A federal judge refused to dismiss an investor lawsuit against Fairfield Greenwich Group, a hedge fund firm accused of funneling money to the now-imprisoned Bernard Madoff for his massive Ponzi scheme.
In a 201-page ruling, U.S. District Judge Victor Marrero in Manhattan narrowed the lawsuit against Fairfield and other firms that provided administrative, custodial and accounting services.
Fairfield and co-founder Walter Noel are among 46 defendants in a separate lawsuit by Irving Picard, a court-appointed trustee who is seeking to recover money for victims of the estimated $65 billion Ponzi scheme.
Investors and Picard have accused Fairfield of guiding billions of dollars to Bernard L. Madoff Investment Securities LLC, which Picard is now liquidating.
Picard has estimated Fairfield received more than $1 billion of fees from Madoff, including for operating its “feeder funds.”
In his ruling, Marrero said the investors sufficiently set forth claims that various defendants ignored “red flags” about Madoff, including his seeming “uncanny” ability to generate consistent returns for his clients in all sorts of markets.
He said the plaintiffs sufficiently alleged that several Fairfield defendants “intentionally or recklessly funneled plaintiffs’ money to Madoff over time while allegedly ignoring clear signs that they were dealing with a master thief.”
Mark Cunha, a partner at Simpson, Thacher & Bartlett LLP representing Fairfield, said: “We are pleased with the decision to the extent it dismissed many of the claims against the individuals and the corporate defendants. For us to have won on every single point probably would have been overachieving.”
Lawyers at Boies, Schiller & Flexner LLP, which represents plaintiffs in the case, were not immediately available for comment.
Citco Group Ltd, GlobeOp Financial Services LLC and PricewaterhouseCoopers LLP are among the dozens of other defendants in the case.
Last month, Marrero rejected efforts by defendants to dismiss much of the case on the ground that the Martin Act, a New York law that gives the attorney general power to fight financial fraud, preempted the investors’ claims.
Madoff, 72, was arrested on Dec. 11, 2008. He pleaded guilty in March 2009 to running the Ponzi scheme, and is serving a 150-year sentence in a North Carolina federal prison.
According to his website for Madoff victims, Picard has reviewed 13,286 claims arising from the Ponzi scheme, and found 2,188 claims worth $5.58 billion to be valid. Picard is a partner at the law firm Baker & Hostetler LLP
The case is Anwar v. Fairfield Greenwich Ltd et al, U.S. District Court, Southern District of New York, No. 09-00118.
Was this article valuable?
Here are more articles you may enjoy.