A group of Washington state investors in a fund tied to Bernard Madoff’s huge Ponzi scheme is going after the fund’s accountants in a Seattle courtroom, in what may be the only Madoff-related case in the United States to make it all the way to a jury trial.
A group of Washington state investors in a fund tied to Bernard Madoff’s huge Ponzi scheme are going after the fund’s accountants in a Seattle courtroom, in what may be the only Madoff-related case in the United States to make it all the way to a jury trial.
Jury selection started Monday, and the initial hearings are expected Tuesday or Wednesday, said Steven Thomas, a lawyer for plaintiffs FutureSelect, a Kirkland-based investment fund that saw more than $100 million of its investors’ money disappear in Madoff’s $20 billion fraud.
More than 300 investors, ranging from local individuals to a church in New York, lost their money after FutureSelect invested in a so-called “feeder fund” that channeled money to Madoff.
The plaintiffs want a Washington jury to force Ernst & Young, the global accounting giant that audited the feeder fund, to repay the money, Thomas said.
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The plaintiffs argue that they wouldn’t have been bamboozled by Tremont, the fund that fed into Madoff’s investment firm, if the accountants hadn’t signed off on its statements.
“We’re trying to get (the investors’) money back.”
Madoff is serving a life sentence in prison, and nothing remains of his dismantled scheme that could reimburse the defrauded investors. But Ernst & Young last year had global revenues of $27.4 billion.
Most Madoff disputes were settled after class-action litigation in New York; a liquidator overseeing the restitutions had, as of late September, distributed $7.2 billion to Madoff customers.
But FutureSelect refused to be part of the class-action suit because it felt “responsibility toward their investors,” and in a large proceeding their voices wouldn’t be heard, Thomas said.
So for years they fought to be heard in a Washington court, an effort that went all the way to the state’s Supreme Court. In August, a King County judge denied one last Ernst & Young motion for summary judgment, paving the way for a jury trial in the case.
“As far as I know there hasn’t been another jury trial” of a Madoff case, Thomas said. He said the trial is scheduled to last through November.
Ernst & Young said in a statement that Madoff’s “sophisticated frauds were concealed through volumes of fake documents and extensive collusion by his employees and cohorts.”
The scheme went undetected for three decades by regulators, law enforcement and numerous audit firms alike, Ernst & Young said, adding that the firm didn’t audit the Madoff firms directly.
“While we regret the investors’ losses, no audit of a Madoff-advised fund could have detected this Ponzi scheme,” the firm said.