In a suit just filed in Manhattan federal court by Criterium Capital Funds BV, BBF Trust, and three other investors, Kingate Management Ltd. and its directors were sued for $3.5 billion, reports Bloomberg.com. The suit involves two funds invested in Bernard L. Madoff Investment Securities LLC. According to the plaintiffs, said Bloomberg.com, Kingate â€œmade negligent misrepresentations â€¦ and breached its duty.â€
told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount. As we reported previously, Madoff never made a single trade on behalf of his investors. Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering, and making a false filing with the U.S. Securities and Exchange Commission (SEC). At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme. Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison.
Angels in the Outfield full Regarding the recent lawsuit, â€œDefendants in fact did not properly vet or monitor Madoff and, instead, falsely reported steadily increasing account values to plaintiffs while paying themselves hundreds of millions of dollars in fees,â€ the investors said in their complaint, quoted Bloomberg.com. The lawsuit comes on the heels of others that have been filed against Madoff feeder funds, such as the Fairfield Greenwich Group and Gabriel Capital LP, said Bloomberg.com, adding that the plaintiffs are now looking to combine into class-action status to include investors in the Kingate funds.
Earlier this year, the trustee appointed to liquidate Madoff Securities sued Kingate in Manhattanâ€™s U.S. Bankruptcy Court seeking the return of $255 million that had been transferred to the firmâ€™s funds just prior to the collapse of Madoffâ€™s Ponzi scheme. Following Madoffâ€™s arrest, the Securities Investor Protection Corporation (SIPC) appointed Irving Picard as trustee, and charged him with locating and liquidating assets from Madoffâ€™s investment business in an attempt to recover some funds for his defrauded investors.
In recent months, Picard has filed several claw back lawsuits seeking a total of $10.1 billion in profits withdrawn by Madoff investors that he claims should have known of the fraud. Picard also is seeking about $735 million from Madoff customers outside of court. So far, Picard has received roughly 9,000 claims from cheated Madoff investors.
Most recently, we wrote that bankruptcy cases involving Madoff will be consolidated in an attempt to save money and increase the chances that stolen assets will be recovered, citing an earlier Bloomberg.com report. This means one trustee will oversee Madoffâ€™s personal bankruptcy, as well as another bankruptcy proceeding involving the admitted swindlerâ€™s business brought by the SIPC. In agreeing to consolidate the Madoff cases, Judge Burton Lifland of U.S. Bankruptcy Court in Manhattan said a common trustee would â€œmaximizeâ€ the odds of asset recovery and avoid duplication of efforts, Bloomberg.com said. The judge also said that Madoffâ€™s creditors would benefit from the consolidation â€œbecause SPIC is underwriting the costs of the recovery.â€ Picard backed the consolidation, the Associated Press said.