From the How Things Really Work Desk:

Madoff Investors Keep Billions in Profit (this is from a NYTimes email)

The company led by the American billionaire Koch brothers, along with dozens of banks and fund managers, kept billions of dollars in profit from Bernard L. Madoff’s Ponzi scheme in accounts offshore.

And, it turns out, the funds can stay there.

They had invested in the Madoff fund from offshore accounts, and a judge said that certain funds held abroad, worth an estimated $2 billion, could not be made available to victims of the Madoff scheme.

The judge said foreign bankruptcy proceedings blocked the trustee from gaining access to the money. Koch Industries began investing in the Madoff fund well before its collapse and pulled out $21.5 million in 2005.

The money went to a fund registered in the British Virgin Islands and then to a Koch entity in Britain. They were not alone.

Several European banks also had Madoff money offshore, according to court papers, including HSBC, UBS, Credit Suisse, an international arm of Merrill Lynch and the French money manager Natixis.

The rest of the story: