Investors in a so-called “feeder” fund that channeled money to Bernard Madoff have been awarded $12.74 million (which includes interest and $112,000 to cover “fees”) by an arbitration panel, according to a Reuters article published in the Wall Street Journal (“Investors Win $12.74 Million in Madoff Feeder-Fund Case”). The feeder fund is Gabriel Capital LP. The investors are the Sandalwood Debt Fund A LP and Sandalwood Debt Fund B LP.
The Sandalwood funds alleged that Gabriel Capital committed fraud, breach of fiduciary duty and negligent misrepresentations by failing to disclose that it was placing their with Madoff to manage. Madoff is currently serving a 150-year sentence in federal prison for operating a ponzi scheme.
Reuters picked up the story from court filings when the Sandalwood funds sought to “confirm” the award ? i.e., convert it to a court judgment to aid in collection. This arbitration was apparently not one sponsored by the Financial Industry Regulatory Authority (FINRA) as Gabriel Capital LP is not listed as a FINRA member. Whether any judgment would be collectible remains unknown.
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