Madoff Trustee Sues Fairfield Co-Founder Noel (Update2)
By Bob Van Voris
July 21 (Bloomberg) -- Fairfield Greenwich Group’s co-founder Walter Noel was sued by the trustee overseeing the liquidation of Bernard Madoff’s firm as part of an amended lawsuit that names 43 new defendants.
Noel and the other defendants worked with Madoff and his firm “to commit, and exponentially expand, the single largest financial fraud in history,” trustee Irving Picard said today in the complaint in U.S. Bankruptcy Court in New York. “Every dollar the defendants purportedly ‘earned,’ and every dollar they kept to unjustly enrich themselves, was stolen money.”
Madoff, 72, is serving a 150-year term in federal prison in Butner, North Carolina, after pleading guilty to orchestrating history’s biggest Ponzi scheme. Fairfield Greenwich was a marketing and investor-relations arm for Bernard L. Madoff Investment Securities LLC, helping to enable the scheme, Picard said.
Picard’s suit seeks more than $3.6 billion in damages from the Fairfield Greenwich defendants.
A Fairfield Greenwich spokesman, Thomas Mulligan, reading from a company statement, said the decision to expand the lawsuit was “incomprehensible” because the company is involved in good-faith negotiations with Picard.
“The Madoff trustee’s amended complaint is replete with false, misleading and rehashed accusations,” Fairfield Greenwich said in the statement.
Top Fairfield Greenwich executives invested in Madoff along with their clients, according to the statement. They lost more than $70 million the fraud, Fairfield Greenwich said.
Suit in 2009
Picard in May 2009 sued three Fairfield Greenwich “feeder funds” that channeled $4.7 billion to Madoff Investment Securities and withdrew billions from the firm.
Picard today added 24 Fairfield Greenwich units and 19 people who held management positions at the firm or marketed the feeder funds. He claims the feeder funds no longer have most of the money they got from Madoff.
Picard claimed Noel, a founding partner and director of Fairfield Greenwich, and the other individual defendants made millions of dollars by ignoring red flags and helping Madoff accomplish his fraud.
“Noel and his immediate and extended family became exceptionally wealthy due to FGG’s de facto partnership with Madoff,” Picard said.
Life of Grandeur
Noel took hundreds of millions of dollars in fees and profit, allowing him and his family “to live what has been publicly described as a life of grandeur, including a mansion in Greenwich, Connecticut, a tropical retreat in Mustique, and extravagant vacation homes in Palm Beach and Southampton,” Picard said.
Among the other individuals added to the case by Picard today were Fairfield Greenwich co-founding partners Jeffrey Tucker and Andres Piedrahita.
“The defendants were not victims,” Picard said in today’s complaint. “They were enablers. They were facilitators. They deepened the pain of Madoff’s customers and their own investors. The effect of their actions was a catastrophic continuation of the Ponzi scheme, the worsening of the BLMIS insolvency, and billions of dollars in additional damages.”
When Madoff was arrested in December 2008, account statements showed $65 billion in nonexistent client investments in 4,900 accounts, according to Picard. Investors lost about $20 billion in principal.
The case is Picard v. Fairfield Sentry Ltd., 09-AP-1239, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.
Last Updated: July 21, 2010 13:09 EDT |
