Wednesday, December 31, 2008

Detailed Look at Madoff Civil Suits

As I mentioned yesterday, I found five complaints against Madoff and his feeder funds on Westlaw. This morning I spent sometime looking them over. The stories are the same - money invested with a hedge fund changes hands until it comes to rest with Madoff - Madoff steals it. A number of things surprised me: many of the complaints try to use 10(b) to reach the feeder funds. In light of Stoneridge (see this post on Race to the Bottom) this seems a chancy strategy. I was also surprised by how little actual investment management goes on in the hedge fund biz.

For a link to a continuously-updated list of suits, see this post.

Here's a quick summary:

12/18/08, 2008 WL 5267855, SDNY, 1:08cv11002
plntf: The Calibre Fund LLP
def: J. Ezra Merkin
atty: Susman Godfrey LLP
Calibre Fund gave Merkin's Ascot Partners Fund $10 million which Merkin gave to Madoff. Calibre is trying to prevent Ascot from distributing any money.
claims:
- fraud
- negligence
- breach of fiduciary duty
- breach of contract

12/16/08, 2008 WL 5243584, SDNY, 1:08cv10922
plntf: New York Law School
defs: Ascot Partners LLP, Merkin, Bdo Seidman LLP
atty: Abbey Spanier Rodd & Abrams LLP
This is a class action complaint. NYLS gave $3 million to Ascot which it gave to Madoff.
claims:
- 10(b)
- 20(a)
- fraud
- negligent misrepresentation
- breach of fiduciary duty

12/16/08, 2008 WL 5243585, SDNY, 1:08cv10930
plntf: Scott Barrie
defs: Gabriel Capital LP, Merkin, Bdo Seidman LLP
atty: Abbey Spanier Rodd & Abrams LLP
This is a class action complaint. It was produced by the same law firm as the NYLS complaint.
- 10(b)
- 20(a)
- fraud
- negligent misrepresentation
- breach of fiduciary duty

12/15/08, 2008 WL 5267808, CD Cal, 2:08cv08260
plntf: Michael Chaleff
defs: Bernard Madoff, Bernard Madoff Investment Securities, Stanley Chais, Brighton Company
atty: Hagens Berman Sobol Shapiro LLP
This is a class action complaint. Michael Chaleff invested with an LA hedge fund called CMG, ltd. CMG gave his money to Stanley Chais who gave it to Madoff. Apparently, Chais funneled $250 million to Madoff. Chaleff obviously believes theres some money to be got from Madoff himself.
claims:
- 10(b)
- 20(a)

12/12/08, 2008 WL 5231154, EDNY, 2:08cv05026
plntf: Irwin Kellner
defs: Bernard Madoff, Bernard Madoff Investment Securities, John Does 1-100
atty: Ruskin Moscou Faltischek PC
This is a class action complaint. Kellner invested $3 million directly with Madoff. Kellner's lawyers used every arrow in their quiver.
claims:
- RICO
- 10(b)
- 12
- fraud
- negligent misrepresentation
- breach of fiduciary duty
- conversion
- unjust enrichment
- deceptive practices under NY Genl Bus Law
- fraudulent transfer under NY Debtor & Creditor Law


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