Lawsuit against Madoff-related Feeder Fund Survives

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A federal judge refused to dismiss an investor lawsuit against Fairfield Greenwich Group, a hedge fund firm accused of channeling money to the Madoff’s Ponzi scheme.

U.S. District Judge Victor Marrero in Manhattan allowed most of the claims to stand against Fairfield and other firms that provided administrative, custodial and accounting services.

Fairfield and co-founder Walter Noel are among 46 defendants in a separate lawsuit by Irving Picard, a court-appointed trustee who is seeking to recover money for victims of the estimated $65 billion Ponzi scheme.

Investors and Picard have accused Fairfield of guiding billions of dollars to Bernard L. Madoff Investment Securities LLC, which Picard is now liquidating.   Picard has estimated Fairfield received more than $1 billion of fees from Madoff, including for operating its “feeder funds.”

In his ruling, Marrero wrote that “according to plaintiffs, Fairfield fulfilled a critical role for Madoff, who knew that secrecy and obfuscation were key to prolonging how long he could keep his big lie afloat and his sand castles grounded.”    

Marrero further stated that the plaintiffs sufficiently alleged that several Fairfield defendants “intentionally or recklessly funneled plaintiffs’ money to Madoff over time while allegedly ignoring clear signs that they were dealing with a master thief.”

Madoff, 72, was arrested on December 11, 2008. He pleaded guilty in March 2009 to running the Ponzi scheme, and is serving a 150-year sentence in a North Carolina federal prison.

According to his website for Madoff victims, Picard has reviewed 13,286 claims arising from the Ponzi scheme, and found 2,188 claims worth $5.58 billion to be valid. Picard is a partner at the law firm Baker & Hostetler LLP

The case is Anwar v. Fairfield Greenwich Ltd et al, U.S. District Court, Southern District of New York, No. 09-00118.

Anna Timone (195 Posts)


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