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Victim Complaint Against Bernard L. Madoff

Victim Complaint Against Bernard L. Madoff

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Published by DealBook
Lawsuit against Bernard L. Madoff et al. from victims of the Ponzi scheme detailing cocaine use at the BLMIS.
Lawsuit against Bernard L. Madoff et al. from victims of the Ponzi scheme detailing cocaine use at the BLMIS.

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Published by: DealBook on Oct 21, 2009
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06/08/2012

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31.Plaintiff Jay Wexler (“Wexler” or “Plaintiff”), an individual and

citizen of New York, invested hundreds of thousands of dollars in Rye Select

Broad Market Prime Fund, L.P. in 2007 and 2008. Rye Select Broad Market

Prime Fund, L.P. was managed by Tremont Partners, Inc.

32.Plaintiff brings this action on his own behalf for fraud, negligent

misrepresentation, conversion and unjust enrichment, and derivatively for

professional negligence, breach of fiduciary duty, and fraud for the benefit of the

Rye Select Broad Market Prime Fund, L.P. and its Limited Partners, whose monies

were invested in BMIS.

33.Plaintiff is, and at all relevant times was, a Limited Partner in the Rye

Select Broad Market Prime Fund, L.P. and has standing to bring his claims on a

derivative basis.

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34.Plaintiff will adequately and fairly represent the interests of the Rye

Select Broad Market Prime Fund, L.P. and its Limited Partners in enforcing and

prosecuting its rights.

35.As a result of the facts set forth herein, Plaintiff has not made any

demand on the General Partner, Tremont Partners, Inc., to institute this action.

Such demand is excused because making a demand would be a futile and useless

act because the General Partner is incapable of making an independent and

disinterested decision to institute and vigorously prosecute this action. The

General Partner was one of the entities that committed the wrongful acts

complained of herein. The General Partner made material misrepresentations to its

Limited Partners, committed professional negligence and breached its fiduciary

duties to the Limited Partners of Rye Select Broad Market Prime Fund, L.P. As

detailed herein, Tremont’s management and board were active participants in the

Madoff fraud and aided and abetted the fraud. The General Partners either had

knowledge of the fraud or acted with conscious disregard of the truth.

36.Due to the numerous “red flags” that Tremont was aware of and the

significant financial benefits Tremont obtained as a Madoff co-conspirator, it is

evident that Tremont committed illegal and wrongful acts against the Limited

Partners of Rye Select Broad Market Prime Fund, L.P. In a December 12, 2008

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letter to its investors, the Rye Investment Management, essentially Tremont, wrote

that, “our level of anger and dismay over the apparent betrayal by Mr. Madoff and

his organization of his 14-year relationship with Tremont is immeasurable.” It is

evident that Tremont refuses to acknowledge responsibility for its own failures

and wrongdoing in this scam.

37.Tremont had conducted no due diligence in this matter, obtaining no

confirmation or verification of the actual trading that BMIS allegedly engaged in.

Besides general statements regarding Madoff’s investment strategy, Tremont

conducted no independent review or analysis of his “split strike conversion”

strategy. Tremont knew of Madoff’s refusal to permit any outside due diligence of

his operations, a major red flag. Moreover, Sandra Manzke, the founder and

former CEO of Tremont, and Robert Schulman, the CEO and chairman emeritus of

Tremont through July 2008, were both Madoff insiders who received significant

personal benefits from participating in the Madoff fraud. As such, it is impossible

for Tremont to act in the best interests of the Limited Partners, excusing the

necessity of first making a demand on Tremont to bring this claim.

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