A jury in King County Superior Court has found the firm of Ernst & Young negligent and responsible for half of more than $20 million lost by a Washington state investment company in the wake of Bernie Madoff’s multi-decade investment scam. The verdict last month puts that legal responsibility on Ernst & Young for damages during the four years it audited funds managed by Tremont Partners. FutureSelect Portfolio Management and some related firms lost a total of about $129 million in Tremont funds that sent money to Madoff.
FutureSelect sued the auditing firm in 2010 alleging about $100 million in losses. They alleged that Ernst & Young would have discovered the Madoff fraud if it had taken basic steps to verify his assets. The amount awarded by the jury covers money lost during the time Ernst & Young worked as an auditor for Tremont Partners. FutureSelect had accepted some responsibility for those losses causing the jury to split the damages between the two in the verdict.
Madoff revealed his scheme in December 2008 amid a collapsing economy, admitting that account statements showing clients held nearly $68 billion were a sham. The roughly $17.5 billion in principal invested by retirees, charities and other clients over decades was mostly gone – paid out as fake profits or raided by Madoff’s family and cronies. Madoff, now 77, is now serving a 150-year prison sentence. A federal trustee based in New York has recovered or made agreements to recover about $11 billion of the lost principal. FutureSelect had invested on behalf of other funds, retirees, a New York church and others.
Source: Claims Journal
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