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Madoff Trustee Wins $180 Million Vizcaya Judgment

The trustee for Bernard Madoff’s investment-advisory business won a $180 million default judgment against Vizcaya Partners Ltd. over claims the hedge fund profited from the conman’s fraud.

Vizcaya, based in the British Virgin Islands, failed to plead its case “or otherwise defend itself” against trustee Irving Picard’s allegations, according to an Aug. 3 ruling by U.S. Bankruptcy Judge Burton Lifland in Manhattan.

Vizcaya missed a deadline to respond to the lawsuit, which seeks to recover money the hedge fund withdrew from its Madoff account less than four months before the conman’s December 2008 arrest. The default judgment applies to Vizcaya and affiliates Zeus Partners Ltd., Bermuda-based Siam Capital Management and the Cayman Islands-based Asphalia Fund Ltd.

Picard has recovered more than $1.5 billion for Madoff victims. His so-called clawback lawsuits seek another $15 billion from funds that funneled money to the fraud, as well as Madoff’s friends and family. Madoff, 72, pleaded guilty last year and is serving a 150-year sentence for running the largest Ponzi scheme in U.S. history.

Recovery of Vizcaya’s damages may hinge on a ruling by the Supreme Court of Gibraltar, which is holding about $74 million on behalf of the hedge fund’s bank, Banque Jacob Safra (Gibraltar) Ltd. The default doesn’t apply to the bank, which was also sued by Picard and is challenging the claims.

Gibraltar Court

The Gibraltar court took possession of Vizcaya funds through a case filed against the hedge fund by financial authorities in the U.K. territory on the southern tip of Spain.

Vizcaya’s lawyer, Anthony Paccione of Katten Muchin Rosenman LLP in New York, didn’t return a call for comment.

Vizcaya invested with Madoff in 2001 through one of its directors, Lilia Clemente, who founded New York-based money management firm Clemente Capital Inc. and met Madoff in the late 1990s when she was a director at the U.S. Security Industry Association, according to court papers.

Clemente, who isn’t named in the complaint, didn’t return a call for comment.

The case is Picard v. Vizcaya Partners Ltd., 09-01154, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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