Q3 – 2015

In preparation for his title role in ABC’s upcom-

ing miniries Madoff, Richard Drefuss recreated

the Ponzi schemer’s infamous portrait in front of

Received claims:

§ 63,737 persons from 135 countries

§ Initial claims of loss $77.3 billion

§ 1,200 separate investment funds or

products.

§ Average pay-out up from 5.2% to 7%

§ 3,819 claims disqualified

§ 54% of claims reviewed

Continued on 5 5

Support group formed for

Luxembourg victims of

Madoff fraud

Page 2

Lawsuit Seeking to Re-

claim $825 Million from

Two Madoff Feeder Funds

May Proceed Page 4

WAKE2O:

Current buying interests

Page 15

www.wake2o.com

Madoff Ponzi Scheme News Update

Madoff Victimes Fund ‘MVF’ – May 2015 Update

  Q1 2015

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2

Q3 – 2015

A group of victims, both private and institu-

tional investors, who invested in the Luxem-

bourg–based fund known as Luxalpha, has

been formed.

Luxalpha was a Madoff-established Luxem-

bourg investment fund for which the Swiss

bank, UBS, provided custodial services and

which was marketed in Europe by Access In-

ternational.

The Meeschaert group and its members have a

claim over €50 million formed from just over a

dozen investors.

The association’s goal is to defend the interests of

the victims of the Madoff fraud. Cédric Mee-

schaert, president of Meeschaert says: “Our group

will strive to ensure that our claims will at least be

considered in the American bankruptcy proceed-

ings.”

Asset manager Meeschaert is the only financial in-

stitution to have assumed such responsibility on

behalf of its clients and to have totally compen-

sated all of its clients in 2009 and 2010 for their

losses stemming from Luxalpha investments.

Despite many victims of Madoff’s fraud being

compensated through the US bankruptcy law’s

“clawback” mechanism, the Luxalpha fund, and

thus its investors, have not yet been authorised by

American law to be a part of these redistributions.

“We will explore every possible legal option to en-

sure that our claim is considered by the American

bankruptcy trustee, Irving Picard,” says Cédric

Meeschaert.

Support group formed for Luxembourg vic-tims of Madoff fraud – 24 June 2015

  Q1 2015

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3

Q3 – 2015

Madoff Employee Must Pay $170 Billion, Can Keep Stamps

A stainless steel Rolex Oyster Chronograph An-

timagnetic watch is displayed during the auction

of personal property that once belonged to Ber-

nard and Ruth Madoff.

The first employee hired by Bernard Madoff has

agreed he owes the government a Rolex watch, a

painting by the comedian Red Skelton and $170

billion cash.

Irwin Lipkin, 77, is scheduled to be sentenced

Wednesday for conspiracy and making false

statements in employment records. As with

Madoff and more than a dozen others convicted

in the scandal, the government is also seeking to

recover the full proceeds of the fraud from Lip-

kin.

Prosecutors filed a forfeiture agreement Monday

in which Lipkin, who said he retired from Ber-

nard L. Madoff Investment Securities LLC in

1998, agreed to a judgment for the cash forfei-

ture, which is about the same as the annual gross

domestic product of Iowa.

Under the agreement, Lipkin will also give up a

home in Del Ray Beach, Florida, some stocks, an

IRA account, the Rolex oyster bracelet watch and

the painting, titled “He’s House Trained.” Lipkin

may keep a house in Paramus, New Jersey, a ruby

ring, a diamond ring, a stamp collection, and a

second Skelton painting, “Choo Choo Freddie.”

The forfeiture agreement must be signed by U.S. Dis-

trict Judge Laura Taylor Swain before it can take ef-

fect.

As part of a plea agreement, Lipkin may be sentenced

to as long as 10 years in prison. Prosecutors have

agreed that’s too long, though they haven’t specified

the term of imprisonment they seek. Lipkin, citing age

and fragile health, as well as his lack of knowledge of

the Madoff fraud, has asked Swain to sentence him to

probation.

Lipkin claims he

was fooled by

Madoff and is one

of the con man’s

many victims. His

lawyer, Richard

Galler, didn’t immediately respond after regular busi-

ness hours to phone and e-mail messages seeking

comment on the forfeiture agreement, Skelton, an

early television star, was known for his oil paintings of

clowns. He died in 1997.

