Although the dust from Bernard Madoff’s collapsed scheme has barely begun to settle, a wave of lawsuits has already been filed. Notably, as the apparent scope and impact of the scheme has grown – particularly with respect to third-party funds and advisers that channeled assets to Madoff – so the plaintiff lawyers’ pool of potential defendants has increased. In many cases, such third parties may be the most promising source of assets to pay plaintiffs’ claims.
In December alone, investors appear to have initiated Madoff-related suits against at least seven distinct third party investment groups. This trend has continued in 2009, as more investors who thought they were investing with a fund or adviser they had confidence in, have discovered that their money was actually being invested with Madoff. Often, Madoff and the intermediary fund or adviser appear to have tried to keep Madoff’s role secret from the investor.
Oppenheimer Funds and Pioneer Investments are among the prominent U.S. organizations that have indicated that their customers have suffered Madoff-related losses. Nor have foreign organizations been spared. For example, two large European banks, Banco Santander and HSBC Holdings, report suffering Madoff-related losses of approximately $3 billion and $1 billion respectively. Reportedly, Spain’s anticorruption prosecutor is investigating the relationships among Banco Santander, the investment fund Fairfield Greenwich Group, and the Madoff scheme, with a number of Santander clients contemplating suit.
In a somewhat similar situation, an investor has filed a suit naming Sonja Kohn, the chairwoman of Bank Medici AG in Vienna, Austria – and the woman behind much of Madoff’s European business – alleging an improper failure to disclose that the investor’s money was being funneled to Madoff.