The US trustee filed a complaint in the US Bankruptcy Court against Kingate Global Fund and Kingate Euro Fund, the feeder funds of Bernard Madoff. The two investment funds, registered in the British Virgin Islands, are sued for the return of 255 million dollars.
It was stated in the complaint by Irving Picard that Kingate subsidiaries received payments of 100 million dollars and 155 million dollars from Madoff in the weeks before Madoff’s Ponzi scheme collapsed last December. By words of the trustee, transfers should be distributed among those who suffered from Bernard Madoff’s scheme, because his remaining assets will not be enough to reimburse investors.
It was said in the complaint that the trustee must pursue recovery from customers who received preferences and/or payouts of fictitious profits to the detriment of other defrauded customers whose money was consumed by the Ponzi scheme.
It was reported in the Wall Street Journal that the two British Virgin Islands funds fed some 1.7 billion dollars of client’s assets into Madoff’s scheme.
Madoff has been pleaded guilty to fraud, and now is due to be sentenced to prison on June 16, 2009.
The Moscow Arbitration Court announced this week that it would delay the decision on whether the seizure of 29.9 per cent stock in VimpelCom owned by Norway’s telecommunications company Telenor will be blocked. The hearing is rescheduled to the end of April. Also, the judge asked representatives of VimpelCom to attend it, and this would be the first time when this company being in the middle of the Telenor-VimpelCom case will appear in the court.
Earlier, it was decided by the Omsk court that Telenor is to be deprived of its share in Russia’s mobile operator. Telenor asked the Moscow court to block the seizure of its stake in VimpelCom, after the Norwegian company refused to pay a court-ordered $1.7 billion fine.
In February, the Omsk court ruled in favor of the BVI company Farimex, which brought the suit against Telenor, claiming that it delayed VimpelCom’s entry into Ukraine. Telenor has linked Farimex, which owns a 0.002 per cent stake in VimpelCom, with Alfa Group’s telecoms arm Altimo, the other main shareholder of VimpelCom, and the telecoms arm of Russian tycoon Mikhail Fridman Alfa Group. Alfa denies any connection to the case.
Before the Moscow court hearing, there will be an April 28 hearing in Tyuman, where a court will hear Telenor’s appeal concerning the execution of the Omsk court’s ruling to the BVI company. The appeal of the original case probably will be heard in the end of May.
The case is tied to related suits in Kiev and New York, and it can create the precedent for shareholder rights in Russia. The lawyer of BVI-based Farimex said that the company does not want Telenor to lose its stake. By his words, Farimex is not interested in the shares of the Nordic telecoms company, but rather in compensation for the losses.
Investors are continuing to seek for $150 million linked to Bernard Madoff. On April 9, 2009 a British Virgin Islands company and a European bank of Gibraltar were sued by a special trustee who claimed it should go to reimburse investors who lost money in Madoff’s Ponzi scheme, estimated at $65 billion.
In papers filed in Manhattan federal bankruptcy court, the trustee alleged that in October 2008 Bernard L. Madoff Investment Securities Llc., owned by Madoff, wired $150 million to Banque Jacob Safra Ltd. of Gibraltar, apparently for the benefit of BVI-registered international company Vizcaya Partners Ltd. The transfer took place about a month and a half before Madoff was arrested, after admitting he initiated a Ponzi scheme for nearly 20 years.
In the suit, the trustee said that from early 2002 and until the arrest of Madoff, Safra or its affiliates invested $327.2 million with him in New York through his account at JPMorgan Chase & Co. on behalf of the BVI company. Now he is asking the bankruptcy court to wipe out the transfer and add the $150 million to the $1 billion in found customer assets to be used to repay Madoff victims, including the BVI-based Vizcaya.
The $150 million in Gibraltar is one of several transactions found by the staff of the trustee at the Manhattan law firm. Offshore money has been placed in Ireland, England, Luxembourg, Bermuda and the Cayman Islands, with potential cash on the Isle of Man.
It is known from the US legal source that BVI-registered Vizcaya sued Banque Jacob Safra in Gibraltar. The exact amount held in the Gibraltar account is still unclear.
On March 19 Weavering Capital, a $639m (£440m) London hedge fund, put into liquidation its main fund - Weavering Macro Fixed Income fund in the Cayman Islands. Weavering froze the fund last week, after it was discovered that it was a $637m derivatives trade with an offshore company controlled by the fund’s founder and chief executive.
PwC, appointed to investigate the position as the liquidators of the fund, said there was “considerable uncertainty” over the $637m value listed for the fund’s main asset not pledged to lenders, a derivative transaction with Weavering Capital Fund Ltd in the British Virgin Islands.
PwC said it had been told the BVI company’s assets were $10m of cash and $40m of private equity positions, although these have not been substantiated. It was unclear who the directors of the BVI company are, but PwC said that Mr Peterson had told them he controlled it.
Matthew Wilde, partner and head of the hedge fund resctructuring team at PwC, said that he could not comment on who at Weavering put the trade in place, or for what reason. The problem with the fund was discovered after investors tried to withdraw $223m, of which just $90 m has been paid so far. In addition to the outstanding $133m payments, the fund reported assets in the amount of $506m at the end of February this year - down from $535m in January.
Weavering is one of the oldest hedge fund managers, running small funds including one in Sweden, and set up in 1998 by Magnus Peterson - former head of trading at Swedish bank SEB. For the past years it had returns of 10-12%.