A broker with longstanding ties to jailed swindler Bernard Madoff has been sued for several million dollars by investors who accuse him of losing their money in the fraud, according to court papers filed last Friday.
The broker, Alvin Delaire, was registered with Cohmad Securities Corp, which promoted Madoff’s funds over many years.
A lawsuit by investors Martin Schulman and his wife Suzanne Schulman of Nassau County on New York’s Long Island said they were induced by Delaire to make investments with Madoff “based on fraudulent misrepresentations by Delaire and his omissions to disclose material facts.”
It said Delaire told them he was “personally familiar with the Madoff system, that he knew how it worked, that it worked, and that he personally tracked it and followed it for many years,” according to the lawsuit in Manhattan federal court.
Lawyers for Delaire and the Schulmans could not immediately be reached for comment.
Madoff pleaded guilty on March 12 to a fraud that prosecutors say bilked investors of as much as $65 billion over 20 years. When the one-time Nasdaq chairman is sentenced, scheduled for June 16, he could be ordered to prison for the rest of his life.
His investors included hedge funds, banks, Jewish charities, the wealthy, and small individual investors in North and South America and Europe. The magnitude of the fraud shocked the public and drew demands for stricter regulations.
Only Madoff and his outside accountant have been criminally charged, but private and state civil action has been taken against some of his associates, including Cohmad Securities, which was owned by Maurice Cohn, his daughter Marcia and Madoff. The name Cohmad was taken from the names “Cohn” and “Madoff”.
The Schulmans’ lawsuit, which seeks a minimum of $9.6 million in damages from Delaire, said their dealings with the Far Hills, New Jersey, broker dated back to 2002.
It said Delaire told the Schulmans that he had successfully invested millions of dollars of Cohmad clients’ money over many years with Madoff and his firm, earning consistently above-market returns.
They accused the broker of neglecting his fiduciary duties and said “he would be unjustly enriched unless required to pay back to the plaintiffs the full amount of their losses up to all of the money which he received from the operation of the Madoff fund and scheme.”
The case is Martin Schulman, M.D. and Suzanne Schulman v Alvin J. Delaire, Jr. 09-3871 U.S. District Court for the Southern District of New York (Manhattan) (Reporting by Grant McCool; editing by John Wallace)
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