Trustee sues Madoff investors to recover $187.5m

The official recovering funds for Bernard Madoff's swindled investors is suing several international firms for a total of $187.5m.

The four lawsuits, filed Thursday by trustee Irving Picard, are the latest of hundreds trying to recover money that Madoff fraudulently paid out to investors as part of the Ponzi scheme that landed him a 150-year prison sentence.

According to Mr. Picard, the defendants invested in two big Madoff feeder funds: Fairfield Sentry Ltd. and Kingate Global Fund Ltd. These funds reached out to investors around the world and funneled their money into Madoff's investment firm. When Mr. Madoff paid out returns, the money went back to these investors through the feeder funds.

The funds that went back weren't legitimate returns but other investors' money, which is why Mr Picard is seeking to claw back these funds.

For example, Mr. Picard is seeking nearly $77m from Banco Itau Europa Luxembourg SA and Banco Itau Europa International. According to the lawsuit, much of the money—$70.6m—came from the wealth-management firms' investments with Fairfield Sentry, while Kingate paid out the remainder.

Mr. Picard is seeking another $30.6m from French bank Credit Agricole SA and its Credit Agricole (Suisse) unit, $16.3m of which they received from Fairfield and the rest from Kingate.

Another defendant is Arden Asset Management Inc. and several affiliates, from whom Mr. Picard is seeking a total of $43.4m. Of that, the investment firm received $12.6m from Fairfield and $30.8m from Kingate.

Finally, U.K. investment firm Grosvenor Investment Management Ltd. and its affiliates face a demand for the $36.5m it received: $31.5m from Fairfield and $5m from Kingate.

Representatives of the four defendants couldn't immediately be reached for comment Friday.

The lawsuits were filed in the U.S. Bankruptcy Court in Manhattan, which is overseeing the liquidation of Mr. Madoff's investment firm, Bernard L. Madoff Investment Securities LLC.

(Published by WSJ - January 13, 2012)