When the State of Massachusetts filed a civil suit last month against the Fairfield Greenwich Group for fraudulently representing its investments and due diligence, the case stopped short of alleging that Walter Noel, his sons-in-law, and the rest of the executives actually knew anything was amiss. Sure, they may have gone to absurd lengths not to know what was going on, but that at least was some sort of defense. Now, the trustee in charge of trying to recoup lost Madoff funds for robbed investors has sued FGG himself, saying they did know that something was amiss, and that they knew it for quite a long time. This comes on top of yesterday's news that some Madoff feeder investors could be charged criminally for their willful negligence and possible collusion.
Irving Picard of Baker & Hostetler, the court-appointed trustee, is suing FGG CEO Walter Noel, his son-in-law Andrés Piedrahita, and partner Jeffrey Tucker to recoup some $3.2 billion dollars that FGG successfully removed from their investments with Madoff over the last six years, before the Ponzi schemer confessed. ($1.2 billion of that sum was withdrawn in the last three months of the scam.) Picard hopes to redistribute these funds out to other defrauded investors who had no idea what was going on, alleging that Noel et al. clearly knew that their Madoff returns of 10 to 21 percent were "unrealistically high and consistent." Plus:
The complaint said, the funds’ account records showed prices for 280 stock trades that did not match the actual price range for those stocks when the trades supposedly occurred. Some trades were shown as occurring on days that were actually holidays or weekends, according to the complaint. “These trades were clearly fictional,” the complaint said.
This raises the obvious question: Just how stupid are men like Noel, Tucker, and Piedrahita willing to pretend to be to stay out of jail?
Trustee Sues Hedge Funds Over Losses to Madoff [NYT]
Earlier: Investigation of Madoff Victims Could Reveal Ring of Old Criminals
Madoff Feeder Fairfield Greenwich Group Charged With Fraud
Related: Dickensian Denial