Fairfield accused of complicity in Madoff’s scam and sued for $3.5 billion

On Monday the trustee for Bernard Madoff filed a suit against funds run by Fairfield Greenwich Group in U.S. Bankruptcy Court for the Southern District of New York (Manhattan). The group was Madoff’s "feeder fund” and is sued for $3.5 billion on allegations that it should have been aware Madoff was engaged in fraud.

The documents filed to the bankruptcy court report that Connecticut-based Fairfield Greenwich Group "worked closely" with Madoff and "knew or should have known" that he was engaged in fraud. The trustee says that Fairfield Greenwich failed to discontinue the partnership with Madoff even after the scam business became the subject of a U.S. Securities and Exchange Commission investigation in 2005, and that Fairfield also ignored other warning signs.

The amount of $3.5 billion represents money Fairfield Greenwich received from Madoff on behalf of clients.

As reported by the Wall Street Journal the investigation conducted by the federal prosecutors was extended to at least eight investors and associates.