People are beginning to question what, exactly, Greenwich’s Fairfield Greenwich Group did to justify earning as much as $135 million a year by merely shoveling money over to Bernie Madoff to steal. As this page (and its readers) have noted, there was zero due diligence conducted by Fairfield Greenwich, despite its fulsome praise of its abilities in that regard posted on its website. The defense Fairfield Greenwich is trying out, that this was a “highly-sophisticated fraud” that could have been, and was missed by everyone, won’t carry much water with clients who paid their investment firm to detect such fraud, particularly when it appears that there was nothing complex about this scam at all, just a repeated assertion to “trust me”. Even Reagan knew better than that: “trust, but verify”.
“It’s mind-boggling that people like Tremont and Fairfield Greenwich had been doing this for so long,” said Brad Alford, who runs Alpha Capital Management LLC in Atlanta, which helps clients choose hedge funds. “It’s the job of these funds of funds to be doing due diligence. That’s why they get paid.”
In Palm Beach, the Wall Street Journal reports, defrauded investors are already putting their $17.0 million condominiums up for sale and hawking their Ferraris, yachts, and jewelry. Will Fairfield Greenwich’s founder, Walter Noel, have to sell his own Round Hill mansion? If he does, you’ll read it here first.
Update: The Journal article mentions a real estate agent who spent her weekend showing those newly-listed condominiums to New Yorkers who flew down to prey on their friends’ misfortunes. That’s mean, of course, but I’m guilty of pulling the tax cards for the houses of several of the Greenwich players in this drama and forwarding them to some of my own clients, just to give them a heads up on what might be coming on the market. Reagan may have advised to “trust but verify”; I learned in the Boy Scouts, “be prepared.”