U.S. Court Rejects Citco Group's Motion in Madoff Fraud Case

NEW YORK, WILLEMSTAD – A motion by Citco Group's legal team to dismiss a bankruptcy case brought against the company by victims of the infamous Madoff Ponzi scheme has been denied by the United States Bankruptcy Court in New York. 

The decision, issued on December 20, 2024, allows the case to proceed. The court has instructed the trustees to file a formal document to solidify the ruling. This marks another chapter in a long-running legal battle that began in April 2019 but has roots extending much further back. 

Case Background 

The bankruptcy trustees represent feeder funds Fairfield Sentry, Fairfield Sigma, and Fairfield Lambda, collectively known as the Fairfield Funds. These funds, now in liquidation, filed an amended complaint on November 1, 2021, seeking multiple legal remedies. 

The trustees are pursuing claims including the imposition of a "constructive trust," a legal tool used to rectify situations where a party has been wrongfully deprived of its rights. They also aim to recover more than $1.76 billion in redemption payments made by Sentry, Sigma, and Lambda to various entities referred to as the "Citco Record Holders." 

Citco Entities Implicated 

Among the sums being contested, Citco Bank Curaçao and Citco Global Custody (Curaçao) allegedly received over $70 million in redemption payments tied to investments in Sentry and Sigma. The court’s ruling referenced objections raised by Citco Banking Corporation NV and Citco Global Custody (NA) NV—referred to as the "Curaçao Entities Objection." 

Additionally, the trustees allege that Citco Group itself received over $1.75 billion through redemption payments connected to investments in Sentry, Sigma, and Lambda. 

Legal Implications 

The ruling underscores the complexity and scale of the Madoff-related litigation, which continues to unravel years after the collapse of the fraudulent scheme. By allowing the case to move forward, the court has left Citco Group facing significant legal exposure and the possibility of substantial financial repercussions. 

As the proceedings advance, Citco Group will need to address the trustees' claims and defend its actions in the distribution of funds tied to the Fairfield Funds. The case remains a pivotal element in the broader effort to recover assets for victims of one of the largest financial frauds in history.




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