Fairfield Pension Pursuing Criminal Charges Over Madoff Loss

January 20, 2009 (PLANSPONSOR.com) - Fairfield, Connecticut, police intend to arrest Bernard Madoff for fraud that caused a loss of $42 million in the Town Pension Fund, and the Pension Board will pursue litigation against any advisers it finds did not fulfill their fiduciary duty.

“We intend to find out and figure out who’s responsible and to bring litigation wherever it’s possible,” said David Golub of the firm, Silver, Golub & Teitell of Stamford, chosen as litigator by Fairfield Town Attorney Richard Saxl, the Fairfield Minuteman reports. Golub said money managers, hedge fund advisers, and others kept the funds in the Ponzi scheme, and there are auditors “who purported to audit the investments and there are some striking things that are in those audits that appear to be red flags as well,” according to the Minuteman.

Golub noted there was a detailed 18-page complaint written in 2005, the facts of which could have been known and should have been acted upon. He says he will pursue not only those who were criminally involved but also those who showed a “willful blindness” to criminality.

First Selectman Ken Flatto pointed out that the pension board consists of volunteers who rely on the advice of the people whom they pay and the board expects those professionals to do their due diligence, according to the news report. He said $25,000 has been set aside by the town pension funds for hiring experts and lawyers, and a sub-committee of five pension board members has been formed to advise on litigation and approve funds.

The town announced in December that it had lost $42 million in Madoff’s scheme (see CT Town Pension Claims $42M Madoff Fund Loss ). Last week, the pension boards voted to end a contract with adviser New England Pension Consultants (see Fairfield Fires Pension Consultants Following Madoff Loss ).