Madoff admitted to federal agents in December 2008

that his company was a sham. He pleaded guilty to 11

counts and was sentenced to 150 years in prison,

though he claimed all along that he worked alone and

refused to implicate anyone else.

The case is U.S. v. Lipkin, 10-cr-00228, U.S. District

Court, Southern District of New York (Manhattan).

  Q1 2015

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Q3 – 2015

A bankruptcy judge largely rejected a bid by two funds to dismiss litigation

1

A lawsuit seeking to reclaim $825 million from

two major funds that invested with Bernard

Madoff may move forward largely intact, a bank-

ruptcy judge ruled Tuesday.

Judge Stuart M. Bernstein of the U.S. Bankrupt-

cy Court in Manhattan largely rejected a bid by

the funds, Kingate Global Fund Ltd. and

Kingate Euro Fund Ltd., to dismiss litigation

brought by the Irving Picard, the trustee winding

down Mr Madoff’s investment firm.

The lawsuit seeks to recover the $825 million

that the two funds, so-called feeder funds that

pooled investors’ cash and sent the funds on to

Mr Madoff, received in the six years before the

2008 collapse of what was ultimately to be re-

vealed as the largest Ponzi scheme of all time.

In letting the lawsuit proceed, Judge Bernstein

said Mr Picard “plausibly alleges” that the funds’

managers knew that Mr Madoff’s investment

strategy wasn’t what it seemed and worked to act

as buffer between Mr Madoff and suspicious

investors.

“The totality of the allegations in the [complaint]

paint a picture of sophisticated financial profes-

sionals who knew that Madoff was reporting

fictitious transactions, and took steps to prevent

any inquiry,” the judge wrote. The allegations

remain subject to a trial.

2

While Judge Bernstein’s ruling preserves the

bulk of the lawsuit, he did block Mr Picard

from moving forward with an effort to throw

out the Kingate funds’ claims against Mr

Madoff’s investment firm. The funds, which are

now in liquidation proceedings, lost approxi-

mately $800 million on their investments with

Mr Madoff.

An attorney for the funds’ liquidators, Robert S.

Loigman, said Wednesday that the judge’s rul-

ing is disappointing and that his clients are re-

viewing their next steps. He said that investors

in the funds, among the biggest losers in the

Ponzi scheme, are already victims of Mr

Madoff’s fraud and would suffer doubly if Mr

Picard’s prevails in court.

“They shouldn’t be victimized twice---first by

Madoff and then again by their managers,” Mr

Loigman said.

The lawsuit’s defendants include Federico Cer-

etti and Carlo Grosso, Kingate’s founders and

Italian nationals who reside in the U.K., accord-

ing to the suit.

Reached Wednesday, an attorney for the men

declined to comment, citing the pending litiga-

tion.

Continued on page 1 1

  Q1 2015

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5

Q3 – 2015

MVF May 2015 Update

Since our last update in the fall, MVF has been extremely busy reviewing claims submitted by Madoff

victims from around the world. We haven't had any major milestones to announce, but the work has

proceeded at a very fast pace. I hope that this update will help each victim to understand the considera-

ble progress that has been accomplished, and the steps that lie ahead.

As we have noted in prior updates, the Madoff fraud represents what we believe to be the largest theft

ever committed. To date, MVF has received claims from 63,737 persons in 135 countries. Initial claims

of loss were approximately $77.3 billion. While the aggregate losses are stunning, we know that behind

the aggregate numbers lie real people who suffered an unexpected loss that in many cases was life-

shattering. Most of MVF's claimants have not received any money through the Madoff bankruptcy pro-

ceeding or other programs, and most are not eligible for other relief. That knowledge animates our ef-

forts to provide a meaningful recovery.

