Connecticut Court Rules Town Cannot Seek Money Madoff Lost

(August 11, 2011) — The Connecticut Appellate Court has ruled that the town of Fairfield cannot seek the millions of dollars in losses to its pension fund as a result of Bernie Madoff’s fraud scheme.

The Connecticut Appellate Court — the state’s second-highest court — upheld a state Superior Court decision to reject the town’s lawsuit against a Greenwich hedge fund and Madoff’s brother, Peter.

“Although the plaintiff’s complaint is rich with allegations that the Fairfield Greenwich defendants acted in concert with Madoff or in furtherance of Madoff’s fraudulent plan, it is devoid of any allegation that the Fairfield Greenwich defendants played any role in inducing the plaintiffs to invest in the Maxam Fund or in any other feeder fund, or with Madoff directly,” Judge Thomas A. Bishop wrote in the court’s decision obtained by the Daily Fairfield.

Consequently, the judge asserted that Fairfield cannot claim $42 million its pension fund lost.

In 2009, the town filed a lawsuit against 18 defendants — including Peter Madoff and the Fairfield Greenwich Group. Also named were other members of the Madoff family, as well as Walter Noelle and Jeffrey Tucker, who were the principals in the Fairfield Greenwich Group, which ran the Fairfield Sentry Fund. The town claimed that Madoff’s brother and the hedge fund’s principals fueled investments into the massive Ponzi scheme through their recommendations. Nevertheless, the judges ruled that the Fairfield Greenwich Group and the Madoffs lacked any direct relationship with the town of Fairfield and thus, the town had no grounds for a lawsuit.

In addition, the town filed a lawsuit against NEPC, which served as the scheme’s investment consultant at the time of the Madoff scandal, CTPost reported. However, NEPC said that Fairfield invested with Madoff prior to retaining NEPC. Furthermore, in 2006, the consultancy said it had recommended the pension fund lower its exposure in Madoff investments, the publication reported.

In 2009, Madoff pleaded guilty to fraud charges and is now serving a 150-year prison sentence in Butner, NC.