A judge has thrown out several lawsuits by investors who blame hedge funds for failing to detect Bernard Madoff’s massive fraud, saying the one-time Nasdaq chairman “cleverly leveraged his considerable reputation” to dupe the most sophisticated financial entities, including regulators and Wall Street banks.
In her ruling, Judge Deborah Batts concluded that investors in the hedge funds run by J. Ezra Merkin were sufficiently warned about risks.
“The list of victims that failed to detect Madoff’s fraud is lengthy,” Batts wrote, citing the Securities and Exchange Commission among them. “In line with what other courts have done, this court will not recognize a claim against those who did business with Madoff, simply by imputing the suspicions of a few — albeit, wise — people who suspected Madoff’s fraud before it was ever discovered.”
The 73-year-old Madoff confessed in December 2008 that he was running a multi-decade Ponzi, or pyramid, scheme and that more than $65 billion he claimed to have on hand for investors had dwindled to a few hundred million dollars from an original investment of about $20 billion. He is serving a 150-year prison sentence.