Trustee seeks money from Madoff feeder funds

May 19, 2009 | By Jim Kim

The Fairfield Greenwich Group was among the feeder funds that suckled at the bosom of Bernard Madoff and grew fabulously wealthy. Then it all fell apart. As the investigation continues, trustees are making more aggressive moves to recover funds. The latest: Trustee Irving Picard has sued to recover $3.2 billion, which the Fairfield Greenwich Group took out of their Madoff accounts, according to the New York Times. No individual partner was named.

The lawsuit raises the issue that many have pondered: How could these "feeder funds" not have known that they returns they were enjoying were fraudulent? It seemed like an all-too-cozy arrangement, Fairfield Greenwich group execs raked in money from all over the world and funneled it all to Madoff, who paid them in enormous fees. We'll see where criminal investigators take the probe. Many assume that a scheme of this scale=d required co-conspirators. But proving that will be hard without Madoff's cooperation, and he's not cooperating.

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