"Conventional wisdom has been turned on its head," said Javier Bleichmar of the law firm Labaton Sucharow in New York, which has clients in the Madoff case. So far, indirect investors have been barred from pursuing their claims in bankruptcy court because they were not technically Madoff customers. And domestic courts have proven unreceptive to claims they filed against banks and other third parties, dismissing them on technical grounds.

Many of their offshore hedge funds are being liquidated in countries where the losing side pays all the legal costs — a risk that many investors just can't take, Mr. Bleichmar said. "In the largest Ponzi scheme in history, not even the domestic investors have been able to access the courthouse steps," Mr. Bleichmar said. "In offshore jurisdictions, it's even more difficult."