Almost four years after Bernard Madoff's Ponzi scheme collapsed, authorities appear to have caught up with one of his feeder fund managers.
U.S. regulators accused Nikolai Battoo, an associate and an interlocking web of companies from Switzerland to Florida to Panama to the Pacific Rim of misleading investors about losses in the Madoff debacle, among other alleged untruths. According to the Securities and Exchange Commission and Commodity Futures Trading Commission, Nikolai Battoo, who is believed to live in Switzerland, raised at least $100 million from U.S. investors.
Battoo allegedly claimed to manage $1.5 billion—and to have posted big returns—before he used the collapse of MF Global Holdings in October as an excuse to stop paying out redemptions, the regulators said. In fact, Battoo's troubles began long before, in 2008, when he lost tens of millions in Madoff feeder funds and fund-linked certificates.
Battoo stood at the helm of "an amorphous syndicate of far-flung funds, entities and affiliates," including a raft of companies called BC Capital in Switzerland, the U.K., Florida, Panama and Hong Kong, as well as Private International Wealth Management. A Chicago judge has frozen Battoo's U.S. assets as well as those of his Panamanian and Hong Kong Affiliates.
Tracy Lee Sunderlage, who allegedly helped Battoo raise money despite an industry ban, was also charged.
"Battoo attracted quite a following of investors by proclaiming his investments withstood the test of the financial crisis," SEC enforcement head Robert Khuzami said. "Reality seems to have finally caught up with him."
"The jig appears to be up," the SEC said in its lawsuit.
“Rather than admit the losses to investors, Battoo has been overstating the value of his investments in a variety of ways," the SEC said. "By boasting benchmark-beating returns, he has continued to attract new investors. However, during the past several months, investors have requested redemptions on their investments with Battoo. Instead of paying them, Battoo has provided a series of excuses ranging from the MF Global collapse to others placing a hold on investors’ money due to government investigations.”