Madoff Feeder Fund Sued for $3.5 Billion

One of Bernard Madoff's largest feeder funds has been sued for $3.5 billion by the trustee in charge of liquidiating the assets of Bernard L. Madoff Investment Securities LLC. The Fairfield Greenwich Group, headed by society page bold faced name, Walter Noel, asserted it had $14 billion under management prior to the December arrest of Madoff and his subsequent guilty plea to charges of running a more than $60 billion Ponzi scheme.

One of Bernard Madoff's largest feeder funds has been sued for $3.2 billion by the trustee in charge...

One of Bernard Madoff's largest feeder funds has been sued for $3.2 billion by the trustee in charge of liquidating the assets of Bernard L. Madoff Investment Securities LLC. The Fairfield Greenwich Group, headed by society page bold faced name, Walter Noel, asserted it had $14 billion under management prior to the December arrest of Madoff and his subsequent guilty plea to charges of running a $50 billion Ponzi scheme.

(ABC News)
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Irving Picard, the trustee in charge, filed a lawsuit in federal bankruptcy court Monday alleging that Fairfield Greenwich Group did not conduct due diligence on behalf of their clients who invested in three of their hedge funds.

According to Picard the managers of the funds "ignored multiple red flags" and should have realized that the trades were "clearly fictional" because, for example, the prices for some of the trades were outside the daily range and in other cases the trades were settled on weekends and holidays.

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"At no time did the Defendants conduct a performance audit of BLMIS or match any trade confirmation provided by BLMIS with actual trades executed through any domestic or foreign public exchange," the complaint states.

Fairfield had earned about $100 million per year in fees based on the money it placed in Madoff's hands, according to another complaint filed in Massachusetts citing testimony from Fairfield executives.

Fairfield Greenwich Group disagrees and argues that they are victims in the scandal.

"Fairfield Greenwich funds lost far more from the Madoff fraud than they ever redeemed. There is no merit to this lawsuit and it will be defended vigorously," Seth Faison, a spokesman for the company, said.

The firm's founder Noel has a mansion in Greenwich, Conn. as well as a fabulous hilltop retreat on the private Caribbean island of Mustique. He along with his wife and family have been featured in magazines, such as Town & Country, enjoying their glamorous lifestyle.

Noel's personal attorney has previously stated that Noel and his family are also victims of Madoff and that his firm, despite its best efforts, did not know that Madoff was scamming the investors Noel sent to Madoff.