MVF's program is designed to allow all Madoff victims to seek a recovery for their actual losses, subject

to our eligibility standards which involve relatively simple principles. Eligibility is universal in the sense

that it doesn't matter if a victim's funds went directly into Madoff, or whether they came in indirectly

after first travelling through one, two, three or more intermediary investment funds. However, whether

they invested directly or indirectly, the claimant must show that the money that was stolen actually be-

longed to them, and not to some other person. For example, there are thousands of claims that involve

nominee entities such as personal holding companies, corporations, foundations or trust entities as

claimants. Some of those entities are eligible, but generally there are one or more individuals who are

the proper claimants as the actual victims. Thus, determining if a claimant was the ultimate owner of an

investment or merely a nominee or intermediary is an important element in the review of every claim.

The eligible loss amount is the actual cash invested in Madoff by a victim, less all the cash previously

recovered. In some cases that is a relatively simple determination with only a limited number of transac-

tions to review. However, other claims involve hundreds of transactions over many years. The calcula-

tion of loss is especially important, but also sometimes very complicated, where a victim invested in a

fund that put money in Madoff and non-Madoff investments. In that situation we have to be sure that

only the portion of funds attributable to the Madoff investment is included in the claim amount.

  Q1 2015

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6

Q3 – 2015

While most victim cash came in via investment vehicles that were invested 100% in Madoff, tens of

thousands of claims involve victim cash moving through funds that might have had as little as 1% to

5% (or as much as 90%) allocated to Madoff, with the balance of funds going into legitimate invest-

ments where the funds were not stolen. We have some claims that involve an investment of a very large

sum, but with a very small percentage that went into Madoff. Reducing such a claim to its Madoff allo-

cated amount is critical to not overstating, and not overpaying, that claim. Similarly, in some situations

it is relatively straightforward math to be sure that all phony profits are stripped out of a claim. In other

cases this is more difficult, as when money moved in or out of Madoff via a fund's internal changes in

NAV rather than through redemption transactions by the investor.

MVF's standards "disqualify" certain types of claimants, including anyone related to the Madoff family,

or anyone who profited by the Madoff investments of others. However, to apply such restrictions, as

well as to protect against cash transfers to persons subject to restrictions on assets (such as terrorists or

officials of certain regimes), we must be certain of the identity of the real victim, and not a nominee.

As simple as these standards are to articulate, the practical reality of verifying the losses is complex. We

know of more than 1,200 separate investment funds or products (we sometimes use the general de-

scription of "investment vehicles") through which the victim money was funneled into Madoff. MVF

has done a great deal of work to document the various paths that victim funds took. Once we verify

such a "path to Madoff", we can approve or reject dozens or hundreds of claims where money travelled

through the same path. However, untangling these flows of cash years after the fact can be very chal-

lenging. We don't want to unfairly exclude some victims, or approve inflated claims for other victims,

so we have to get the numbers right.

MVF has roughly 60,000 claimants whose accounts were never reviewed in the bankruptcy proceed-

ings, and we are doing so for the first time. We have received millions of pages of documents explain-

ing investment structures or documenting transactions. Claims involving entities that are not an indi-

vidual are particularly complex, as are claims in some foreign languages. The burden of proving claim

eligibility and the eligible amount of the loss is on the claimant. However, we do not want to reject

claims that aren't well-documented if we can assist the claimant to show the necessary facts. Our goal is

to help claimants, not drown them in paperwork. However, we can't simply accept claims that aren't

verifiable without risking dilution of legitimate claims.

  Q1 2015

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7

Q3 – 2015

The primary beneficiaries of carefully reviewing the claims and verifying the amounts really lost are the

actual victims. Every dollar paid on excessive claims would dilute the recovery on genuine claims if they

survived the review process. It is simple mathematics, but if we had distributed our approximately $4

billion in assets evenly across the initial claims of $77.3 billion, each victim would have received an av-

erage payout of only approximately 5.2% of their total loss. If hypothetically the same $4 billion were to

be distributed across verified claims of only $57 billion, victims would receive an average payout of 7%.

Distributing the same $4 billion over $37 billion would produce an average distribution of 10.8%, and

so on.

MVF can't increase the $4 billion it has available in resources. However, by identifying excessive claims

we are able to increase significantly the percentage of loss that will be paid on real losses compared to

what it would otherwise have been if all claims had been accepted at face amount. As a result, we guard

the claim denominator fiercely against being inflated by ineligible or non-existent losses.

