Kingate Global Fund Ltd., Kingate Euro Fund Ltd. and other defendants must return $975 million in funds they took out of Bernard L. Madoff’s Ponzi scheme, said the trustee liquidating the jailed con man’s investment firm.
The trustee, Irving H. Picard, filed a new complaint against the two so-called feeder funds that invested with Madoff, adding defendants and boosting his demand from $255 million in a 2009 suit. The amended complaint was filed yesterday after U.S. Bankruptcy Judge Burton R. Lifland gave Picard permission to do so. The funds are being liquidated in the British Virgin Islands.
The new complaint names Federico Ceretti and Carlo Grosso, “Italian nationals operating from England” who funneled about $1.7 billion of investors’ money to Madoff from 1994 through the Kingate funds, which they set up and ran, Picard said.
Ceretti, Grosso and the funds should have known of Madoff’s fraud and must return $975 million they redeemed before his 2008 bankruptcy, Picard said in the suit.
“These avoidable transfers to the Kingate funds are customer property that must be returned to the estate,” he said. He also is seeking any tax refunds the defendants may get on their fictitious profits from the Ponzi scheme.
William Tacon of Zolfo Cooper, the liquidator for the funds, has declined to comment on Picard’s suit.
$7.6 Billion Recovered
Picard has recovered about $7.6 billion for investors who lost more than $17 billion in the Ponzi scheme, with most of it so far unavailable for distribution, he has said. He and his law firm, Baker & Hostetler LLP, charged more than $175 million for their work, according to court filings.
The complaint names the investment firm FIM Advisers LLP, run by Ceretti and Grosso, along with trusts and HSBC Bank Bermuda Ltd.
“HSBC is defending itself vigorously against Madoff-related claims,” J.D. Massa, associate general counsel at the bank, said in an e-mail. Antony Zacaroli, a lawyer for London-based FIM Advisers, didn’t return a call seeking comment.
The case is Picard v. Ceretti, 09-1161, U.S. Bankruptcy Court, Southern District of New York (Manhattan).