Some of the money touched by Bernie Madoff is going back where it belongs.
According to the Wall Street Journal, “One of the largest offshore fund managers that channeled cash to Bernard Madoff will return $860 million in stolen money under a settlement with the liquidators cleaning up after his Ponzi scheme. Two British Virgin Islands funds managed by Kingate Management Ltd. agreed to repay 93% of what they received from Mr. Madoff’s phantom investment fund over their lifetimes, according to papers filed Wednesday in the U.S. Bankruptcy Court in New York.”
Kingate is a Hamilton, Bermuda hedge fund, and was a feeder fund into the securities firm of Madoff, as part of the Madoff investment scandal. It and Tremont Capital Management set up Kingate Global Fund Ltd. as a joint venture. It charged an initial fee of 5%, and then 1.5% of assets per year. It was one of the largest feeder funds of Bernie Madoff, and raised $3.5 billion for Madoff starting in 1994. It was overseen by FIM Advisers LLP, a London firm. The fund lost all of its assets in the Madoff Ponzi scheme.
“Offshore feeder funds that pooled investor cash and funneled it to Mr. Madoff have been prime targets for Irving Picard, the liquidating trustee who has spent a decade suing beneficiaries of the Ponzi scheme to dig up funds for those who lost money,” the Journal piece continued. “Kingate Global Fund Ltd. and Kingate Euro Fund Ltd. invested $1.73 billion in Mr. Madoff’s firm starting in 1994 and lost everything when it was exposed as a fraud in 2008, according to court records.”
The Madoff scandal rocked the financial world like few before it. On December 10, 2008, Madoff’s sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as saying that it was “one big lie”, according to Wikipedia. The following day, FBI agents arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted multiple investigations into his business practices but had not uncovered the massive fraud.
“On March 12, 2009, Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme,” the report said. “The Madoff investment scandal defrauded thousands of investors of billions of dollars. Madoff said that he began the Ponzi scheme in the early 1990s, but federal investigators believe that the fraud began as early as the mid-1980s and may have begun as far back as the 1970s. Those charged with recovering the missing money believe that the investment operation may never have been legitimate. The amount missing from client accounts was almost $65 billion, including fabricated gains.”
