Wednesday, 28 September 2016
Last updated 13 hours ago
Dec 8 2010 | 10:26am ET
Tremont Group Holdings was among the largest victims of the Bernard Madoff Ponzi scheme; the firm's funds lost more than $3 billion in the fraud. But, as one of the largest managers of Madoff feeder funds, Tremont and its Rye Investment Management, now defunct, and Tremont Capital Management units have been magnets for litigation. And in the waning days of court-appointed receiver Irving Picard's period for filing lawsuits, it has found itself on the receiving end of another.
Picard yesterday sued Tremont, parents Oppenheimer Acquisition and MassMutual and several executives and former executives, alleging that the firms failed to do "any reasonable or meaningful" due diligence before pouring their investors' billions into Madoff.
"They relied on Madoff's reputation and their appetite for consistent returns," David Sheehan, a lawyer for Picard, said. "All the warning signs were there—some were impossible to ignore—yet all were consciously ignored by the Tremont network."
"Tremont blindly relied upon Madoff to drive the funds' returns and, more importantly, Tremont's profits," Picard alleged. The receiver did not specify how much he was seeking in the suit, which calls for the return of "fictitious profits, preferential payments and fraudulent transfers," as well as "additional payments to prevent any unjust enrichment on the part" of the defendants.
Picard also sued UBS for a second time in as many weeks yesterday. The receiver demanded an additional $555 million from the Swiss bank for return to the Madoff scheme's victims; he had already sued the bank for more than $2 billion, accusing it of lending "an aura of legitimacy" to Madoff.
UBS has previously denied any wrongdoing.
Picard is working against a Saturday deadline—the two-year anniversary of Madoff's arrest—to file clawback suits seeking the return of money for distribution to the scam's victims. He has already collected $2.6 billion, and has lawsuits outstanding for another $33 billion. Total losses in the $65 billion Ponzi scheme are estimated at $20 billion.