Is hedge fund manager Walter Noel’s company merely a victim of Bernie Madoff’s massive Ponzi scheme or did it turn its back and plug its ears as the scandal brewed around them?
Irving Picard of Baker & Hostetler, the court-appointed trustee trying to recoup money for victims of the disgraced investor’s scheme, is coming after Noel's Fairfield Greenwich Group for $3.2 million. They should have known things were fishy, the trustee said.
The suit asks for the return of the billions that three of Noel’s funds took out of their Madoff accounts from 2002 until the scheme’s collapse, according to The New York Times.
The documents, filed Monday in bankruptcy court in Manhattan, claim Fairfield Greenwich ignored warning signs Madoff was orchestrating a giant Ponzi scheme.
They "knew or should have known" that Madoff's operation "was predicated on fraud," and that the returns had to be fiction, the trustee claims.
The suit claims Fairfield Greenwich, and others being sued, clearly knew that their Madoff returns of 10 to 21 percent were "unrealistically high and consistent," New York Magazine reported.
Fairfield Greenwich says the company’s just an innocent victim of Madoff’s scheme and that the trustee's allegations were groundless.
In fact, the funds "lost far more from the Madoff fraud than they ever redeemed," the statement said.
Fairfield Greenwich is finding itself more and more embroiled in this national financial scandal.
Last month, Massachusetts Secretary of State William Galvin filed a suit against the company, saying the so-called feeder fund had failed to disclose internal concerns about Madoff's operation.
Fairfield Greenwich said those allegations are bogus too.
Madoff, 70, pleaded guilty in March to charges that his secretive investment advisory operation was a multibillion-dollar scam.
The former NASDAQ chairman faces up to 150 years in prison.