NY judge: Feeder funds not Madoff customers

AP News
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Posted: Jan 05, 2012 11:29 AM
NY judge: Feeder funds not Madoff customers

A federal judge has affirmed a bankruptcy court ruling that thousands of clients of funds that invested money with jailed financier Bernard Madoff do not qualify for payouts that reimburse Madoff customers.

The decision made public Thursday by Judge Denise Cote (koht) agreed with a judge's finding last year. It said the clients don't qualify because they did not hold accounts in their names.

It means investors still cannot recover up to $500,000 from a fund created to reimburse small investors who are victims of fraudulent schemes.

The ruling came in a case brought on behalf of 16 feeder or hedge funds that invested with Madoff.

Lawyers for the funds did not immediately return messages seeking comment.

Madoff is serving a 150-year prison sentence for masterminding the multibillion-dollar Ponzi scheme.