Walter Noel Jr. and his wife Monica had it all: Luxurious houses on Connecticut's wealthy coast, Palm Beach and the Hamptons and a hilltop retreat on an exclusive island in the Caribbean named after a goddess.
The couple's five daughters mostly married foreign men in high social circles, adding to a network of international connections that helped Noel expand his New York-based money management firm with billions of investments from the elite around the world.
That world is now in jeopardy.
Investors are lined up to sue over the $7 billion in client funds that Noel's Fairfield Greenwich Group invested with Bernard Madoff, the alleged architect of what investigators say may be the largest Ponzi scheme in history.
Madoff is accused of duping investors out of as much as $50 billion by paying returns to certain investors out of the principal received from others.
Local
Connecticut connections:
- Center for Children’s Advocacy, a Hartford-based legal advocacy group for children, lost $85,000.
- Fairfield Greenwich Advisors had part of its $7.5 billion fund invested with Madoff. How much it lost is unknown.
- Hadassah, a national volunteer organization of Jewish women founded in 1921, lost $90 million. There are 26 Hadassah chapters in Connecticut, according to its Web site.
- Maxam Capital Management, based in Darien, might be forced to close, the New York Post reported. It lost $280 million.
- Town of Fairfield - volunteer members of Fairfield's pension board had invested $22 million of funds for 800 town workers and 300 retirees in Madoff's company and thought its stake had grown to $42 million.
The lawsuits filed against Noel and his company accuse them of ignoring obvious red flags with Madoff and unjustly enriching themselves of at least $1 billion, and say Fairfield Greenwich Group failed to provide even minimal scrutiny of Madoff. Investors say the firm misled shareholders about monitoring the investments, all while collecting lucrative investing fees.
"I don't think they were active participants in the fraud," said Robert Finkel, attorney for a retirement trust fund that lost $200,000. "They're probably 'hear no evil, see no evil.' "
Noel had a business relationship with Madoff for more than 20 years, according to one of the lawsuits.
Fairfield Greenwich Group earned hundreds of millions of dollars and possibly more than $1 billion in fees for raising large sums of money from investors that was invested with Madoff, according to the lawsuit.
Fairfield Greenwich says it performed extensive due diligence and was victimized by a sophisticated criminal scheme. The company says Noel and other partners invested about $60 million of their own money with Madoff.
Warning Signs
Experts who looked at Madoff concluded his claimed investment strategy was statistically impossible, the lawsuits claim.
Michael Markov, chief executive of Markov Processes International, said his company analyzed one of Fairfield Greenwich's funds that invested with Madoff in 2006 and concluded the returns were most likely not real. Such returns would have required perfect foresight and more option contracts than existed in the market, he said.
The lawsuits say Madoff's firm could not have bought and sold the volume of options it claimed to run its strategy because the total of necessary trades on any given day would have far exceeded the publicly reported total trading volume in the market for those days, according to one of the lawsuits.
One hedge fund adviser was shocked to discover in 2007 that the entire internal audit function at Madoff's company involved a firm with three employees, including a 78-year-old man living in Florida, a secretary and a 47-year-old accountant.
Newspaper articles dating back to 1992 raised issues about Madoff's operation.
Noel's firm has not been charged in the Madoff case. FBI agents have not contacted Fairfield Greenwich, according to a person close to the firm who spoke on condition of anonymity because he was not authorized to speak about the matter. The person said regulators with the Securities and Exchange Commission did visit the company's headquarters in New York recently, but said they were not from the enforcement division.
Federal authorities should investigate Fairfield Greenwich and others who invested client money with Madoff, said Stephen A. Weiss, a New York attorney who represents Madoff investors.
There are many compelling reasons why federal authorities should investigate entities like Fairfield who oiled the Madoff capital machine," Weiss said. "It seems evident that they were either complicit or grossly negligent in not undertaking due diligence that would have uncovered the scheme. Of course, I can think of several hundred million reasons why Walter Noel was incentivized to look the other way."
Noel, a 78-year-old Tennessee-born financier, declined an interview request through his company, and did not return messages left at his home. Friends described him as well liked in the wealthy social circles he frequented.
Family friend George Ball compared Noel to Jimmy Stewart's character in the movie "It's a Wonderful Life."
"He's a very decent person, very caring person, perhaps naive in some ways, but far from a fool," Ball said. "I think he is on balance a victim."
Noel's family has been spending most of its time in Greenwich these days, in an 8,600-square-foot colonial on prestigious Round Hill Road. The eight bedroom, nine and one-half bath home had a market value of $6 million in 2005. When they're not there, they're at their hilltop retreat on the exclusive island of Mustique, which they named Yemanja for the goddess of the seas in Brazilian folklore.
Monica Noel, who raised in Brazil by wealthy Swiss parents, recently described to Town and Country Magazine how she decorated her holiday table there with palm tree leaves, red butterflies and moving snakes. She also talked about shopping from New York to Florida for bamboo side tables and an African tribal stool placed near an infinity-edge pool that followed the curve of the mountainside.
It's not clear how long it will take for the lawsuits to wind through the courts, but if Noel is found liable, he could be forced to dip into his personal wealth to pay damages. Those who know him suggested that he may have simply trusted Madoff, and do not believe he willingly engaged in fraud.
Ball compared Noel's longtime relationship with Madoff to that of an old reliable truck in the barn that the owner assumes is reliable: "Familiarity leads to comfort," he said.
