Madoff trail leads trustee to Mass Mutual

Bankruptcy court sues Tremont Group to recoup victims' funds; claims insurer ignored warning signs of massive fraud

Dec 8, 2010 @ 10:27 am

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UBS AG and Tremont Group Holdings Inc., the hedge-fund firm owned by Oppenheimer Acquisition Corp., were sued by the trustee liquidating Bernard Madoff's investment firm over claims they profited from his fraud.

The claim for at least $555 million against UBS comes after a $2 billion suit against the Zurich-based bank last month, Irving H. Picard, the lawyer appointed as trustee by a New York bankruptcy court, said in a statement yesterday.

Picard said in a separate statement that Tremont, its funds, affiliates and owners including Massachusetts Mutual Life Insurance Co. ignored obvious warning signs of fraud to maximize their own profits and self-interest. The statement didn't say how much he was seeking from Tremont.

Any money recovered will be returned to Madoff's victims on a pro rata basis, said Picard, who has so far recovered about $2.5 billion for creditors of Bernard L. Madoff Investment Securities LLC. Picard faces a Dec. 11 deadline to file claims against parties alleged to have profited from Madoff's fraud.

Chris Cockerill, a Hong Kong-based spokesman for UBS, said today by e-mail that the bank would take “all appropriate steps” to show Picard's latest allegations are “false and unfounded.”

Mark Cybulski, a spokesman for MassMutual, couldn't be reached by telephone after working hours and didn't respond to an e-mail requesting comment.

Madoff, 72, is serving a 150-year sentence in a federal prison in North Carolina after admitting he directed the biggest Ponzi scheme in history.

At the time of his arrest, Madoff's account statements reflected 4,900 accounts with $65 billion in nonexistent balances.

Including the HSBC suit, Picard is seeking a total of more than $33 billion from Madoff and his family, former employees, banks, feeder funds and investors alleged to have profited from the fraud. That amount is more than the estimated $20 billion in principal lost by Madoff investors.

—Bloomberg News—

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