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In the Madoff case, there were a number of funds seized from his family members who had also participated in the scam. Some of this money was indeed given to the defendents, though I can't get an accurate figure of just how much. But yes, some was returned. But all governments are thieves, so it shouldn't be any kind of shock. Here in PR, they have a saying that goes a little like this..."don't steal, the government hates competition".
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