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Compliance February 27, 2013
DOL Recovers $43M for Madoff Victims
The Department of Labor (DOL) reached a settlement
to compensate employee benefit plans for losses suffered through investments in
Bernard L. Madoff’s Ponzi scheme.
Reported by Sara Kelly
The settlement with Austin Capital Management, which indirectly invested in Madoff’s scheme, provides payment of more than $34 million to worker retirement and health care plans. The agreement follows an earlier settlement with Austin Capital’s parent company, KeyCorp, for more than $9 million.
Recoveries from both settlements total more than $43 million for plan investors in funds managed by Austin Capital. The money will be distributed to the plans by an independent fiduciary selected by the DOL. Austin Capital Management also will pay a civil penalty of more than $4 million.
Based on its investigation, the DOL contended that Austin Capital violated the Employee Retirement Income Security Act (ERISA) by causing or permitting certain funds to imprudently invest the assets of ERISA-covered plans with Madoff through investments in the Rye Select Broad Market Prime Fund L.P., offered by Tremont Partners Inc., which was 100% invested with Bernard L. Madoff.
The funds involved were the Austin Safe Harbor ERISA Dedicated Fund, Safe Harbor Portable Alpha Offshore Fund One, Safe Harbor Portable Alpha Offshore Fund Two, Safe Harbor Offshore Fund, All Seasons Qualified Purchaser Fund, All Seasons Offshore Fund and the Balanced Offshore Fund.