We don't yet know what the final approved loss number will be. However, as a result of our claims re-

views during the last 12 months we have been able to remove approximately $18.5 billion in excessive

claims, thereby bringing the maximum potential total approvable claims denominator down to $58.8

billion today. That number will fall as we con-

tinue to review claims and eliminate ineligible

amounts. As a result of this work, the potential

average payout to victims has risen by approx-

imately 24% already, from 5% initially to nearly

7% today. The potential future payout percent-

age will continue to climb throughout the claim

review process until all claims have a verified

loss amount.

The cumulative verified loss on all approved claims we will recommend to the Department of Justice

for approval is what we call the "claim denominator". The sum of the claim denominator at any point

in time and the total dollar amount of all unreviewed claims or claims pending resolution is what we call

the "maximum potential claim base". Thus, today the claim denominator is approximately $1.3 billion,

while the maximum potential claim base is over $58 billion. As the process moves forward those two

numbers will converge significantly, narrowing the range of what the final claim denominator might be.

Convergence in the two numbers will come both from approving new claims, and from disallowing

other claims.

  Q1 2015

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8

Q3 – 2015

Getting these two numbers into a much narrower range is the key to being able to know what we can

distribute, and to whom. It is worth noting that what MVF ultimately determines the "claim denomina-

tor" to be will differ from the total amount of approved claims in the bankruptcy proceedings because

of different eligibility criteria under the two processes.

In the roughly 12 months from the claim deadline of April 30, 2014 to May 15, 2015, MVF reviewed

34,257 claims for eligibility and for the verification of loss amounts. This number includes 3,819 claims

that were disqualified on review due to duplication or other eligibility issues. Thus, MVF has reviewed

roughly 54% of the total number of claims, leaving us a bit more than half way through the initial

claims review phase.

As of May 15, 2015, there were just over 7,010 claims that I will recommend to the Department of Jus-

tice for approval to pay. I will recommend approximately 3,900 additional claims that are missing only

the signature of the appropriate person once the signatures are received (which I expect to occur in all

cases). As a result, 12 months into the review process MVF has roughly 11,000 claims that can be rec-

ommended to the Department. The aggregate verified losses on those claims is approximately $1.3 bil-

lion. As a matter of contrast, in the bankruptcy proceedings a much larger sum has been distributed,

but those distributions are going to approximately 2,550 accounts. It is likely that MVF's 11,000 "ap-

proved" claims will at least double in number, and perhaps more, before our reviews are completed. So,

MVF's distributions of cash will be spread across a much wider base of victims.

By far the greatest number of claims that MVF has

reviewed are missing some form of required docu-

mentation. We call those claims "deficient", but it

would be equally accurate to simply call them

"pending further review". Claims may be missing

one or more transaction documents, account state-

ments from relevant periods, or other information

vital to determining the proper claimant or the

amount of eligible loss. Though it will not always happen, we hope to see each "pending resolution"

claim ultimately converted into an approved claim.

Progress in the Review Effort

  Q1 2015

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9

Q3 – 2015

Toward that end, if you receive a notice that your claim is considered "deficient" at any point in the

process, please provide the information that we request. You can call our toll free numbers or email us

for assistance in preparing supplemental information.

Of the claims that had been reviewed as of mid-May this year, 22,799, or about two thirds of the total,

have one or more deficiencies. These claims show approximately $21 billion in losses in their original

submission to us. After we review a claim that is deficient, MVF will generally send out an informal de-

ficiency notice or "IDN" to let you know what information your claim is missing. So far, MVF has sent

out approximately 11,700 IDNs to claimants. We have received responses from 2,389 recipients of

IDNs, and we appreciate the prompt response of these claimants. If you receive an IDN, you should

respond to it promptly.

To date, MVF has identified approximately 3,800 duplicate claims, and approximately 700 more claims

that do not meet MVF eligibility standards. As Special Master, it is part of my job to recommend that

the Department of Justice should deny these claims. However, before the Department takes final action

(and the decision on approving or denying all recommendations is theirs alone) each of these claims

will receive a notice advising of the reason the claim does not meet the eligibility standards. Before any

action is taken, the claimant will have an opportunity to provide further evidence that the claim does

meet MVF's standards.

