Madoff fraud lawsuits begin to center on "feeder funds."
Look for cases arising our of Bernie Madoff's Ponzi scheme to include claims under civil RICO. Investigations by several prominent law firms are expanding the potential pool of defendants. The Financial Times (12/30, Chung, Brewster) reports, "As victims of Bernard Madoff's alleged $50bn fraud try to recover losses, the 'feeder funds' that channeled money to him are emerging as a key target of investor lawsuits, lawyers say." There have only been a "handful of lawsuits...filed since the alleged fraud came to light this month, questions about the level of due diligence performed by the feeder funds have become a central issue." Now, "the search for deep-pocketed sources of compensation could lead plaintiffs' law firms to examine the potential liability of auditors who signed off on feeder funds' accounts."
