Tracy Sunderlage and Nikolai Battoo – “Sons of Madoff”?
It’s Halloween weekend and kids throughout the country are dressed in costume. (Same for a fair amount of adults in college towns too.) 75 years ago, the public was terrified when the hit movie Son of Frankenstein was released in theaters. Today it takes more than a movie to scare most adults. For this Halloween season, no list of scariest monsters is complete without including the “Son of Madoff” feeder funds.
The so-called Son of Madoff feeder funds are funds in which money was collected from investors by third parties and placed into commodity pools or hedge funds. Unbeknownst to the investors, those pools and funds then gave the money to Bernie Madoff. In many instances the people offering these investment products were as crooked as Madoff himself. When crooks ripoff other crooks, the public has a much harder time recouping their losses.
Investors in these feeder funds scams face several big hurdles. One is Irving Picard, the court appointed trustee of Bernie Madoff. Picard has collected hundreds of millions of dollars but those monies are being distributed to the direct investors. That means none of the monies collected through the court ordered receivership are being returned to those that invested in the feeder funds.
Who are these “Son of Madoff” promoters? There are several.
Anchor Holdings – Anchor marketed several funds that stressed a well diversified portfolio; they were marked as a fund of funds. Instead it appears that all the monies were often turned over to Madoff.
The several investments schemes tied to Nikolai Battoo and Tracy Sunderlage are also examples of Son of Madoff feeder funds. The CFTC, SEC and foreign liquidators have civilly pursued both men and their many investments – PIWM (Private International Wealth Management), BC Capital Group and Maven. (There were several others.)
In 2009, the CFTC charged that Battoo and his companies sent false “asset verifications” to pool participants that simply made up values for the PIWM investments. When the number of redemption requests exceeded new money coming onto the funds, Battoo and company blamed the collapse of MF Global, Inc. Only later did the truth begin to emerge – the money was spent on living lavish lifestyles and went to Madoff.
Thus far, the feeder fund liquidation and regulatory actions have recovered little money. That doesn’t mean there is no hope for investors, however.
Investors who purchased through an investment advisor, stockbroker or insurance agent have potential claims against the person selling the investment and their employer. Financial professionals have an obligation to conduct due diligence before recommending investments to their clients. Their employers have the same duty too.
Many times these Son of Madoff feeder funds were marketed in connection with claims of special tax benefits. We have seen the Battoo and Sunderlage products sold as part of welfare benefit plans, 419 plans, business protection plans and the like. Unfortunately, those investors often later learned that not only did they lose their money, the IRS also considered these investments to be an abusive tax shelter. The silver lining, however, is that some investors relied on accountants and lawyers to review their investments. If an accountant or lawyer gave bad advice, there may be a claim of malpractice.
Time is running out to bring claims for monies lost to Tracy Sunderlage ,Nikolai Battoo and other peddling feeder funds. State and federal law limit the time period that a victim has to sue for these losses. Those laws are called statutes of limitations and some may have already expired.
Don’t sit on the fence. We will review your case without charge and let you know if we can help. If we do take your case, it can probably be handled on a contingent fee basis meaning no legal fees unless we recover.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). Legal services are available in most jurisdictions.
Post by Brian Mahany, esq.