Darien investment adviser hit with $2.9M judgement in Ponzi scheme
Published 12:56 pm, Sunday, March 17, 2013
A judgment of nearly $3 million was issued Friday against a Darien investment adviser that invested money from the Town of Fairfield's retirement fund in the multi-billion-dollar Ponzi scheme orchestrated by disgraced Wall Street financier Bernard Madoff -- an overall loss to municipal pensions that topped $40 million.
Darien's Maxam Capital Management sold Fairfield's two retirements plans in an investment with Madoff in 1997.
Fairfield officials said the town was awarded $2.88 million Friday by a Stamford Superior Court judge ruling in favor of the town's claim against the investment firm.
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With Friday's judgment, the town has achieved a total recovery in its Madoff-related claims of more than $15.4 million. This is the total amount the town had invested with Madoff, First Selectman Michael Tetreau said in the statement. He said that, minus lawyer fees and litigation costs, the town recovered about 80 percent of that investment loss.
The total loss suffered by Fairfield's pension funds, however, was estimated at about $42 million by town officials at the time the Madoff scandal broke in 2008. That amount represents the pension funds' cash investment in the scam perpetrated by Madoff, as well as the false growth reported on that investment.
Maxam Capital Management did not admit any wrongdoing.
Madoff, who pleaded guilty in 2009 to fraud charges, is serving a 150-year prison sentence. Thousands of people lost about $20 billion from his scheme.
In 2009, the town filed claims against Maxam and other investment advisers and pension consultants seeking restitution of its pension losses. Officials contended that investment advisers either knew that Madoff's investment strategy was fraudulent or failed to adequately ascertain the soundness of his strategy. The town had previously settled with other investment advisers and consultants.
Friday's judgment resolved Fairfield's last claim over the losses in the Madoff fraud.
"The town and the pension boards have been committed to doing everything possible to recover the funds lost to Madoff. We are very appreciative of the excellent work done by our attorneys," Tetreau added.
The town was represented by David Golub of Silver Golub & Teitell LLP of Stamford and Richard Robinson of Pullman & Comley of Hartford.
"When we started, people were saying that Madoff had fooled everyone and that there was no way the town would be able to win any of its claims," Golub said in the town's statement. "But the evidence showed that many people on Wall Street refused to do business with Madoff because they questioned his returns. And with that evidence, we were able to recover the town's lost funds."