The Department of Labor sued four investment firms for allegedly failing to examine swindler Bernard Madoff’s business practices before entrusting him with hundreds of millions of dollars in pension fund money.
Ivy Asset Management, Beacon Associates Management, J.P. Jeanneret Associates, Andover Associates Management and their principals were named as defendants in a complaint filed Thursday in U.S. District Court in New York.
The suit was brought under the Employee Retirement Income Security Act on behalf of union-sponsored and single-employer benefit plans, according to the complaint. The Labor Department asked the court to order the defendants to “restore to the plans all losses suffered” as a result of fiduciary breaches by the defendants related to Madoff investments.
“These defendants chose their own financial interests over those of the plans whose assets they were duty bound to manage prudently,” Labor Secretary Hilda Solis said in a statement.
Mr. Madoff is serving a 150-year prison sentence after admitting to orchestrating the biggest Ponzi scheme in history. When he was arrested in December 2008, account statements reflected 4,900 accounts with $65 billion in non-existent investments, according to Irving Picard, the trustee overseeing the Madoff bankruptcy.
Ivy is a unit of New York-based Bank of New York Mellon. Craig Brown, a spokesman for Ivy, said he couldn’t immediately comment.
In May, New York Attorney General Andrew Cuomo sued Ivy, along with former CEO Lawrence Simon and former Chief Investment Officer Howard Wohl for allegedly misleading clients about Madoff-related investments. Messrs. Simon and Wohl are named as defendants in the Labor Department suit.
Steven Kaplan and Tab Rosenfeld, attorneys who represent Beacon and principals Joel Danziger and Harris Markhoff in other Madoff-related litigation, didn’t immediately return a call to their law firm seeking comment. Mr. Kaplan is listed as counsel to Andover in another case, according to court records.
Brian Whiteley, a lawyer who represents J.P. Jeanneret and its principals, John Jeanneret and Paul Perry, also didn’t immediately return a call seeking comment.