Hi and welcome to Just Answer!
Yes - you may deduct your loss. There are two options...
If you your own money became noncollectable - that will be treated as a bad debt and is deducted.
In your case that would be a personal bad debt. To deduct a personal bad debt - you need to determine in which year it became worthless.
For details how to deduct bad debt - see this IRS article - http://www.irs.gov/taxtopics/tc453.html
A nonbusiness bad debt is reported as a short-term capital loss in Part 1 on
Form 1040, Schedule D . It is subject to the capital loss limitations. A nonbusiness bad debt deduction requires a separate detailed statement attached to your return.
The bad debt is reported on form 8949 - Part I - http://www.irs.gov/pub/irs-dft/f8949--dft.pdf - box "C" in the header should be checked.
Then - amounts will be transfered to schedule D - http://www.irs.gov/pub/irs-pdf/f1040sd.pdf
Part I, line 3 - and you should have the loss in column (h).
If the bankruptcy court cannot find the rest of the funds - you might be subject of fraud.
The fraud may be treated as theft. If you became a victim of theft - you may claim a deduction for Casualties, Disasters, and Thefts losses. A theft is the taking and removing of property or money with the intent to deprive the owner of it.
As long as your losses may be classified as theft - you may deduct them.
The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.
For a theft loss, in case of audit - you should be able to show all the following.
-When you discovered that your property was missing.
-That your property was stolen.
-That you were the owner of the property.
-Whether a claim for reimbursement exists for which there is a reasonable expectation of recovery.
Such losses are reported on Form 4684. For more information, refer to Publication 547, Casualties, Disasters, and Thefts.
You are not required to file a police report or sue other party in order to claim a theft loss - but in case of audit having a police report or a court judgment might be helpful to proof that the action is illegal under the law of your state.
Please let me know if you need any help or clarification.