Conn. town seeks pension money lost by Madoff

AP News
Posted: May 19, 2011 6:06 PM
Conn. town seeks pension money lost by Madoff

Lawyers representing Fairfield, Conn., asked the state's Appellate Court on Thursday to reverse a lower court ruling that the town cannot make claims for losses due to disgraced financier Bernard Madoff's fraud.

Attorney Richard Robinson told the court that Walter M. Noel Jr. and Jeffrey H. Tucker, who were partners in an investment firm, conspired with Madoff. As a result, they should be included among those responsible for a $42 million loss in Fairfield's pension fund, he said.

The pension fund provides benefits to 1,500 town employees.

Stamford Superior Court Judge John F. Blawie ruled in April 2010 that the harm that Fairfield alleges Noel and Tucker caused was "indirect, remote and derivative." As a result, the judge said Fairfield does not have standing to make a claim.

Fairfield accused Sandra L. Manzke, chief executive of investment firm Maxam Capital, and Noel and Tucker of telling potential investors that Madoff achieved consistent annual returns of between 8 percent and 12 percent while also limiting losses. The town accuses them of misrepresenting the investment potential, saying they knew the strategy could not produce such consistent returns in good years and bad.

Robinson said a colleague who argued the case in Stamford Superior Court could have made a better case that Noel and Tucker worked with Maxam and therefore are responsible for the losses.

"Could we have done a better job in bringing this to the attention of the trial judge? Of course, we could have," he said. "The judge was looking for some way to tie Noel and Tucker to Maxam."

But he said that does not alter the town's claim that Noel and Tucker are culpable in the loss of millions of dollars.

"We submit there is no legal significance to what I'd concede is poor communication," Robinson said.

Judge John F. Blawie used the word "conspiracy," but Fairfield's lawyers did not allege that a conspiracy took place, Robinson said.

"But what we have pled is something that serves the same purpose," he said.

Attorney Stanley Twardy who represents Tucker and spoke for him and Noel before the three judges, said there was no link between the two men and Fairfield. Noel and Tucker never solicited investments from Fairfield, he said.

"This complaint on the face of it has no connection whatsoever between the plaintiffs and Noel and Tucker," he said.

In addition, he said even if the Appellate Court rules there was a conspiracy, Fairfield's harm was "proportionate" to the loss among other investors.

Noel and Tucker were principals of Fairfield Greenwich Group, one of several investors sued by a trustee seeking to recover money lost by Madoff. Fairfield Greenwich has claimed to be an innocent victim of Madoff's massive Ponzi scheme.

The trustee, Irving Picard, has alleged that the Connecticut firm "knew or should have known" that Madoff's operation "was predicated on fraud" and that the returns had to be fiction.