Who Got the Biggest Payments?
Not speaking from any actually fact but one of the biggest (if not biggest) beneficiary of the Madoff Ponzi scheme may have been the US Government and the IRS.  With all the falsely reported profits going out in statements to investors over the past 10 years, up to $30 billion in fake income may have been reported to the IRS by those investors. Could be a big nut.

How Much Was Overpaid?
Because we do not have the actual details, we cannot say for sure but with a little insight into how funds work and taxes are calculated, we can take an educated guess.  First, we can assume that MOST of the investors had income outside of the Madoff fund. The investor lists reads like a who’s who of business and celebrity and the minimum investment requirements would dictate that these were mainly coming from the highest income tax brackets.  As anyone who has received a statement from a stock fund can attest, there are also multiple trades and liquidations throughout any given year so if the Madoff Funds were built to mimic those transaction, we can assume that over the life of the scheme, all if not most of the profit was shown as being realized and reinvested.

Napkin Math Time Again
We all know how much you liked our last exercise with tsunami wave water volumes, so we decided to do the same thing with the tax liability. If we say that the avg. tax bracket of the investors is 30% having factored in some capital gains vs. short term fund gains and apply that to a $30,000,000,000 taxable PROFIT base, the IRS could have collected $9,000,000,000 in taxes on profits that never materialized.  They could be on the hook for refunds (and a claw-back? J)  They might even have to pay interest.

Getting Paid
The IRS and Federal Government have a knack for working around the kind of pesky details that most citizens have to follow, and getting money out of the Treasury can be harder than picking the winning lotto numbers.  Our guess is that the payments from the IRS will be smaller, slower in coming and represent a fraction of what they received but I guess we will just have to wait and see but it is an interesting question.