Fairfield, Conn. files $75m suit against Madoff, family
A Connecticut town is suing disgraced financier Bernard Madoff, his family, and investment companies because its pension board allegedly lost millions in Madoff's Ponzi scheme.
The lawsuit, seeking $75 million, was filed Monday in Bridgeport Superior Court by the Town of Fairfield and its pension board. It names members of Madoff's family, Tremont Group Holdings Inc., and Maxam Capital Management for failing to oversee Madoff's investments, along with the founding partners of Fairfield Greenwich Group, which lost more than $7 billion in the scheme. Tremont Group Holdings is a unit of MassMutual Financial Group of Springfield.
"These are entities that raised money and solicited money and fed money to Madoff to enable his Ponzi scheme to succeed," attorney David Golub said at a news conference yesterday. "We believe that the feeder funds know Bernard Madoff was engaging in criminal activity, supported that criminal activity, and abetted that criminal activity."
The town's joint pension board, which provides benefits for about 1,500 active and retired Fairfield workers, had invested a net of about $15 million with Madoff since 1997. It was led to believe that as of last November, that investment had grown in value to $42 million.
Golub said the $75 million claim - one of at least four dozen Madoff-related lawsuits - includes the $42 million, fees paid to the feeder fund managers over the years, and punitive damages.
Madoff's attorney, Ira Sorkin, and Fairfield Greenwich spokesman Tom Mulligan declined to comment. Officials at Tremont and Maxam did not immediately return phone calls.
Federal prosecutors have said Madoff informed investors at the end of November that they had nearly $65 billion in their accounts. Investigators say the figure was most likely based on what accounts originally valued at less than $20 billion would be worth if he had delivered the steady profits he promised.
The FBI and regulators are still trying to determine if members of Madoff's inner circle were in on the fraud.
Fairfield officials this week also obtained a temporary restraining order that prevents Madoff, his relatives, and executives with Fairfield Greenwich, Maxam, and other firms that allegedly fed Madoff's fund from selling real estate, personal property, and financial accounts. The assets of Madoff's investment company have already been frozen in a deal with federal regulators and a receiver was appointed to manage the firm's financial affairs.
The order marks the first time that a judge has frozen assets owned by the Madoff sons, who worked with their father.
Connecticut Superior Court Judge Arthur Hiller on Monday granted a temporary restraining order that freezes assets owned by Mark Madoff and Andrew Madoff. It also freezes the assets of their mother and their uncle, Peter Madoff.
The town had previously sued two other companies - NEPC of Cambridge and KPMG of Montvale, N.J. - for failing to provide due diligence of Fairfield's investments.
Meanwhile in New York yesterday, a lawyer for Peter Madoff tried unsuccessfully to have a second freeze order lifted from his client's assets. The lawyer said his client agreed with US prosecutors to have some of his assets frozen in December and argued that the restraining order imposed by a state judge last week was "unnecessary," "overly broad," and "totally inappropriate."
Peter Madoff already had reached a less-restrictive agreement with federal prosecutors, the lawyer, Charles Spada, told the state appeals court in Brooklyn.
Thomas A. Dickerson, the appeals court justice who reviewed the request, rejected the appeal. 