Madoff, Relatives, Feeder Funds Have Assets Frozen

Date: Wednesday, April 1, 2009
Author: Patricia Hurtado and Edvard Pettersson, Bloomberg

A Connecticut judge froze the assets of Bernard Madoff, his wife Ruth, his sons and brother Peter as well as so-called feeder funds including Fairfield Greenwich Group, said a lawyer who obtained the order.

A state judge in Bridgeport yesterday granted a freeze at the request of the town of Fairfield’s pension fund and its 1,500 members, David Golub, a lawyer for the fund, said today in a phone interview. The town’s initial $22 million investment with Madoff through Maxam Capital grew to $42 million, he said.

Bridgeport Superior Court Judge Arthur Hiller granted a temporary order freezing the assets, with the exception of normal living and business expenses, until a hearing on April 13. Those involved in the feeder funds whose assets were frozen include Sandra Manzke, founder of Maxam Capital, and Walter Noel Jr., a partner at Fairfield Greenwich Group, Golub said.

“Everyone has filed suit alleging the feeder funds were negligent,” Golub said. “This is the first complaint to say these feeder funds were involved in the criminal activity. We’re saying they may not have known he was operating a Ponzi scheme, but there’s no way that Madoff could have gotten those results with any legal effort.”

Ira Sorkin, Madoff’s lawyer, Peter Chavkin, his wife’s lawyer, and Charles Spada, his brother’s lawyer, didn’t immediately return calls seeking comment after business hours. Martin Flumenbaum, a lawyer for Madoff’s sons, and George Sard, their spokesman, didn’t immediately return calls for comment.

Manzke didn’t immediately return calls to her office and her mobile phone after business hours. Glenn Kurtz, a lawyer for Noel, also didn’t immediately return a call seeking comment.

‘Sophisticated Fraud’

“Fairfield Greenwich Group had no business relationship with the Town of Fairfield, its pension funds or employees,” Thomas Mulligan, a spokesman, said in an e-mailed statement. “Contrary to allegations in the Connecticut lawsuit filed on Monday, FGG conducted extensive monitoring of its clients’ investments with Bernard L. Madoff Investment Securities but, like others, was victimized by a sophisticated fraud.”

The case is Retirement Program for Employees of the Town of Fairfield v. Madoff, Superior Court of Bridgeport, Connecticut.

To contact the reporter on this story: Patricia Hurtado in Brooklyn, New York, at phurtado@bloomberg.net; Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.