Conn. Town Can't Sue Fairfield Greenwich

Aug 12 2011 | 11:05am ET

Another Connecticut judge has put the brakes on a Connecticut town's effort to recoup some of its losses from the Bernard Madoff Ponzi scheme from the arch-fraudster's brother and primary feeder fund.

The Connecticut Appellate Court this week upheld a lower court's dismissal of the Town of Fairfield's lawsuit against Peter Madoff and the Fairfield Greenwich Group. The two were among 18 defendants sued by the town two years ago in an effort to get its $42 million back.

The only problem, according to the appellate judges, is that Fairfield had no direct relationship with either Peter Madoff, who has not been accused of any wrongdoing, or its namesake hedge fund. Instead, the court ruled, Fairfield will have to settle for suing the Maxam Absolute Return Fund, which invested the town's money with Fairfield Greenwich and, in turn, with Madoff.

"Although the plaintiff's complaint is rich with allegations that the Fairfield Greenwich defendants acted in concert with Madoff or in furtherance of Madoff's fraudulent plan, it is devoid of any allegation that the Fairfield Greenwich defendants played any role in inducing the plaintiffs to invest in the Maxam Fund or in any other feeder fund, or with Madoff directly," Judge Thomas Bishop wrote in the court' decision.

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