Madoff Feeder Fund Accused of Fraud
Fairfield Greenwich Group was Founded by Walter Noel of Greenwich, Conn.
By RICHARD ESPOSITO, PIERRE THOMAS, and MADDY SAUER, ABCNews.com
A fund that fed over $7 billion into Bernard Madoff’s Ponzi scheme has been charged with knowingly misrepresenting to its investors what it knew about Madoff’s operation and with asserting it performed a level of due diligence that it did not actually perform, according to a civil complaint by the Massachusetts Secretary of State.
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.
Noel’s 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.
Subsequently, the fund group’s management asserted that it would seek to recover the $7.2 billion of its investors’ capital that it had placed in Madoff’s hands through one of its investment vehicles, the Fairfield Sentry fund.
But Wednesday’s complaint alleges that the Fairfield Greenwich fund failed to disclose the “interconnected nature” of its relationship with Madoff Investments.
“It’s like there’s been a plane crash and the pilot of the plane is saying ‘it’s not my fault. I’m just a passenger’,” said Massachusetts Secretary of State William Galvin in an interview earlier this year with ABC News. ‘You’re not just a passenger. You have responsibilities.”
“Fairfield’s complete disregard of its fiduciary duties to its investors and its flagrant and reoccurring misrepresentations to investors, rises to the level of fraud,” 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 the complaint citing testimony from Fairfield executives.
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