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Madoff Victims Quest for Justice Blocked ... Again

By Joe Consumer

Look, it?s not our job to comment on Bernie Madoff's prison life (we'll leave that to tabloids like the Wall Street Journal), or even to cover the criminal cases of Madoff aides who helped run his $20 billion Ponzi scheme.  

It definitely is our job to monitor the perhaps less-scintillating but still really important civil suits, to see if victims can recover anything at all.  Unfortunately, a decision yesterday doesn?t give us ? or them - much to love.

Last April, two hedge funds which had invested some of their assets with a "feeder fund" for Madoff sued auditors KPMG LLP for issuing false and misleading audit opinions, saying that ?if they had looked into Madoff's auditor, they would have known that audits of Madoff's firm by Friehling & Horowitz were a sham.?  We can?t say whether this is true, 'cause the judge wouldn?t even allow this case to go forward.  The court ruled that to even proceed at all, ?a plaintiff must allege that the accounting practices were so deficient that the 'audit amounted to no audit at all, or an egregious refusal to see the obvious, or investigate the doubtful, or that the accounting judgments which were made were such that no reasonable accountant would have made the same decisions if confronted with the same facts.'"  Case dismissed!

A lot of the problem has to do with how hard it now is for defrauded investors to hold accountable anyone who helps fraud schemes to succeed.  (Check out CJ&D?s report, Legal Abandon. ) 

Congress must fix some of the bigger problems here, and right now, Senator Dodd?s new financial reform bill, which used to address critical liability issues for third parties, no longer does. We gotta do something about this!

Full post as published by ThePopTort on April 01, 2010 (boomark / email).