Paris prosecutors investigate Madoff-linked funds

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Paris prosecutors investigate Madoff-linked funds

By David Jolly Published: March 22, 2009



PARIS: The French authorities are investigating funds linked to the Bernard L. Madoff fraud, an official from the Paris prosecutors office said Sunday.

The official, who spoke on the condition of anonymity because of standard department policy, declined to provide further details, but the French newspaper Journal du Dimanche reported Saturday that one of those investigations involved BNP Paribas.

BNP said Sunday in an e-mailed statement that it was aware of a possible complaint regarding losses suffered by clients of the LuxAlpha Sicav-American Selection fund, but did not know the exact nature of the complaint.

According to the Journal du Dimanche, the authorities are investigating whether BNP might have misled some investors with the wording of subscription documents for the fund. The investigation follows a complaint by Olivier Metzner, a lawyer for investors who lost money with the fund. A spokesman for Mr. Metzner said he was unavailable for comment Sunday.

BNP said that it "never counseled clients to invest in this fund." It added that it would "very carefully" study the complaint, and did not exclude the possibility of filing its own lawsuit for defamation.

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The LuxAlpha fund was created by BNP, but it transferred the fund's management to the Swiss bank UBS. The fund lost about €1 billion, or $1.36 billion, through its investments with Mr. Madoff, with about three-quarters of the losses affecting French investors. UBS and Ernst & Young, its auditor, face civil suits related to the Madoff affair in Luxembourg, where the LuxAlpha fund is incorporated.

French prosecutors are also conducting a separate investigation following complaints from a second group of investors in the LuxAlpha fund, the Journal du Dimanche said.

René-Thierry Magon de la Villehuchet, the French aristocrat and co-founder of Access International Advisors, the company that advised the fund, committed suicide Dec. 22.

Between 3,000 and 5,000 French investors were defrauded by the disgraced American financier, the newspaper reported, citing reports to plaintiffs lawyers by the market regulator, the A.M.F. It said many of the victims do not yet know the extent of their losses.

The third case involved a merchant in Paris whose adviser suggested placing $2 million with Kingate Management, a hedge fund based in Bermuda and the British Virgin Islands, unaware that the money was going to Mr. Madoff.

Mr. Madoff pleaded guilty on March 12 to securities fraud, money laundering and perjury, and is currently in jail awaiting sentencing. He faces a maximum of 150 years in prison when he is sentenced on June 16.