On Friday January 30th 2009, Maxam Capital Management LLC, yet another "feeder fund" to Bernie Madoff, sued its own auditors for not detecting the alleged fraud at Bernard Madoff Investment Securities. Apparently the Maxam Absolute Return Fund LP placed all of its $280 million in holdings with Madoff. That fund has now sued McGladrey & Pullen LLP and Goldstein Golub Kessler LLP for professional negligence on Jan. 30 in Connecticut state court. The case is Maxam Absolute Return Fund LP v. McGladrey & Pullen LLP, Connecticut Superior Court (Bridgeport).
According to the complaint, while the auditors issued opinions that Maxam’s financial statements conformed with general accounting principles, they “negligently relied solely on documents created by Madoff and sought no independent confirmation that trades had been executed or that assets existed.” The complaint continues “Assets were grossly overstated based on fraudulent trading tickets and fraudulent account statements provided by” Madoff.
From Bloomberg News, "Goldstein Golub, based in New York, did the Maxam fund’s 2006 audit, according to the complaint. McGladrey & Pullen, based in Bloomington, Minnesota, did its 2007 audit after Goldstein Golub partners joined that firm. McGladrey & Pullen General Counsel Richard Miller didn’t immediately return a call for comment. Two phone numbers for Goldstein Golub in New York ring through to RSM McGladrey Inc., a professional-services firm that “operates in an alternative practice structure with McGladrey & Pullen,” according to its Web site. Goldstein Golub no longer conducts audits, according to the complaint."
Darien, Connecticut-based Maxam Capital Management LLC was started in 2006 by Sandra Manzke after she left Tremont Capital which she founded in 1985. Tremont Capital suffered major losses due to the money that it had placed with Madoff. Ms. Manzke apparently started in investing almost exclusively with Madoff after she started her new firm. There are conflicting reports about how Maxam marketed itself and whether it highlighted itself as women and/or minority owned in order to attract investor funds as a start-up.
Sandra Manzke s some piece of work
Boy, this Sandra Manzke is some piece of work. First she sends out a letter complaining about lack of due diligence and ethics in the hedge fund business, timed coincidentally with her redemption of 30Million USD from Madoff. Then when her FOF blows up because of it's total Madoff exposure she goes public on page 1 of the WSJ and begs sympathy while confessing (bragging?) that she redeemed 30Million 30 days prior to the collapse, thus exposing herself to a clawback for fraudulent conveyance. Now, after her total failure at doing due diligence on behalf of her FOF investors from whom she has grown rich she passes the buck and sues her auditors and launches a line of Madoff golf balls for 17.50 a sleeve. Is it chutzpah? Is it stupidity? Could it be both???
Wall Street Jpurnal article
maxam capital needs more lawyers
If MAXAM was positioned as a fund of funds and promoted to investors its skills in performing due diligence, why would they be suing an outside firm? Wasn't it their job to do the due diligence and actually review the brokerage statements that Madoff was sending to them? Little things such as analyzing the reported trades against the reported volumes in the listed options?
And what about the fact that MAXAM actually redeemed a significant amount from Madoff in November?? Can anyone spell 'claw back'? With one law firm defending them against investor suits, another law firm suing their outside auditor, they now need a third to advise them about claw back liability....Its great to be a lawyer! Odd that the only place to find these juicy morsels of info are at www.bernard-madoff-scam.blogspot.com
Manzke Likely To Go To Jail
I predict Manzke will be going to jail. She has or is involved in 3 feeder funds to Madoff. She pimped her most recent fund as investing in women and minorities, and talked up their "due diligence". She will have a country club cell right next to Bernie and Ruth.
100 Women in hedge fund as
100 Women in hedge fund as an organization invited Sandra Manzke to spoke as a speaker last September in Greenwich. That's how I know her. Why asked her funds and one manager one of her employee sounds fishy to me. How can she so innocence? She is a rich lady and with no too many background in investment but pension consulting. I wonder how did she get there.