Bernie Madoff ran history's biggest Ponzi scheme outside state-run pensions, losing $17.5 billion, dwarfing the efforts of local hero David Ross.
Madoff's victims will get back at least $9.5b. Those who lost money to David Ross will get nothing.
Not everyone loses in a Ponzi. According to the liquidator's reports, 627 investors lost $114 million with Ross Asset Management (Ram) but 204, collectively, took $46m more than they put in.
In the US, Irving Picard, Madoff's court-appointed trustee, has received $800m in funding from a quasi-fidelity fund for brokerages. This has allowed him to relentlessly litigate a number of parties, including those considered the net winners.
Of the $46m winners in Ram pocketed, liquidators PwC have identified only $3.8m in possible recoveries under the Companies Act voidable transactions regime. Although its reports hint a "constructive trust" case could be made, without funding this is unlikely to proceed.
The bigger issue is that Picard went after Madoff's bankers, alleging that they either knew or should have known about the fraud. The case faltered in the New York courts because Picard was standing in Madoff's soiled shoes.
The legal principle, in pari delicto or mutual fault, translates in New Zealand as Clean Hands. One party to a fraud cannot sue another party for their loss.
It is probable that the New Zealand courts would look differently at the same scenario, although now the issue has been clarified the possibility of a class action by the investors is obvious.
It won't happen because the net losers appear to be hoping either the Government or the liquidators will rescue them. This is a shame. If they fought, they might win.
Ross spent two decades building up his business, consistently showing good returns, even through the global financial crisis. There is no public evidence that any third party knew or should have known Ross was operating a Ponzi scheme, but this does not mean that the information isn't there.
It seems incredible that with nearly half a billion of non-existent funds under his control, no one suspected a thing. Not his bank, not the Institute of Chartered Accountants, not the Securities Commission or the FMA that licensed him. Not even the financial advisers who touted for him. No one knew? I don't believe it.