Madoff Ponzi Scheme Leads to Seattle Litigation
SEATTLE - While Bernard Madoff stood before a New York judge, pleading guilty to financial fraud of epic proportions, another legal battle began in Seattle, where a local investment advisor faces legal action after channeling client funds to Madoff's operation without first investigating its worthiness, a suit claims.
The lawsuit, filed by investor John Dennis in U.S. District Court claims FutureSelect Prime Advisor II LLC and its managing partner Ron Ward, charged him a management fee of at least 1.5 percent, but did little other than turn the funds over to the Tremont Group, a holding company for a group of hedge funds including the Rye Broad Market Fund. The Rye Fund, in turn, placed investor funds with Bernard Madoff.
Ward and his firm are based in Redmond, Washington.
Steve Berman, managing partner of Hagens Berman Sobol Shapiro, filed the suit on behalf of John Dennis. Berman's firm is very active in representing investor interests, with suits against the Tremont Group and OppenheimerFunds among others.
"The law says that before an investment company puts client money in a fund, there is an iron-clad responsibility to investigate the worthiness of an investment," Berman said. "It appears that in Ron Ward's case, the due diligence was limited to FutureSelect looking up the mailing address to forward Mr. Dennis's investment to Madoff through Tremont."
The suit claims that had Ward and his firm done adequate due diligence, he would have recognized the massive Ponzi scheme within Madoff's operations, which ultimately led to losses for Dennis and other FutureSelect investors.
In December 2008, HBSS filed a separate case against Tremont in New York. The suit represents investors and groups that invested capital in the Rye Funds through Tremont, which then invested the funds with Madoff without proper due diligence, the suit alleges.
As a limited partner of the investment fund, Dennis is also bringing a derivative suit on behalf of FutureSelect against Tremont and a group of other defendants including OppenheimerFunds, Inc., one of the largest asset management companies in the country and owner of Tremont Group Holdings.
"We may be a long way from New York, but Madoff's actions have had a devastating effect on investors and foundations here in the Northwest," Berman said.
About Hagens Berman Sobol Shapiro
Hagens Berman Sobol Shapiro is based in Seattle with offices in Chicago, Boston, Los Angeles, Phoenix, San Francisco and New York. Since the firm's founding in 1993, it has developed a nationally recognized practice in class action and complex litigation. Among recent successes, HBSS has negotiated a pending $300 million settlement as lead counsel in the DRAM memory antitrust litigation; a $340 million recovery on behalf of Enron employees which is awaiting distribution; a $150 million settlement involving charges of illegally inflated charges for the drug Lupron, and served as co-counsel on the Visa/Mastercard litigation which resulted in a $3 billion settlement, the largest anti-trust settlement to date. HBSS also served as counsel in a $850 million settlement in the Washington Public Power Supply litigation and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. For a complete listing of HBSS cases, visit www.hbsslaw.com.