The Sunday January 25th 2009 edition of The New York Times has an article in its Real Estate section entitled Every Man for Himself. This article details how one Richard Murphy in 2007 paid $33 million for the 25-foot-wide town house at 7 East 67th Street.

At the time, this purchase was the highest price on record for an Upper East Side town house built on a standard 25-foot-wide lot. The home has 12,000 square feet of space on seven levels, including the basement. Apparently Mr. Murphy has been considering listing it now for $36 million. "But brokers were skeptical that he would get that price, with one suggesting it might eventually sell for $30 million at most, about 10 percent less than he paid." This story is indicative of how even Manhattan real estate is beginning to sag under the weight of Wall Street layoffs, hedge fund retrenchment and the economic recession.

Toomre Capital Markets LLC ("TCM") took particular note of this story because of the firm Mr. Murphy until very recently worked for: Fairfield Greenwich Group, the "feeder fund" group with the largest exposure to Bernie Madoff's fraudulent investment business. Fairfield Greenwich is reported to have had approximately $7.5 billion invested with Madoff at the time of his arrest. The article notes that Mr. Murphy is listed as one of the defendants, along with other Fairfield Greenwich partners, in lawsuits brought by disgruntled and aggrieved investors.

According to this court document, The New York Times may have gotten Mr. Murphy's first name wrong. The name listed in the lawsuit with other Fairfield Greenwich partners is Charles Murphy, who lives at 202 Round Hill Road in Greenwich, Connecticut — a short distance from 175 Round Hill Road and the home of Fairfield Greenwich Group founder, Walter Noel. Their Fairfield Sentry fund is said to have had substantially all of its approximate $7.2 billion in assets invested with Bernie Madoff.

Walter Noel and his wife Monica are parents to five daughters. The picture in the upper left of this post is from their 2005 Christmas card and show clockwise from the left, Lisina, Corina, Walter, Monica, Ariane, Marisa, and Alix. Each of the five daughters is now married and many of the son-in-laws became involved in Fairfield Greenwich Group business. Four of the five son-in-laws along with Walter Noel are named in the above referenced lawsuit.

Corina, the eldest, married a Columbian named Andres Piedrahita, who became a partner of Fairfield Greenwich. Corina and her husband apparently relocated to London some years ago and subsequently spent considerable time in Spain as well while raising funds from European and Latin American investors. Rumor has it that Andres Piedrahita "may have done something fatally stupid by placing 2x-3x-laundered Columbian Drug Cartel money into the FFG-Madoff sinkhole". The court document referenced above includes Andres Piedrahita as one of the defendants. According to that document, Mr. Piedrahita is being represented by Andrew Levander, the same lawyer who also happens to be representing Ezra Merkin and his "feeder funds" in lawsuits by other distraught Madoff investors.

Bernard Madoff allegedly defrauded many investors over many years. One of the key reasons why his alleged fraud was able to continue for so many years was that Madoff was able to claim that he only had a few investors, most of which were so-called "feeder funds". As Toomre Capital Markets LLC ("TCM") noted in the post Update on Bernie Madoff Scandal and Feeder Funds, the five largest admitted feed funds were Fairfield Greenwich, Tremont Capital, Banco Santander, Bank Medici and Ascot Partners. Two days ago, TCM wrote more about the legal travails of Ezra Merkin and his Ascot Partners and Gabriel Capital hedge funds in the post Ezra Merkin and Madoff Feeder Funds Face More Lawsuits.

The largest of the Madoff "feeder funds" was Fairfield Sentry Fund run by Walter Noel's hedge-fund firm Fairfield Greenwich Group. All told that firm had approximately $7.5 billion invested with the alleged fraudster Bernie Madoff. On Monday January 12th 2009, the latest (and at least the third) civil complaint was filed against this "feeder fund" manager. This suit was filed on behalf of investors by noted lawyer David Boies, who also represents "Hank" Greenberg (formerly the CEO of AIG) and who previously argued before the U.S. Supreme Court on behalf of presidential candidate Al Gore in the 2000 election litigation regarding the State of Florida re-count fiasco. Mr. Boies is now representing two trusts and a holding company based in the Cayman Islands as well as Carlos Gauch of Mexico.

The complaint states “Most, if not all, of the assets of the plaintiff class had invested with defendants were stolen through the Madoff Ponzi scheme.” Boies further wrote “These losses could have been avoided if defendants had fulfilled their duties” and “if they had adequately investigated and monitored Madoff. ” Through the complaint, the plaintiffs are seeking the return of their investments and fees as well as damages.

The defendants are the firm's founder Walter Noel, Andres Piedrahita and Jeffrey Tucker. They are accused of breach of fiduciary duty, negligence and unjust enrichment, among other counts. Other defendants apparently include the Dublin branch of Netherlands-based Citco Bank Nederland NV, which maintains Fairfield Sentry’s escrow account, according to the complaint. The inclusion of Citco (primarily known as a fund administrator for a great percentage of the largest hedge funds) is noteworthy because it suggests that Mr. Boies is attempting to go after other "deep pockets" that might be able to contribute to the funds available to aggrieved investors. This suit is referenced as Inter-American Trust v. Fairfield Greenwich Group, 09-cv-301, U.S. District Court, Southern District of New York (Manhattan).