JP Morgan is in the sights of the Get Madoff crowd. While the bank had a small amount ($250 million) of its own money in the game, it pulled it in September after a summer of rumors about Bernie. JP forgot to tell its clients, though, and they were left high and dry. Sort of like Walt Noel and his Fairfield Greenwich Group, but I believe they’re already named in this suit. Should continue to get interesting as this latest inclusion of a defendant is the result of the 4 1/2 hours Bernie spent talking with the lead litigator. Nervous yet, Walt?
By the way, why is the New York Post on top of the Madoff story while the New York Times and the Wall Street Journal ignore it? Just because a story is sexy and has legs is no reason to leave the field to the Post, is it?
A September 9th hearing up in Boston will be devoted to what Walter Noel and his boys knew and when they knew it. I’m going to check – if the hearing is open to the public, I smell road trip. How cool to live-blog from there! Walt, if you’re going (and I assume that you are since you’ve been subpoenaed) maybe we can ride up together. I’ll borrow a trailer and the filly(ie)’s can come too.
Boston Globe, Beth Healy
The Massachusetts memo portrays Fairfield Greenwich as growing more aware over the course of 2008 of gaps in its knowledge of Madoff’s operations. Executives acknowledged to state regulators and to each other in internal e-mails that they couldn’t answer the increasingly probing questions of some clients. They didn’t know Madoff’s trading strategy, they knew only a handful of Madoff’s employees, and had never been allowed to see the trading floor where Madoff was allegedly buying and selling securities for their customers.
By last year, Fairfield was feeling far more pressure. In May 2008, a large European investment client, Unigestion, asked if Madoffreally made the trades he claimed, the state said. Dissatisfied with Fairfield’s assurances, Unigestion withdrew $75 million by August.
In one e-mail to his colleagues on Aug. 20, 2008, [FGG employee] Vijayvergiyasaid he had reassured a customer that after two decades of dealing with Madoff’s firm, “we have good knowledge of BLM’s business,’’ according to text of the e-mail cited in Galvin’s memo.
Yet just the day before, Vijayvergiya wrote in another internal e-mail that “unfortunately there are certain aspects of BLM’s operations that remain unclear and although we are attempting to obtain responses from Bernie Madoff . . . this process could take some time.’’
That same month, another big customer, JPMorgan, asked about the trading counterparties in Madoff’s options-investment strategy; when Fairfield couldn’t answer, the Wall Street giant withdrew its money.
Though they could not answer clients’ specific questions, Fairfield Greenwich executives drummed up a stock reply to respond to them. According to the memorandum, a Nov. 14 e-mail by a Fairfield analyst laid out a “standard response’’ for clients, “setting forth the basis on which Fairfield was satisfied that adequate controls existed to ensure that the Madoff assets were properly supervised.’’
While FWIW was unable to reach FGG spokesman Seth Faison for comment (not that we tried) Edgar Martins, as usual, spoke for him: “It’s all a bunch of horrible lies,” Martins insisted on behalf of Faison. “Horrible! My clients were busy as little beavers, keeping track of their profits and Andres’ whereabouts – do you have any idea how hard it is to keep track of a drunken skipper on a boat that goes 39 knots and has the seven seas to get lost in? – that they couldn’t possibly be expected to watch their old friend Bernie. The man was the fucking head of the fucking NASD, for Crissake! You think Walter’s gonna call him a crook? Lose a zillion bucks in fees? Go pound sand.”
Here’s the original complaint brought against FGG
So he says now. Walt Noel, however, has already emailed us to say that his dumb son-in-law is high on horse flatulence and no money is going to be returned, ever. I’ll bet Walt is right on this, and that Andres was put up to this egregious lie by Fairfield Greenwich Group’s PR guy, Seth Faison.
Received the following email from some Fairfield Greenwich Group PR guy. I’ll call him after lunch and report back but it sounds like fun. Oe question: where is FGG getting the money to pay a PR firm?
I just left you voicemail. I’m a media adviser to Fairfield Greenwich, and some comments that were posted to an item on your blog have raised concern. I hope there’s an easy way to resolve it. Please give me a call at [ ] , when you have a moment.
UPDATE: I spoke with Mr. Faison, who turned out to be very polite and had a simple request: someone commenting on an unrelated blog posting here several months ago had put up the name, address and telephone number of a person vaguely related to FGG and would I consider taking it down off the Internet? Of course I would do that and have done so. I try to weed out that stuff before it gets posted because it can lead to real abuse of people, but this one slipped by. So now it’s gone, end of matter. How dull.
I did express my surprise to Mr. Faison that FGG was still around to pay a PR firm and he told me that “there are a lot of law suits out there” who knew? And Faison’s firm is working on putting out fires. Interesting.
While poor Walter Noel is stuck cadging free drinks at the Bathing Club in the Hamptons (where he was blackballed from membership, but can still walk the hallowed grounds if accompanied by a member) and is banned from his digs at the Round Hill Club, son-in-law Andres Piedrahita is busy living it up on stolen money. Turns out, he’s off cruising the high seas on his new $30 million yacht he bought this June. That’s not just showing no remorse, that’s rubbing defrauded investors’ noses in it. Could be dangerous, Andres.
"Two mojitos, Walter and then I believe the master stateroom's head needs attending to."
Greetings from Bogata!
Walter Noel returns from BVI wearing nothing but an all-over tan. All the poor bastard wanted was to get away from Mustique for a little R&R!
A judge in the British Virgin Islands has approved the liquidation of the Fairfield Sentry funds, which were the largest conduits for cash flowing into the hands of Bernard L. Madoff and his global Ponzi scheme.
The ruling on Tuesday cleared the way for the fund’s investors to pursue legal claims against the Fairfield Greenwich Group
and its affiliates, which advised and marketed the funds worldwide.
When Mr. Madoff was arrested in December, the Sentry funds, regarded as one of the so-called feeder funds, had more than $7.2 billion invested in his spurious investment advisory operation. He has since pleaded guilty and is serving a 150-year jail term.
According to the court application in Road Town, Tortola, the capital of the British Virgin Islands, the funds now have less than $70 million, all of it subject to ownership disputes and most of it frozen by a court in the Netherlands. Fairfield Greenwich Group did not immediately respond to requests for comment.
Although Fairfield Greenwich is based in New York, its flagship funds were incorporated in 1990 under the mutual fund statutes of the British Virgin Islands and technically are under the control of local directors there.
This year, lawyers acting for Boies, Schiller & Flexner, a law firm representing investors, sought the liquidation of the funds, arguing that management had been “effectively paralyzed and its business destroyed.” Their actions have left no potential assets except legal claims against others including the fund’s directors and management, the lawyers argued.
Many others are pursuing claims against the Fairfield Greenwich Group, its partners or its offshore affiliates.
Besides lawsuits by individual investors, the group has also been sued by Irving H. Picard, the trustee liquidating Mr. Madoff’s brokerage business for the benefit of his victims. If Mr. Picard’s lawsuit is successful, he would become one of the fund’s unsecured creditors in the liquidation proceeding in the British Virgin Islands.
General Motors stock, destined to become worthless as the result of its bankruptcy, gained 43% today before trading was halted at 2:00 p.m. Experts profess bewilderment at the phenomenon (which actually happens all the time down there in the canyons) but as one pointed out, “someone’s making a lot of money on this.” It’s cruel to say so after he’s become such a friend of this blog but I did mention last week that Noel’s Fairfield Greenwich Group restarted operations last week, ostensibly to wind up its matters. Is it too far a stretch to imagine Walt having one more go at his Round Hill Club friends at the bar, offering them a “sure fire, can’t miss” investment opportunity?