Net change in maximum potential claim base.

As a result of our claim reviews, MVF now believes that it has identified $18.5 billion in initial claims

that should not be approved. This brings the maximum potential claims base down to $58.8 billion

compared to the initial claims of $77.3 billion. Approximately half of the claim reduction results from

ineligible or otherwise excludable claims, including duplicates. The other half of the reductions come

from determining that eligible losses were lower than first claimed, mostly due to mixed asset alloca-

tions. All victims benefit from an accurate claim denominator, and we are proud that we have already

been able to increase the likely average future payout percentage significantly.

MVF has 29,264 claims yet to review, and approximately 22,800 deficient claims that must still be re-

solved. Therefore, over the next six months you will continue to see fairly significant changes in the

number of approved claims and in the aggregate claim denominator or total approved loss amount.

  Q1 2015

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Q3 – 2015

"Approved" losses should grow significantly over that period.

At the same time, the maximum potential claim base should continue to fall at an even faster pace as

claims are reviewed, which reflects the fact that we are replacing the original claim amounts with the

verified loss amounts. The biggest change in the maximum potential claim base will come when MVF

finishes reviewing the investment allocation percentages of all known investment vehicles. As we de-

termine the Madoff investment allocation percentage of the remaining 300-400 investment vehicles, we

will be able to separate Madoff and non-Madoff losses on thousands of additional claims.

For most of the past year, MVF has been very busy reviewing your claims. Until we had reviewed at

least half the claims, announcing preliminary findings could have been misleading. The claims reviewed

were not a sufficiently large sample, and claims are all unique. However, MVF's claim reviews will

shortly pass 60% of the claims. Equally importantly, the "deficient" claims are starting to provide sup-

plemental data that will allow the eligible loss calculations to be made. Thus, we are entering a period

when our confidence in understanding the size of the likely aggregate eligible loss (the likely final claim

denominator) should grow considerably.

We anticipate making our next update in early September. We aren't yet to the point where we can reli-

ably predict the time for commencing cash distributions. However, the more progress we make in nar-

rowing the gap between the current claim denominator and the maximum potential claim base, the

closer that time will approach.

There is a great deal of work still to do, and thousands of claimants still need to provide supplemental

information to resolve deficiencies. The faster claimants do that, the faster MVF will be able to com-

plete our reviews of your claims. Nonetheless, barring unforeseen developments I am quite optimistic

that we should soon be able to project when the transition to cash distributions will begin.

Thank you for reading this somewhat technical update, and as always please don't hesitate to address

any questions to me at info@madoffvictimfund.com.

  Q1 2015

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11

Q3 – 2015

The Kingate funds had reached a deal with Mr

Picard to resolve the litigation. But The Wall

Street Journal reported in 2013 that the $800

million fell apart after the Justice Department

refused to include feeder funds like the Kingate

funds among those eligible to share in a $2.35

billion fund for Mr Madoff’s victims.

Mr Madoff is currently serving a 150-year pris-

on sentence after pleading guilty to running a

Ponzi scheme in which investors lost more than

$17 billion in principal.

Since being appointed in 2008 to oversee the

liquidation, Mr Picard has recovered or struck

deals to recover nearly $10.9 billion. He has re-

turned about $7 billion of that to investors to

date.

Hedge fund manager and administrator Citco

Group Ltd. told a New York federal judge on

Thursday that it’s reached a settlement with

Madoff feeder fund customers and is withdraw-

ing a motion to dismiss their suit.

There was little additional information in the

letter that a lawyer for Citco sent to U.S.

District Judge Victor Marrero on Thursday, but

lawyer Andrew Gordon of Paul Weiss Rifkind

Wharton & Garrison LLP said that the defend-

ants have reached a settlement with the plain-

tiffs, pending standard measures like court ap-

proval.

“Plaintiffs and the Citco defendants have

reached an agreement … to resolve the claims

asserted against the Citco defendants,” the letter

said.

In March, Citco and PricewaterhouseCoopers

LLP said they would fight class certification yet

again, weeks after a second certification took

hold. In a letter, Citco and PwC asked Judge

Marrero to hold off on scheduling any decisions

in the case while the firms fight the renewed

class certification.

