Monday, 27 June 2016
Last updated 2 days ago
May 19 2009 | 2:07am ET
Irving Picard , the court-appointed trustee liquidating Bernard Madoff’s empire of fraud, is keeping very busy these days running to the court. Less than a week after filing lawsuits seeking $7 billion in phony profits from Madoff investors, he has slapped the biggest loser in the Madoff sweepstakes with a $3.5 billion suit.
The clawback suit targets Fairfield Greenwich Group, the New York fund of hedge funds shop that lost about half of its assets when Madoff’s $65 billion Ponzi scheme collapsed in December. Picard alleges that the firm withdrew some $3.54 billion in non-existent profits from its Bernard L. Madoff Investment Securities accounts in the years before Madoff’s arrest.
“The defendant funds received from BLMIS unrealistically high and consistent annual returns” from 1996 through last year, the complaint alleges. “Defendants knew or should have known that BLMIS was engaged in fraud based on these facts.”
The lawsuit is hardly the first to target FFG, which lost $7.5 billion in the scandal. It has been hit with a number of class-actions on behalf of aggrieved investors, as well as a lawsuit filed by Massachusetts authorities. FFG and its principals, who have also been sued, have denied the charges, painting itself and themselves as victims of the Ponzi scheme. It has done so again in the face of this one.
“There is no merit to this lawsuit, and it will be defended vigorously,” an FFG spokesman told Bloomberg News.
FFG last week agreed to turn over control of four of its largest remaining funds to Sciens Capital Management.
FFG is not the only Madoff feeder fund manager targeted by Picard: Earlier this month, he sued former GMAC Financial Chairman J. Ezra Merkin, who ran three Madoff feeders, for $557.8 million, and last month sued Kingate Management for $255 million. Last week, he sued philanthropist Jeffry Picower and hedge fund Harley International (Cayman) for more than $7 billion.