Fairfield Is Sued by Madoff Trustee for $3.54 Billion

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The trustee liquidating Bernard Madoff’s defunct money management firm sued three Fairfield Greenwich Group hedge funds, seeking the return of $3.54 billion withdrawn before Madoff’s massive fraud unraveled.
The trustee, Irving Picard, filed the so-called clawback lawsuit today in Manhattan federal court, seeking damages that will be used to repay victims of a $65 billion Ponzi scheme at Madoff’s New York-based money-management firm.

Since 1995, the Fairfield funds invested about $4.5 billion with Bernard L. Madoff Investment Securities LLC, or BLMIS, through 242 wire transfers, Picard said in the complaint. The funds are Fairfield Sentry Ltd., Greenwich Sentry LP and Greenwich Sentry Partners LP.

Beginning in 1996, “the defendant funds received from BLMIS unrealistically high and consistent annual returns,” Picard said in the complaint. “Defendants knew or should have known that BLMIS was engaged in fraud based on these facts.”

The hedge funds withdrew $3.2 billion from Madoff accounts in the six-year period before Madoff’s Dec. 11 arrest, including $1.2 billion withdrawn in the final three months of the fraud, according to the complaint. Picard said that amount is recoverable under U.S. bankruptcy law.

Fairfield Greenwich, one of the hardest-hit firms in the Madoff fraud with $7.5 billion invested, has been sued by several investors over its Madoff-related losses.

SOURCE: http://www.bloomberg.com/apps/news?pid=20601103&sid=a4ynfTC9vMOU&refer=u...

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