Defender Limited

Last updated
Defender Limited
Genre investment fund
FoundedMay 2007 in British Virgin Islands
FounderReliance Group
Headquarters
British Virgin Islands

Defender Limited is an investment fund. It was incorporated in the British Virgin Islands in 2007. Defender funneled clients' funds to Bernard Madoff's firm as part of a Ponzi scheme run by Madoff. [1] [2] [3] [4] [5] Madoff was arrested in December 2008, and pleaded guilty to fraud in 2009. [2] He is serving a 150-year prison term. [1]

Investment fund way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group

An investment fund is a way of investing money alongside other investors in order to benefit from the inherent advantages of working as part of a group. These advantages include an ability to:

British Virgin Islands British overseas territory in the Caribbean

The British Virgin Islands, officially simply the Virgin Islands, are a British Overseas Territory in the Caribbean, to the east of Puerto Rico and the US Virgin Islands and north-west of Anguilla. The islands are geographically part of the Virgin Islands archipelago and are located in the Leeward Islands of the Lesser Antilles.

Ponzi scheme Type of financial fraud

A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

Contents

Formation

Defender was formed in May 2007. [2] It was formed with the support of individuals who had encouraged investing with Madoff since 1999. [2] According to the Securities Investor Protection Act (SIPA) Trustee for BLIMIS assets Irving Picard, Defender was created by the Reliance Group. The Reliance Group was, according to Picard, in turn established by Tim Brockmann, an investment manager in Switzerland and Gibraltar. [6]

The Securities Investor Protection Act of 1970, Public Law No. 91-598, 84 Stat. 1636, codified at 15 U.S.C. § 78aaa through 15 U.S.C. § 78lll, established the Securities Investor Protection Corporation (SIPC). Most brokers and dealers registered under the Securities Exchange Act of 1934 are required to be members of the SIPC.

Irving H. Picard is a partner in the law firm BakerHostetler. He is known for his recovery of funds from investors, Bernie Madoff and his family, and their estates in the Madoff investment scandal.

Gibraltar British Overseas Territory

Gibraltar is a British Overseas Territory located at the southern tip of the Iberian Peninsula. It has an area of 6.7 km2 (2.6 sq mi) and is bordered to the north by Spain. The landscape is dominated by the Rock of Gibraltar at the foot of which is a densely populated town area, home to over 30,000 people, primarily Gibraltarians.

Activities

Defender acted as a feeder fund, by funneling clients' funds to Bernard Madoff's firm, Bernard L. Madoff Investment Securities (BLMIS), as part of a Ponzi scheme run by Madoff. [1] [2] [3] [4] [5] Madoff was arrested in December 2008, and pleaded guilty to fraud in 2009. [2] He is serving a 150-year prison term. [1]

A feeder fund is an investment fund which does almost all of its investments through a master fund via a master-feeder relationship.

Litigation

In December 2013, Defender sued HSBC Institutional Trust Services Incorporated, an Irish subsidiary of HSBC Bank with registered offices in Dublin, in an Irish court for $539 million. [3] [7] [8] [4] Defender alleged that the bank failed to conduct adequate due diligence on Madoff, and failed to warn Defender that HSBC was not able to confirm the existence of Defender's assets. [3] [7] [8] [9] [10] In December 2018, the High Court of Ireland ruled that Defender's claim against HSBC was reduced by 100% due to Defender's earlier settlement with BLMIS. [4] Defender appealed that decision to the Irish Court of Appeal, where the appeal is pending. [11]

HSBC Bank may refer to any one of the following principal local banks for HSBC Group:

Dublin Capital of, and largest city in, Ireland

Dublin is the capital and largest city of Ireland. Situated on a bay on the east coast, at the mouth of the River Liffey, it lies within the province of Leinster. It is bordered on the south by the Dublin Mountains, a part of the Wicklow Mountains range. It has an urban area population of 1,173,179, while the population of the Dublin Region, as of 2016, was 1,347,359, and the population of the Greater Dublin Area was 1,904,806.

Due diligence legal term

Due diligence is the investigation or exercise of care that a reasonable business or person is expected to take before entering into an agreement or contract with another party, or an act with a certain standard of care.

On April 16, 2015, the United States Bankruptcy Court for the Southern District of New York approved an agreement between Picard on the one hand, and Defender and related entities on the other hand. [12] The BLMIS Customer Fund benefited by $93 million. [12] [2] Defender received a $522.8 million claim in the BLMIS liquidation, because Defender had deposited more with BLMIS than Defender withdrew. [1]

The United States Bankruptcy Court for the Southern District of New York is the United States bankruptcy court within the United States District Court for the Southern District of New York. The Southern District of New York is a major venue for bankruptcy, as it has jurisdiction over the corporate headquarters and major financial institutions located in Manhattan.

See also

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References

  1. 1 2 3 4 5 "Madoff feeder fund settles; victims' recovery tops $10.6 billion". Reuters. 23 March 2015.
  2. 1 2 3 4 5 6 7 Randazzo, Sara (24 March 2015). "Madoff Trustee Strikes $93 Million Deal with Feeder Fund". The Wall Street Journal.
  3. 1 2 3 4 "VI 'feeder fund' sues bank to recover Madoff monies". The BVI Beacon. 4 December 2013.
  4. 1 2 3 4 Carolan, Mary. "Ruling casts doubt on $141m case against HSBC's Irish arm". The Irish Times.
  5. 1 2 LeBor, Adam (8 October 2009). The Believers: How America Fell For Bernard Madoff's $65 Billion Investment Scam. Orion Publishing Group. ISBN   9780297859222 – via Google Books.
  6. ↑ "TRUSTEE’S MEMORANDUM OF LAW IN OPPOSITION TO MOTION OF RELIANCE MANAGEMENT (BVI) LIMITED, RELIANCE MANAGEMENT (GIBRALTAR) LIMITED AND TIM BROCKMANN TO DISMISS THE TRUSTEE’S COMPLAINT BASED ON A LACK OF PERSONAL JURISDICTION"
  7. 1 2 Convery, William Fry-Paul; Hegarty, Derek. "Hard to Gain, Easy to Lose? - Lexology". lexology.com.
  8. 1 2 Groendahl, Boris. "HSBC warned about Madoff 'fraud and operational risks' in two KPMG reports - The Royal Gazette:Bermuda International Business". The Royal Gazette.
  9. ↑ "Irish arm of HSBC bank being sued over Madoff scheme". The Irish Independent.
  10. ↑ Mike. "BVI investment fund sues HSBC's arm over Madoff Ponzi scheme - BVI Offshore Business: Grey Area".
  11. ↑ "Judge says recusal hearing in Madoff case would be 'waste of court time'". The Irish Times.
  12. 1 2 "Defender"
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