -

[* 11 ] acco un t h adwhatap pe ar t o b e p ro pe rty-li ke rig ht s i n h is ag reem en t wi th Mad of f In ve st m en ts co nc ern in g the Mad of f acc ou nt ; e.g ., he h adth e res tri ct ed rig htto tra ns fer the acco un t. We cann otsay onth e rec or d b efo re u s, h owe ve r, whe th er tha t ag reem en t co ns ti tu te d apro pe rty int eres t i nc lu di bl e in Deced en t’s gr os s es ta te sep arat e fro m , or e xc lu si ve of, any int eres t Dec ed en t h adinwhat pu rp orte d t o b e th e as se ts he ldinth e Ma do ff ac co un t. Thi s que st io n i s b es t
an swe redaft er the pa rti es have ha d the op po rtu ni ty to d ev el op th e rel ev an t fa ct s at tri al . W e wil l the refo re d en y res po nd en t’s m ot io n o n thi s p oi nt . III. Val ue of the Pro pe rty for Fe de ral Est at e Tax Purp os es W e n ow turn t o re sp on de nt ’s sec on d a rg um en t-- th ata hypo th et ic al wil li ng bu y er an d wi ll in g s el le r of th e Ma do ff acc ou ntwou ldno t re as on ab ly kno w or fo res ee tha t M r. Mad of

f was op erat in g aPo nz i s ch em e atth e ti m e Dece de ntdi ed
. W e b eg in with o urst an da rdfor va lu in g p ro pe rty inc lu di bl e in th e g ro ss es ta te to pro vi de co nt ex t t o re sp on de nt ’s arg um en t. The Fed eral est at e ta x i s im po se d o n the tra ns fer o f pr op erty rathe r th anon th e rec ei ptof p ro pe rty. Itha ca Trus t Co . v. Un it edSta te s, 2 79 U.S. 15 1 (1 92 9) . There fo re, the va lu e o f th e pr op erty to be tax edm

us t b e d et erm in edas o f th e ti m e th e p ro pe rty is tran sf erre d. Id
.- 12 -

[* 12 ] Valu e in th is co nt ex t i s d efi ne d a s fa ir m ark etva lu e--wh ata wil li ng bu y er wou ldpa y

to a wil li ng sel le r, bo th ha vi ng reas on ab le kn owl ed ge of t he rel ev an t fact s. Sec . 20 .20 31 -1 (b ), Est at e Tax Reg s. Acco rd in gl y , lat er o ccurri ng ev en ts affe ct in g the va lu e o f th e p ro pe rty tran sf erre d a re re le va ntto th e d et erm in at io n o f fai r m ark etva lu e o nl y

if the y were re as on ab ly fores eeab le at t he ti m e o f tr an sf er. Est at e o f Gil fo rdv. Co m

m is si on er, 8 8 T.C. 3 8, 5 2- 54 (19 87 ). Bu t l at er o ccu rri ng ev en ts no t af

fect in g v al ue m ay

be rel ev an t t o the de te rm in at io n o f fai r m ark et
va lu e reg ard le ss of t he ir f or es eeab il ity

at t he ti m e o f tr an sf

er. Est at e o f Ju ng v. Co m m is si on er, 1 01 T.C. 41 2, 4 31 (19 93 ). Res po nd en t ar gu es th ata Po nz i s ch em e, by its ve ry natu re, i s n otreas on ab ly kn owabl e o r fo res eeab le un ti l i t i s d is co ve redor i t co ll ap se s. Re sp on de ntno te s Mr. Ma do ff’s p art ic ul ar s ki ll an d tha t h is Po nz i s ch em e was no t d is cl os edun ti l i t
co ll ap se d i n Dec em

be r 20 08 . Res po nd en t the n re as on s tha t M r. Mad of f’s Po nz i
sc he m e was kn owabl e o r fo res eeab le on ly at th e p oi ntwhen itco ll ap se d- -wh enth e am ountof m on ey

flo win g o utof M ad of

f In ve st m en ts was g reat er tha n the am ou nt flo win g i n. Fo r pu rp os es of t hi s m ot io n, atlea st , we di sa gr ee. So m e p eo pl e h adsu sp ect edy ears be fo re Mr . Mad of f’s arre stth atMad of

f In ve st m en ts ’ reco rdof c on si st en tl y hi gh returns was s im

pl y to o g oo d t o b e true . See, e.g ., Com

m . onFin . Serv s., 1 11 th Co ng ., Meet in g o n As se ss in g the Mad of f- 13 -

[* 13 ] Po nz i Sc he m e an d the NeedforReg ul at ory Refo rm 48 -4 9 (C omm . Prin t 20 09 ); Ov ers ig htof S ecu rit ie s an d Ex ch an ge Co m m is si on ’s Fai lu re t o Id en ti fy th e Bern ardL. Mad of

f Po nz i Sc he m e & Ho w to Im pr ov e SEC Pe rfo rm an ce: Heari ng Befo re the Co m

m . onBan ki ng , Hou s., & Urb anAffai rs , 11 1t h C on g. 2 -3 (20 09 ). Whe th er a h y

po th et ic al wil li ng bu y er an d wi ll in g s el le r wou ldha ve acce ss to th is in fo rm at io n a ndto whatde gr ee thi s i nf orm at io n wo ul d a ffec t the fai r m ark etva lu e of th e Ma do ff ac co un t o r th e as se ts pu rp orte dl y he ldinth e Ma do ff ac co un t o n the da te Deced en t d ie d a re d is pu te d m at eri al fact s. See Ru le 12 1( b) ; El ec. Art s, In c. v. Co m m is si on er, 1 18 T.C. at 2 38 . Thu s, we wi ll de ny resp on de nt ’s m ot io n o n thi s po in t as well
. IV. Con cl us io n W e wil l d en y

res po nd en t’s m ot io n. Inreac hi ng th es e h ol di ng s, we h av e co ns id eredall of t he pa rti es ’ arg um en ts , an d, t o the ex te ntno t ad dr es se d, we co nc lu de th atth ey are m oo t, i rrel ev an t o r witho utm eri t. To re fle ctth e fo reg oi ng , An ap pr op ria te ord er wi ll be is su ed de nyin g re sp on de nt ’s m ot io n.