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Madoff Trustee Sues Hedge Fund for $1 Billion
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(May 12, 2009 - Tuesday) - http://dealbook.blogs.nytimes.com/2009/05/12/madoff-trustee-sues-another-feeder-fund-for-1-billion/?ref=business
The trustee overseeing the liquidation of Bernard L. Madoff’s now-defunct investment firm has sued the hedge fund Harley International for the return of $1 billion that it invested with the convicted swindler.
The trustee, Irving H. Picard, contends that Harley, which is based in the Cayman Islands, received “unrealistically high and consistent returns” of about 13.5 percent from 1996 to 2008. The firm, which withdrew its capital 90 days before Mr. Madoff confessed to running a vast Ponzi scheme, made 148 purported trades in its account over the last 10 years, according to the complaint.
Mr. Picard says in the complaint that Harley “knew or should have known” that Mr. Madoff’s firm was a fraud.
The suit, filed electronically in Federal Bankruptcy Court in Manhattan on Tuesday, is similar to Mr. Picard’s lawsuit against J. Ezra Merkin, the New York financier who lost over $2 billion with Mr. Madoff, and the complaint against Stanley Chais, an investment manager and prominent Los Angeles philanthropist.
So far, Mr. Picard has sued feeder funds and other investors seeking the return of about $4 billion that they withdrew from Mr. Madoff’s firm, either because they should have known of the fraud or because the transfers can be taken back under the Federal Bankruptcy Code.
– Zachery Kouwe
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