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Madoff Trustee Drops $212 Million Claims Against Feeders

May 18 (Bloomberg) -- The trustee liquidating Bernard L. Madoff’s firm agreed not to pursue $212 million from two bankrupt U.S. funds related to the Fairfield Greenwich Group, the biggest so-called feeder fund in Madoff’s Ponzi scheme.

As part of a settlement with the trustee, the funds, Greenwich Sentry LP and Greenwich Sentry Partners LP, reduced their claims against the Madoff bankruptcy estate and signed over claims they had made against Fairfield Greenwich Group, trustee Irving Picard said in a statement today. Greenwich Sentry cut its claim against the Madoff estate to $35 million, from more than $140 million, and the other fund’s claim dropped to about $2 million, from $2.5 million, he said.

“The agreements greatly further the interests of the customers” of the conman, Picard said in a court filing today in U.S. bankruptcy court in Manhattan.

The deal struck by Picard is similar to one announced on May 9, when he dropped efforts to collect $3.8 billion that three offshore Fairfield funds allegedly withdrew from the Madoff firm in the final six years of the fraud, the trustee said. The offshore funds also cut their claims on the Madoff estate.

Fairfield Greenwich Group, founded by Walter Noel, invested about $7 billion with Madoff, according to court documents.

The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Bob Van Voris in U.S. District Court in Manhattan at rvanvoris@bloomberg.net. Linda Sandler in New York at lsandler@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.

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