BOSTON (Reuters) - A Connecticut town took a step toward recouping some of its $42 million in losses to Bernard Madoff, securing on Monday a court order for $25 million in assets owned by Madoff’s relatives and business partners.
The order by Connecticut Superior Court Judge Arthur Hiller in Bridgeport, Connecticut, was in response to a lawsuit filed by the town of Fairfield’s pension fund, whose 1,500 members are trying to recover retirement money lost to Madoff.
Fairfield’s attorneys obtained on March 30 a temporary restraining order that froze assets owned by Madoff’s two sons, Mark and Andrew, and those of Madoff’s wife, Ruth, and his brother, Peter Madoff.
Also included were the assets of so-called feeder funds that steered investors to Madoff, including those run by several prominent hedge-fund industry personalities.
These included Walter Noel and Jeffrey Tucker, who together founded hedge-fund firm Fairfield Greenwich Group; Andres Piedrahita, a managing director at Fairfield Greenwich; Sandra Manzke, who ran Maxam Capital Management LLC; and Robert Schulman, who once ran Tremont Group Holdings Inc.
Under Monday’s agreement, Andrew and Mark Madoff agreed to pledge up to $2.5 million each on houses they own in the wealthy town of Greenwich, Connecticut. And Peter Madoff was ordered to post up to $2.5 million on property he owns in Long Island, New York, the attorneys said.
Walter Noel pledged up to $10 million on his house in Greenwich. Other Madoff feeder funds also pledged up to $2.5 million in cash escrows or property, the attorneys said.
The temporary freeze order was lifted.
Fairfield is the first party suing Madoff to obtain orders securing pledges of cash or property, the town’s lawyers said.
“These orders give the town priority over everyone else on the assets that have been pledged,” David Golub, lead counsel for Fairfield, said in a statement. “As a practical matter, this means that there will be money available to repay the town for the pension funds’ losses for any party held liable.”
Fairfield’s pension plans had $15 million of principal invested in Madoffrelated funds. The last statement received in early December 2008, shortly before Madoff’s scheme was exposed, showed the balance had increased to $42 million.
Madoff pleaded guilty on March 12 to a fraud that prosecutors say bilked investors of as much as $65 billion over 20 years. When the one-time Nasdaq chairman is sentenced, scheduled for June 16, he could be ordered to prison for the rest of his life.
His investors included hedge funds, banks, Jewish charities, the wealthy, and small individual investors in North and South America and Europe. The magnitude of the fraud shocked the public and drew demands for stricter regulations.
Reporting by Jason Szep; Editing Bernard Orr