Madoff Feeder Fund Sues Its Auditors

Feb 2 2009 | 1:57am ET

A Bernard Madoff feeder hedge fund shop has sued its auditors, alleging they failed realize that something was afoot at what authorities are calling a $50 billion Ponzi scheme.

Darien, Conn.-based Maxam Capital Management, which lost about $280 million invested with Bernard L. Madoff Investment Securities, has accused Goldstein Golub Kessler and McGladrey & Pullen of negligence. The lawsuit, filed Friday in Connecticut Superior Court, alleges that the auditors offered “unqualified” opinions for the Maxam Absolute Return Fund’s financial statements, saying they represented the fund’s true financial position.

“Maxam intends to purse its legal rights to ensure that proper restitution is made to its investors,” Jonathan Cogan, a lawyer for Maxam, said in a statement.

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