A hedge fund run by former Fortis banking group executives has become the latest financial firm to get roped into litigation over its role in Bernard Madoff’s Ponzi scheme. The court appointed trustee for Madoff’s defunct firm is suing the Cayman based Harley International for more than $1 billion, claiming the fund “should have known” of Mr. Madoff’s fraud.
Harley is managed by Cayman Island-based Euro-Dutch Management Ltd, which is run Anthony L.M. Inder Rieden and Dawn Davies, both former executives at Fortis Fund Services. Fortis Prime Fund Solutions Ltd. is the administrator of Harley International, the report to investors shows.
Before the scheme went bust, Harley was receiving an average annual return of 13.5%. The Madoff trustee, Irving Picard, claims the Cayman Islands-based fund ignored warning signs that should have alerted it to the fraud.
In the lawsuit, filed on Tuesday in federal bankruptcy court in Manhattan, Mr. Picard said Harley withdrew more than $1 billion from the firm in the two years before its collapse on Dec. 11, 2008, including $425 million in the three months before that date.
The lawsuit is the third of its kind filed by Mr. Picard, an attorney at Baker & Hostetler LLP, in the past two weeks against feeder funds that fed billions of dollars into Mr. Madoff’s hungry Ponzi scheme. The suits say the funds were sophisticated investors that claimed to perform due diligence on their investments for clients. The suits also say that the funds enabled the fraud by ignoring numerous warning signs, including nearly uninterrupted steady returns.
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