The certification had been granted earlier that

month on evidence that investors had relied on

PwC’s and Citco’s erroneous valuations and au-

dit reports in choosing to invest in Fairfield

Greenwich Ltd.-managed funds — including

the Madoff scheme’s single largest feeder fund.

Judge Marrero had granted that certification af-

ter the Second Circuit vacated his decision to

certify last year. The class of about 1,000 indi-

viduals and businesses lost at least $7.5 billion

to the Ponzi scheme as a result of their invest-

ments with Fairfield Greenwich, according to

Citco Strikes Deal With Investors In Madoff Feeder Fund Suit

Continued from page 4

A bankruptcy judge largely rejected a bid by two funds to dismiss litigation

  Q1 2015

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12

Q3 – 2015

The settlement, filed last month, settles compet-

ing claims between Plaza and Mr Picard.

Mr Picard had sued Plaza for the return of $235

million in fraudulent profits it received as a result

of Mr Madoff’s Ponzi scheme.

Plaza, meanwhile, had argued it was owed more

than $280 million by Mr Madoff’s firm on ac-

count of its investment losses.

The settlement gives Plaza a $405 million claim

against Mr Madoff’s firm. With the judge’s ap-

proval, Plaza is entitled to receive about $198

million of that right away, in light of payouts that

have previously been made to

Mr Madoff’s other investors.

It also stands to recover more in future payouts.

However, to settle the trustee’s lawsuit, Plaza

agreed to return $140 million to Mr Picard, who

will then add that to the money he has collected

for all of Mr Madoff’s cheated investors.

Last month, the bankruptcy court approved a

similar settlement with investment funds tied to

financier J. Ezra Merkin. The deal gave the funds

the right to collect $144 million as well as the

chance of future payouts, although they had to

return $35 million of their payout to Mr Picard.

court documents.

The investors’ argument — that their relationship

with PwC and Citco was close enough to establish

a “duty of care” under New York law — was ac-

cepted by Judge Marrero, who said Fairfield

Greenwich’s emails to PwC stating that “investors

have been requesting the audits for the past cou-

ple months” showed that PwC knew the plaintiffs

were relying on its reports, according to court

documents.

As for Citco, its internal-procedures manual ex-

plicitly stated that shareholders and partners will

make investment decisions based on its net asset

value reports, according to the judge.

A bankruptcy judge approved a settlement that

allows an investment firm that placed customers’

money with Bernard Madoff to pocket at least

$58 million.

Court papers show Judge Stuart M. Bernstein of

the U.S. Bankruptcy Court in Manhattan on

Tuesday signed off on the settlement between

Irving Picard, the trustee unwinding Mr Madoff’s

investment firm, and Plaza Investments Interna-

tional Ltd., a so-called feeder fund that pooled

investors’ money and sent it Mr Madoff’s way.

Judge Approves Settlement With Madoff Investor Plaza

  Q1 2015

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13

Q3 – 2015

Mr Picard, who has been running the liquidation

of Bernard L. Madoff Investment Securities LLC

since December 2008, has so far recovered, or

struck deals to recover, about $10.9 billion of the

roughly $17.3 billion in principal that Mr Madoff

was convicted of stealing from investors. was

convicted of stealing from investors.

Mr Madoff, who in May 2009 pleaded guilty to

running the biggest Ponzi scheme of all time, is

currently serving his 150-year prison sentence at

the federal prison in Butner, N.C.

Hedge fund Baupost Group LLC bumped heads

with a New York bankruptcy judge Tuesday,

pushing to consummate its deeply discounted

purchase of a claim against the Bernard Madoff

bankruptcy estate that later turned out to be

worth $230 million and appeared to be on track

until it was halted by the Second Circuit in Janu-

ary.

U.S. Bankruptcy Judge Stuart M. Bernstein over-

seeing the Chapter 15 case of Madoff feeder

fund Fairfield Sentry Ltd., which sold the Securi-

ties Investor Protection Act claim to Baupost in

2010 for 32 cents on the dollar in a British Virgin

Islands auction did not explicitly say he was lean-

ing toward voiding the deal.

