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US Investment Firm Sues Auditors Over Madoff
Tom Burroughes
2 February 2009
Maxam Absolute Return Fund, a US hedge fund, has sued auditors Goldstein Golub Kessler and McGladrey & Pullen to recover losses suffered by its investors in investments held by the alleged Ponzi scheme fraud of
Maxam, an investment advisor based in Darien, Connecticut, relied on the auditors for their expertise in examining Mr Madoff's firm, according to a lawsuit filed in Connecticut Superior Court in Fairfield County. The lawsuit, though, said the auditors issued "unqualified" opinions for 2006 and 2007 audits that stated Maxam's financial statements presented its true financial position. Maxam was one of many funds that invested with Mr Madoff, who in December last year was arrested for allegedly running a $50 billion Ponzi scheme. Maxam contends the auditors were negligent when performing Maxam's 2006 and 2007 audits. "Maxam intends to pursue its legal rights to ensure that proper restitution is made to its investors," Jonathan Cogan, a partner at Kobre & Kim and counsel to Maxam, was quoted as saying. Officials from the two auditing firms were not immediately available for comment.