Town sues Bernard Madoff

March 31, 2009 4:37:37 PM PDT
A Connecticut town is suing disgraced financier Bernard Madoff, his family and investment companies because its pension board allegedly lost millions in Madoff's Ponzi scheme. The lawsuit seeking $75 million was filed Monday in Bridgeport Superior Court by the town of Fairfield and its pension board. It names members of Madoff's family and Tremont Partners and Maxam Capital Management for failing to oversee Madoff's investments, and the founding partners of Fairfield Greenwich Group, which lost more than $7 billion in the scheme.

"These are entities that raised money and solicited money and fed money to Madoff to enable his Ponzi scheme to succeed," attorney David Golub said at a news conference Tuesday. "We believe that the feeder funds know Bernard Madoff was engaging in criminal activity, supported that criminal activity, and abetted that criminal activity."

The town's joint pension board, which provides benefits for about 1,500 active and retired Fairfield workers, had invested a net of about $15 million with Madoff since 1997. It was led to believe that as of last November, that investment had grown in value to $42 million.

Golub said the $75 million claim - one of at least four dozen Madoff-related lawsuits - includes the $42 million, fees paid to the feeder fund managers over the years and punitive damages.

Madoff's attorney, Ira Sorkin, and Fairfield Greenwich spokesman Tom Mulligan declined to comment. Officials at Tremont and Maxam did not immediately return phone messages.

Madoff, 70, was sent to prison in March after he pleaded guilty to charges that he ripped off thousands of investors for billions of dollars. He was arrested in December after confessing to his sons that his private investment business was a giant fraud. He faces a maximum sentence of 150 years in prison.

Federal prosecutors have said Madoff informed investors at the end of November that they had nearly $65 billion in their accounts.

Investigators say the figure was most likely based on what accounts originally valued at less than $20 billion would be worth if he had delivered the steady profits he promised.

The FBI and regulators are still trying to determine if members of Madoff's inner circle were in on the fraud. They say the investigation could drag out for months.

Fairfield officials this week also obtained a temporary restraining order that prevents Madoff, his relatives and executives with Fairfield Greenwich, Maxam and other firms that allegedly fed Madoff's fund from selling real estate, personal property and financial accounts. The assets of Madoff's investment company have already been frozen in a deal with federal regulators and a receiver was appointed to manage the firm's financial affairs.

The town had previously sued two other companies - NEPC of Cambridge, Mass., and KPMG of Montvale, N.J. - for failing to provide due diligence of Fairfield's investments.


NEW YORK AND TRI-STATE AREA NEWS

USEFUL LINKS:
  • VIEWER PHOTOS AND VIDEOS

  • REPORT TYPO

  • GET WIDGET

  • EYEWITNESS TWITTER

  • FIND US ON FACEBOOK



  • Load Comments