But he repeatedly pushed back against a slew of

arguments put forward by Eric D. Winston of

Quinn Emanuel Urquhart & Sullivan LLP, coun-

sel for Baupost.

The Boston-based hedge fund, through its Far-

num Place LLC investment vehicle, is trying to

rescue the transaction after the Second Circuit

concluded in January that its impact on creditors

of Fairfield Sentry a liquidating entity that fun-

neled money into Madoff's Ponzi scheme must be

assessed in U.S. bankruptcy court even though it

took place in a foreign jurisdiction.

Winston asserted Tuesday that a decision to undo

the deal would come at “a great cost” to the integ-

rity of the auction process and would make it

more difficult for bidders to have confidence in

foreign liquidations. That, in turn, would put cred-

itor recoveries at risk in other cases, he said.

But Judge Bernstein didn't seem to agree. He

called the case “very unusual” in posture, suggest-

ing he didn't see the same sweeping impact.

Judge Bernstein also flipped Winston's argument,

asking whether a decision to approve Baupost's

undersized bid in the face of the claim's rising

value would do more harm than good by hurting

Fair field Sentry creditors.

Baupost Pushes for OK on Bargain-Basement Madoff Claim

  Q1 2015

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14

Q3 – 2015

Winston countered that Baupost's motive for bid-

ding on the claim during a period of relative un-

certainty was to speculate on a rise in value when

others would not.

“This wasn't real property or a bag full of widg-

ets,” he said, asserting that the risk his client took

should be respected.

Pressing for a decision to undo the auction was

David J. Molton of Brown Rudnick LLP, counsel

for British Virgin Islands-based liquidator Ken-

neth Krys.

Three days after Krys approved Baupost's bid in

2010, a $7 billion settlement between Bernard L.

Madoff Investment Securities LLC trustee Irving

H. Picard and Jeffry Picower, a primary benefi-

ciary of the Ponzi scheme, sent the value of the

claim through the roof.

Molton said officials like Krys have sweeping

power to cancel such transactions until bankrupt-

cies are confirmed.

He called that power unremarkable in the con-

text of a U.S. bankruptcy and said that if the

transaction is upheld, the upshot will be that the

Fairfield Sentry estate will have to cut a $38 mil-

lion check to the hedge fund.

“A trustee can always walk away when other

facts present themselves,” he said.

“At the end of the day all Mr. Winston can say is

'I won the auction so give me my price.'”

  Q1 2015

;

15

Q3 – 2015

1

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diary providing liquidity solutions on alternative as-

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Our core business is in Hedge fund secondary trans-

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2

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2

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For other Madoff linked paper not listed above we

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§ Allen Stanford § Aramid Entertainment

Madoff Feeders:

§ Alpha Prime § Ascot Partners LP § Auriga § Defender * Price higher § Fairfield Sentry * Fairfield Sigma* § FIM Long Invest* § Herald Lux Price higher Herald USA

Price higher § Hermes* § Kingate EUR * Kingate Global * § Kingate Global (Prior redeemer) § Lagoon § Lux Alpha * Luxembourg Invest-

ment Fund (LIF) * § Maxam § Plaza § Primeo

  Q1 2015

;

16

Q3 – 2015

Wake-x is a distribution hub that enables members to realize their investment needs via the secondary

hedge fund market.

Key features:

• Actionable interests; Members will have live access to the current tradable axes.

• Market depth; Interests per fund can be viewed on a single line giving average price or a line by line basis

• All interest list; A full list of all buying and selling posts.

• Post interests; Add buying and selling interests, display to all or keep private and receive alerts.

• Create Watch lists; Enter funds to monitor and receive alerts.

• Monitor Portfolios; Enter and price your current portfolio.

• Trends and Statistics; Market information such as strategies, investor demographics and pre-mium/discounts.

The secondary marketplace for all qualified hedge fund investors.

Wake2o| Complex Suite A, Level 1 | 16th September Square | Mosta MST 1180 | Malta

info@wake2o.com

+356 3550 0503 | +41 22 575 4748

+971 55 849 0114

www.wake2o.com | www.wake-x.com