Madoff Feeder Fairfield Goes On Recovery Rampage

Law360–Fairfield Sentry Ltd., Bernard L. Madoff’s largest feeder fund, filed 57 New York federal court suits over a three-day span last week in a litigation binge aimed at recovering
$3 billion the fund must turn over to Madoff’s trustee.

Among the largest single targets of the litigation, all filed in the U.S. Bankruptcy Court for the Southern District of New York, were Koch Investments (UK) Ltd. and a unit of the former Fortis Bank, now a unit of BNP Paribas.

Sentry, which is engaged in a Chapter 15 liquidation, says Koch Investments withdrew more than $21.5 million between May and September 2005.

The Fortis unit withdrew nearly $21.6 million from Sentry funds in August 2008, mere months before Madoff revealed his scheme in December of that year, according to the complaint.

Both suits were filed Friday.

Koch Investments and BNP Paribas could not immediately be reached for comment.

On Thursday — the first and by far the largest day of the binge with 40 cases filed — Sentry hit a
Deutsche Bank unit with an over $11 million claim and a Bank of America Corp. subsidiary with a nearly
$4 million claim.

A second BNP Paribas unit was sued for nearly $2.7 million on Thursday, and several other major investment banks like Credit Suisse AG felt Sentry’s sting over the course of the three-day litigation spree, according to the docket.

Tortola, British Virgin Islands-based Sentry filed for bankruptcy in April 2009 in the territory’s Commercial Division of the High Court of Justice. Two units, Fairfield Sigma Ltd. and Fairfield Lambda Ltd., have also sought protection. The Chapter 15 proceedings commenced in June 2010.

With at least $7 billion in assets held by BLMIS, Sentry claims to have been Madoff’s largest feeder. Sentry said it needed Chapter 15 protection from multiple potential creditors, including Irving H. Picard, Securities Investor Protection Act trustee for the BLMIS liquidation, who has filed an adversary proceeding looking to recover $3.5 billion Sentry received from Madoff during the six years prior to BLMIS’ collapse.

Sentry ceased calculating its net asset value in December 2008, when Madoff was arrested following news that BLMIS had been uncovered as the largest Ponzi scheme in U.S. history.

Sentry formed a litigation committee in February 2009, at which point the company said its sole purpose had become ensuring the preservation of its assets for efficient distribution.

The Irish Stock Exchange delisted Sentry in May 2009.