The Work

May 19, 2009 2:53 PM

Enduring Enterprise: Picard Files Latest Madoff Feeder Fund Suit

Posted by Brian Baxter

If you'll forgive us a Star Trek reference, Baker & Hostetler's Irving Picard, Chapter 7 trustee for Bernie Madoff's dissolving money management firm, has been busy in recent weeks firing civil salvos against feeder funds seeking to recoup money for out-of-pocket Madoff investors.

On Monday, Picard targeted the largest of those funds, Fairfield Greenwich Group (FGG). He slapped the Stamford, Conn.-based investment firm with a civil suit seeking $3.54 billion in funds withdrawn before Madoff was arrested for allegedly running a $50 billion Ponzi scheme on December 11.

FGG and its Sentry funds are estimated to have steered more than $7 billion in investments to now-bankrupt Bernard L. Madoff Investment Securities (BLMIS). FGG cofounders Walter Noel, Andres Piedrahita, and Jeffrey Tucker have turned to a high-profile team of defense lawyers to protect them from civil liability.

Noel is represented by Glenn Kurtz, global chair of commercial litigation at White & Case in New York. Tucker has turned to Marc Kasowitz of New York's Kasowitz Benson Torres & Friedman. Piedrahita has tapped Dechert litigation bigwig Andrew Levander. FGG is being represented by Simpson Thacher & Bartlett's Peter Kazanoff.

They're not the only heavy hitters that Picard will battle in future months. The BLMIS trustee has the following civil actions on his docket:

-- Noted philanthropist Jeffrey Picower, his Florida-based Picower Foundation, and Cayman Islands-based hedge fund Harley International were sued last week by Picard for more than $7 billion in Madoff-related profits. Schulte Roth & Zabel name partner William Zabel is representing Picower.

-- Former GMAC chairman J. Ezra Merkin was sued earlier this month for $557.8 million he allegedly withdrew from BLMIS when it was already insolvent. Merkin is also being represented by Dechert's Levander.

-- On May 1, Picard sued Los Angeles philanthropist and investment adviser Stanley Chais, accusing him of reaping the proceeds from returns on Madoff accounts when he should have known the operation was a fraud. Loeb & Loeb white-collar defense practice cochair Eugene Licker is representing Chais. (Chais has since stated that he will cooperate with any criminal probe into Madoff investors.)

-- A month ago, Bermuda-based Kingate Management was sued by Picard in a suit seeking the return of $255 million in funds transferred to Kingate accounts prior to the collapse of BLMIS. Bankruptcy court records did not list defense counsel for Kingate.

-- In April Picard sued Gibraltar-based Banque Jacob Safra and British Virgin Islands-based Vizcaya Partners seeking to recover $150 million in assets transferred out of BLMIS accounts last year. Vizcaya is being advised by Katten Muchin Rosenman.

For your daily Madoff fix, be sure to bookmark's Madoff Watch, which keeps a running tally of the latest news and court filings.

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