Madoff mansion, yacht seized; feeder fund firm charged with fraud

ByABC News
April 1, 2009, 7:21 PM

— -- Jailed financier Bernard Madoff's Palm Beach mansion, 55-foot luxury yacht and a smaller boat were seized by U.S Marshals in Florida Wednesday, while in Massachusetts, one of Madoff's top investment feeder funds was charged with fraud for allegedly misrepresenting how much it knew about the disgraced financier's operations.

Barry Golden, a spokesman for the U.S. Marshals Service, said five U.S. marshals arrived at the 8,753-square-foot, five-bedroom mansion late Wednesday afternoon, hours after marshals seized the boats. Authorities planned to enter and secure the mansion, change the locks and conduct an inventory of the property, which Palm Beach County records show had a taxable value of $9.3 million last year.

The process "might take a while," Golden said.

Palm Beach County property records show that the mansion was purchased in 1994 under his wife Ruth's name for $3.8 million. The 2008 property tax bill was $157,298.

Earlier in the day, Golden said Madoff's 55-foot yacht named "Bull" and a 24-foot motor boat were taken from marinas on Florida's east coast. The yacht, a 1969 Rybovich, is worth $2.2 million.

The investment fraud case, the first government charges against one of the many funds that funneled investors' money to Madoff, was filed by Massachusetts' top securities regulator against the Fairfield Greenwich Group.

The firm's Sentry Funds placed roughly $7.2 billion of investors' assets, representing 95% of the total, with Madoff.

The complaint filed by Massachusetts Secretary of State William Galvin cited an alleged "profound disparity" between the due diligence Fairfield told its investors it would conduct on Madoff's operations and minimal checking the firm actually performed.

The alleged disregard of duties owed to investment clients and alleged misrepresentations "rises to the level of fraud," the complaint says.

Investment advisers have a fiduciary responsibility to their clients under law, said Galvin. "The allegations against Fairfield in this complaint outline a total disregard for such responsibility, which helped the Madoff scheme to stay afloat for so long."