January 5, 2009 / 2:26 PM / 10 years ago

French Madoff investor found dead in NY office

NEW YORK (Reuters) - A French executive who invested with accused swindler Bernard Madoff was found dead in an apparent suicide on Tuesday, reportedly distraught over losing up to $1.4 billion (955 billion pounds) in client money.

The death added a chapter to the widening story of the Wall Street fund manager who authorities say confessed to running a $50 billion fraud that ensnared investors and charities around the world.

While Madoff remained under house arrest in his Manhattan apartment with his assets frozen, another investor sought to hold U.S. regulators responsible for $2 million in purported Madoff-related losses, and the American Civil Liberties Union ACLU.L said it may lose $850,000 in donations due to the scandal.

Thierry Magon de la Villehuchet, 65, a co-founder of money manager Access International, was found dead on the 22nd floor of a New York City office building, officials said.

He slit both wrists with box cutters, and appeared to bleed to death, according to a police source who spoke on condition of anonymity.

He may have also taken sleeping pills after staying late in the office on Monday night, the source said, who added that there was no suicide note.

An official cause of death was not expected until at least Wednesday, a spokeswoman for the New York City Medical Examiner said.

Villehuchet had been trying to recover some of the funds lost to Madoff, Paris newspaper La Tribune reported on its website, citing a person close to Villehuchet. That source also told the newspaper Villehuchet killed himself.

“He had been searching day and night for a way to recover the funds of his investors. ... He couldn’t bear the blame game that broke out among Europeans,” a person described as close to Villehuchet told La Tribune.

“It’s a farewell from someone who had nothing to be ashamed of. ... The truth is that everybody wanted to invest with Madoff, who was considered by all as AAA or totally safe,” La Tribune quoted him as saying.

Villehuchet’s Access International was a feeder fund to Madoff, according to hedge fund professionals who declined to be identified.

Access may have exposure of $1.4 billion through its Madoff investments, the New York Daily News reported.


A receiver has been appointed to oversee Madoff’s firm, while investigators pour over masses of documents and conduct interviews to assess the losses and probe whether anyone else was involved. Federal prosecutors have charged Madoff with securities fraud, but he has yet to formally respond to the accusations in court.

A woman who said she gave Madoff $2 million to manage took legal action against the U.S. Securities and Exchange Commission, believed to be the first attempt by an investor to recover losses from the SEC.

Phyllis Molchatsky, a 61-year-old retiree from New City, New York, is seeking $1.7 million in damages.

“The SEC has fallen down on the job,” said attorney Howard Elisofon, a former SEC lawyer who represents Molchatsky. “They should be held responsible for these catastrophic losses.”

The SEC declined to comment.

Investors have filed lawsuits against the funds that entrusted their money with Madoff, but until Tuesday, none of the major accounting firms that audited the investment managers have been sued.

KPMG LLP was named as a defendant in a lawsuit filed in U.S. District Court in Manhattan by investor Richard Peshkin of Boca Raton, Florida, seeking class action status against Tremont Group Holdings, which operates several funds.

“As a result of auditing activities, KPMG knew or reasonably should have known that Tremont improperly recognized and reported returns, assets, losses, and/or liabilities associated with the capital given to Madoff for management,” the lawsuit said. “The auditors failed to exercise professional skepticism and due care.”

KPMG spokesman Dan Ginsburg said: “KPMG has not been served with this complaint, and can’t comment at this time.”

In a letter to its supporters, the ACLU said two foundations that have been “incredibly generous” with the civil rights group were victimized in the alleged swindle and forced to close their doors.

“That means that $850,000 in support we were counting on from these foundations in 2009 simply won’t exist,” ACLU Finance Director Alma Montclair wrote.

The executive director of a Jewish charity feared the case would scare off people from giving at a time when charities are already suffering from investment losses and as demand rises for their services because of the recession.

“I don’t want there to be Jewish backlash for charities because of this one guy (Madoff),” said Cathy Lanyard, executive director of American Friends at ALYN Hospital, a nonprofit organization that raises funds to benefit a facility in Jerusalem for disabled children.

“I am fearful that people, out of distrust, will give nothing,” she said.

Numerous charities burned by losses from Madoff’s suspected Ponzi scheme were Jewish.

Additional reporting by Lilla Zuill, Martha Graybow, Michelle Nichols, Dan Wilchins and Grant McCool in New York and Estelle Shirbon in Paris; editing by Jeffrey Benkoe

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