Bernie Madoff’s Brother Sued By Frank Lautenberg’s Foundation

The family foundation of New Jersey Senator Frank Lautenberg has filed a lawsuit against the brother of Ponzi King Bernie Madoff. Peter Madoff, who was the chief compliance officer and general counsel of Bernard L. Madoff, is accused in the lawsuit of failing to spot—or perhaps concealing—obvious signs of criminality.

Dealbook has the complaint filed in federal court in New Jersey and gives us this report:

The complaint, filed Tuesday afternoon in federal court in New Jersey, describes a litany of “obvious, material red flags” that plaintiffs believe should have alerted Peter Madoff to the fraud taking place at his firm, where he was general counsel and a senior managing director.

Among the 17 “flags” named in the suit was the fact that no one was allowed in the 17th floor of the firm’s New York office space, known as “the cage,” and the fact that the firm’s trading statements showed a history of buying securities at or near their daily lows and selling them at or near their daily highs, timing that the complaint says was “virtually impossible to achieve in the absence of deceit or manipulation.”

The Lautenberg foundation invested $7.3 million into Mr. Madoff’s firm in 2001 and 2002, according to the complaint. The latest statement from Mr. Madoff’s firm put the foundation’s balance at $15.4 million, reflecting the completely phony returns Madoff told clients he was earning for them.

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