HARTFORD, Conn. (CBSNewYork/AP) – The Connecticut Appellate Court ruled Wednesday that the town of Fairfield may not make claims for millions in losses to its pension fund due to disgraced financier Bernard Madoff’s fraud scheme.
The state’s second highest court ruled 3-0 that a Stamford Superior Court judge decided correctly in April 2010 that Fairfield was not directly affected by the actions of two partners in an investment firm accused of conspiring with Madoff.
Richard Robinson, the lawyer representing Fairfield, told the court May 19 that Walter M. Noel Jr. and Jeffrey H. Tucker, the two partners, conspired with Madoff. As a result, they should be included among those responsible for a $42 million loss in Fairfield’s pension fund, he said.
The pension fund provides benefits to 1,500 town employees.
Robinson said Wednesday that although Fairfield did not have direct contact with Noel or Tucker, the two men were involved in what amounts to a conspiracy and “acting in concert is the functional equivalent of contacting other people,” he said.
‘We think they got it wrong,” he said, referring to the Appellate Court judges.
The town’s attorney, Richard Saxl, said Fairfield officials are considering their options, including a possible appeal to the state Supreme Court.
Noel and Tucker were principals of Fairfield Greenwich Group, one of several investors sued by a trustee seeking to recover money lost by Madoff. Fairfield Greenwich has claimed to be an innocent victim of Madoff’s massive Ponzi scheme.
Attorney Stanley Twardy who represented Tucker and spoke for him and Noel before the Appellate Court in May, told the judges there was no link between the two men and Fairfield. Noel and Tucker never solicited investments from Fairfield, he said.
Twardy did not return a call Wednesday seeking comment.
The Appellate Court said that although Fairfield’s complaint is “rich with allegations” that Noel and Tucker acted in concert with Madoff or aided his fraud, “it is devoid of any allegation” that the two partners played a role in inducing the town to invest.
Fairfield accused Sandra L. Manzke, chief executive of investment firm Maxam Capital, and Noel and Tucker of telling potential investors that Madoff achieved consistent annual returns of between 8 percent and 12 percent while also limiting losses. The town accused them of misrepresenting the investment potential, saying they knew the strategy could not produce such consistent returns in good years and bad.
The trustee, Irving Picard, has alleged that the Connecticut firm “knew or should have known” that Madoff’s operation was predicated on fraud and that the returns had to be fiction.
Madoff is serving a 150-year prison sentence in Butner, N.C., after pleading guilty in 2009 to fraud charges. He fleeced victims out of billions of dollars.
(Copyright 2011 by The Associated Press. All Rights Reserved.)