Madoff Trustee Files Clawback Lawsuits Collectively Seeking Over $1B For BLMIS Feeder Fund Transfers

Irving Picard, the trustee in charge of liquidating Bernard L. Madoff Investment Securities LLC, has filed nearly a dozen clawback lawsuits seeking to recover more than $1 billion from investments by “feeder” funds tied to the failed financial firm. Picard has been working to recover the money of the victims of the Madoff’s Ponzi scam who were collectively bilked of billions of dollars.

Among the defendants are Swiss private banks Lombard Odier Darier Hentsch & Cie and EFG Bank SA. Picard is seeking $179.4 million and $354.9 million, respectively. He is also suing ABN Amro Fund Services (Isle of Man) Nominees Ltd for $122.2 million and Banque Degroof SA, a Belgian private lender, for $108.1 million.

Although firms and banks based abroad that allegedly obtained transfers from the funds are the primary defendants, there also were other entities and individuals named. All of the defendants are affiliated with the Fairfield Greenwich Group, which was BLMIS’s biggest feeder fund operator.

The clawback complaints were filed with the U.S. Bankruptcy Court in Manhattan right before the one-year anniversary of when the settlement between Picard and the liquidators of Fairfield Sigma Ltd., Fairfield Sentry Ltd., and Fairfield Lambda Ltd., which are three funds connected to the Fairfield Greenwich Group. was approved. According to Picard’s spokesperson Amanda Remus, June 7, 2012 is the earliest date that defendants can claim that the statute of limitations “expires for subsequent transfer cases” related to that settlement.

In other Madoff-related news, the U.S. District Court for the Southern District of New York has dismissed a would-be securities class action lawsuit by investors in Madoff feeder fund Optimal Strategic U.S. Equity fund, against Banco Santander SA.

The plaintiffs claim that an investment adviser of the feeder fund and two affiliated Banco Santander S.A. entities disregarded “red flags” that should have warned them that Madoff was running a Ponzi scam. They are contending that their investments are covered under US securities law protections because they are connected with Madoff’s alleged New York Stock Exchange stock trades and, as a result, “economic reality” makes their purchases equal to investments in these stocks. They also believe that the defendant issued material misstatements related to the sale of shares of Optimal US.

More Blog Posts:
Leave The 2nd Circuit Ruling Upholding Madoff Trustee’s “Net Equity” Method for Investor Recovery Alone, Urges SEC to the US Supreme Court, Stockbroker Fraud Blog, June 5, 2012

SIPC Modernization Task Force Recommends Increasing SIPA Protection Level for Failed Brokerage Firm’s Clients from $500K to $1.3M, Stockbroker Fraud Blog, March 10, 2012

Citing the US Supreme Court’s ruling in Morrison v. National Australia Bank, the district court found that considering the “extremely tenuous and speculative” ties to securities on a US stock exchange, the plaintiffs did not “overcome the presumption” against the 1934 Securities Exchange Act Section 10(b)’s extraterritorial reach. Judge Shira Scheindlin said that investors are not able to look to US securities laws to get back investments that were made outside the country.

Contact our Ponzi scheme attorneys to find out whether you have grounds for a securities case.