New lawsuit in Madoff case targets alleged Latin American and European fraud

The New York trustee overseeing the liquidation of the investment firm of convicted ponzi-schemer Bernard Madoff, has expanded his lawsuit in U.S. bankruptcy court in an effort to recover $3.6 billion related to the operations of one of Madoff's largest so-called 'feeder funds', Fairfield Greenwich Group.

Among the new defendants are the group's co-founders, one-time socialite and jet-setter Walter Noel, his partner Jeffrey Tucker and Noel's Colombian-born son-in-law, Andres Piedrahita, as well as the firm's Miami manager, Santiago Reyes, and its sales director for Latin America, Lourdes Barreneche. Reyes is married to Maribel Obregon Santo Domingo, niece of Colombian billionaire Julio Mario Santo Domingo, one of the wealthiest men in Colombia, and former owner of Bavaria, the nation's largest beverage company.

The 217-page complaint provides a detailed history of Noel's relationship with Madoff's firm, beginning with his first investment in 1989. The firm is believed to have placed almost $7.5 billion with Madoff, more than 10 per cent of Madoff's $65 billion fraud.

The new lawsuit declares that the hedge fund employees were active participants in Madoff's Ponzi scheme. "The defendants did not properly, independently, and reasonably perform due diligence into the many red flags strongly indicating Madoff was a fraud," it alleges. "The defendants were not victims. They were enablers. They were facilitators. They deepened the pain of Madoff’s customers and their own investors."

It says Noel, Tucker and Piedrahita received a combined $390 million of partnership distributions in the six years that Fairfield Greenwich was feeding money to Madoff. "Every dollar the defendants purportedly ‘earned,’ and every dollar they kept to unjustly enrich themselves, was stolen money," the lawsuit argues. It charges Noel and 24 other Fairfield Greenwich employees, among them his daughter Corinna, and his sons-in-law Philip Toub, Andres Piedrahita, and Yanko Della Schiava, with 31 counts of fraud.

The complaint alleges Noel and his partners collected more than $1 billion in fees despite knowing about Madoff's fraud for years and lying to investors. The Noel family enjoyed a luxurious lifestyle, including a $4.2 million Greenwich mansion, a posh $9.4 million Southampton summer home and an 18,000-square-foot villa, Yemanja, in Mustique.
The complaint describes Noel's wealthy son-in-law, Andres Piedrahita, as being motivated by "limitless greed, without regard for any interest other than his own." After the collapse of Madoff, Piedrahita and his wife sold their American home "and moved from country to country after Piedrahita took delivery of a $12 million yacht," according to the complaint. It cites an article in the Wall St Journal titled 'The charming Mr Piedrahita,' by prize-winning Wall St Journal correspondent, Jose de Cordoba.

Noel's partner, Jeffrey Tucker, was described in the complaint as becoming "exceptionally wealthy" with "prized racehorses, private jets and luxurious mansions" due to what was described as the firm's "de facto partnership with Madoff."

In a statement Fairfield Greenwich rejected the latest allegations. The firm's founders consider themselves victims of Madoff, and say they personally lost a total $70 million.
Fairfield-Greenwich is now in liquidation. In September it paid $8 million to settle a lawsuit with investors in Massachusetts, which covered about 15 per cent of losses in that state.

Madoff was sentenced to 150 years in jail last year.