A reader shares some interesting scuttlebutt and allegations about Fairfield Greenwich Group, the primary Bernie Madoff fund-raising vehicle, which got paid $500+ million over the past decade to vaporize $7+ billion of client money at the hands of The Ponz.
In December, we predicted that FGG wouldn’t make it through January. We were wrong. The firm is still alive, although it appears to have hunkered down.
We’re presented the reader’s input below, in the Socratic format in which it appeared in the comments. We can’t vouch for the accuracy of any of the theories, facts, facts or allegations. We have spoken to the reader, and he/she sounds credible.
The exchange below appeared in the comments on our post about Andres Piedrahita, the high-living FGG partner who is married to FGG founder Walter Noel’s daughter Corina.
This quasi redemptive puff piece by the WSJ [about Andres Piedrahita] was a complete sham!
I looked at FGG in 2004 and saw the gross negligence they were so adamantly selling. Andres was raking in the wealthy SAs, the Euro trash and their institutions to feed their beast. When once asked about the details of due diligence they perform at FFG, he said, “we have the little people do that….I’ll have one of the juniors call you and explain why Madoff was so hard to access!”
He is an arrogant moron who was kept away from any US meetings that centered on the intricacies of the business and was despised by most all the other officers (save for Walter and Jeff…who needed him to keep selling). Just ask Rob Blum why he left the firm in 2004-05!…
Andres, his daddy-in-law [Walter Noel] and their partners were all crooks who full well knew they had some “issues” with the golden-goose, but saw little reason to upset the status quo. They are the farthest things from victims (just like the Madoff family still out of jail…for now).
The real reason they aren’t shuttering the firm is that their D&O insurance and coverage for legal costs disappears if FGG closes.
I really look forward to the day David Boies & Co tear these clowns a new a..hole. They so very well deserve it.
Do you know any of the details of the D&O insurance policy? Any idea how many people are left at FGG? Yes, it is fairly comprehensive and it allows for significant legal defence funding (only for civil proceedings).
FGG continues to pay a majority of their senior people (can anyone say “no rat” insurance?) while they hunker down with lawyers,Most of the junior folks (inc. the stiletto squad) have been let go. These people were given lucrative severance and forced to sign detailed NDAs before they could receive it.
At the very least FGG was/is guilty of severe gross negligence. I’d speculate that the Feds find more than that (using all sots of leverage and wide-berth prosecutorial tools).
Do you know the policy limit?
Yes, but I was asked to remain mum about specific #’s and features as it has come from a source that would prefer to not have that out just yet.
Regardless, there will come a point in time in the near future where a few key people begin to realise their interests are no longer aligned with the Andres, Walter & Jeff and began to jump off the sinking ship. Once they talk, the whole feeder fund scam will come to light and round two of perp walks
What do you mean by the “feeder fund scam?” Are you referring to the fact that the Feeders misrepresented themselves by claiming to perform due diligence that they never did, or do you think they were in on the Ponzi?Or something in between?
All the above is probably right, but the last (in btw) fits best.
I genuinely believe that FGG full well knew of multiple questions about Madoff’s operation, reporting, accounting. These questions started in the late 1990’s (when a founding principal left the firm) and re-appeared every year up through last December. The firm made conscious and proactive decisions to avoid responding to specific inquiries by potential investors. They deliberately avoided probing Madoff, his auditors, and ANYONE else in the exchange (and off-exchange, OTC) options world that could question the Madoff strategy or returns. They did near ZERO real due diligence (on both Madoff and many of their international clientele). Ultimately, the latter will come back to haunt them.
Only when they realised that there was no legitimate end game (after openly courting potential buyers, ALL of whom failed to get past the first day of questioning and DD) did they start to beef up their bogus DD section on their now nearly empty website.
They cry “victim” now as they remain offshore or elsewhere, fighting requests for documentation, moving legal jurisdiction and probably (speculatively) moving $$ around the world…all things Madoffian. Like Bernie, the grand-master of deception himself, the playbook is to insulate their heirs from financial persecution. Me thinks the Feds know this and will get around to them once they finish cooking Ruth, Frank & Sons.
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