October 6, 2009 6:54 PM
Lawyer for Madoff Whistleblower Launches Own Firm
Posted by Brian Baxter
The longtime lawyer for Harry Markopolos, the forensic accountant who tried to warn the SEC about Bernie Madoff, is starting over.
Gaytri Kachroo stepped down from her position as international practice chair at McCarter & English three months ago because of potential conflicts over her work representing victims of Madoff's massive Ponzi scheme.
Last week, Kachroo hung out her own shingle in Kachroo Legal Services. At the moment, the firm is a one-lawyer shop based in Cambridge, Mass.
But the 47-year-old Kachroo has big plans.
Kachroo is focusing most of her attention on a global settlement for all Madoff victims (Kachroo prefers the term "innocent investors" to victims). Her proposal, she says, will provide a cohesive solution for Madoff claimants--Kachroo herself represents about 600--by forging alliances with other firms.
"I'm working on [forming] a consortium of firms in New York, Washington, and Boston," says Kachroo, who declined to publicly name the firms because she doesn't yet have signed agreements from all of them.
Since the Madoff fraud came to light, Kachroo has sought to leverage her connection as counsel to its chief whistleblower. She serves as vice chair of a global alliance of 50 firms representing Madoff investors, and has joined in its call for the creation of an international financial court.
Kachroo also assisted in collecting affidavits that were used for an internal investigation conducted by the SEC's inspector general. The investigation ultimately led to a 457-page report released last month detailing how Madoff systematically deceived the regulator for decades.
It's the SEC that Kachroo has in her sights.
She says the regulator must accept responsibility for its past failures by sponsoring a government-backed global Madoff settlement that will send a positive message to investors worldwide. (Kachroo commends current senior SEC officials for implementing changes to the way the agency operates.)
Taxpayers won't be responsible for funding an SEC-sponsored settlement, Kachroo says. Instead the money will come from a list of financial institutions identified by her and a team of affiliated firms.
"I don't want to go near the word 'bailout,'" she says. "The SEC was not the only agency or institution responsible--it shares responsibility with other financial institutions, many of whom have been bailed out. But they're still deep-pocketed and there's no reason for them not to come forward and settle their claims."
By partnering with the government as a group, Kachroo believes more financial institutions will be incentivized to come forward. The SEC or some other special government task force or commission can administer claims, she says.
It's a tall order for any firm, let alone a start-up, but Kachroo says she's already taken steps towards her goal. The technology behind a registration system for Madoff victims on her firm's Web site is worth nearly $4 million, she says. The money was "provided more or less pro bono" by a sympathetic IT company.
That system will enable Kachroo and those working with her to present the SEC with a comprehensive list of victim names and, as such, emphasize the potential for litigation against the agency, Kachroo says. She hopes to use her growing network of firms to enlist between 100,000 and 1 million investors--"the numbers are key," she adds--for a global settlement.
Kachroo Legal Services might be a one-person firm today, but it's namesake is ready to start hiring immediately.
"It's a big campaign that we're launching here and it's not going to be a one-person job," Kachroo says. "I'm getting outstanding resumes."
She hopes to soon hire one lawyer with six years of SEC experience, something she jokingly notes Markopolos would probably scoff at. A corporate lawyer by trade, Kachroo has a particular need for litigators experienced in fraud and securities cases. (Kachroo, who used to head McCarter's India initiatives, also hopes to add another corporate lawyer to assist with transactional work.)
Start-up capital for her new firm is coming partly from large groups of clients, both domestic and international, who are paying her to investigate and pursue claims against the SEC and certain financial institutions.
Kachroo's efforts to unify various investor groups has also been met with a positive response, she says, adding that the firms she hopes to affiliate with will also share some of the financial burden in order to get her campaign going.
And her star client is also branching out. Markopolos is writing a memoir and plans for a documentary are also in the works. The whistleblower and his team that spent nine years investigating Madoff will work closely with Kachroo's new firm.
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