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Saturday, June 27, 2009
ERB To Join Madoff-Related Class Action
By Mike Gallagher
Journal Investigative Reporter
The Educational Retirement Board voted Friday to join in a class action lawsuit in New York filed against hedge fund managers who invested millions of dollars with convicted con man Bernard Madoff.
Austin Capital Management invested a portion of the money the ERB had placed with it in a hedge fund that in turn invested in what turned out to be a multibillion dollar Ponzi scheme run by Madoff.
The ERB lost an estimated $7 million to $8 million in the Madoff scheme.
Two other New Mexico lawsuits against Austin Capital were unsealed earlier this week in Santa Fe. The suits were filed under state's Fraud Against Taxpayers Act.
The ERB will join a number of other pension funds in the class action case.
The board voted at a public session after discussing the litigation in closed session.
The board also told its attorneys to investigate whether a lawsuit should be filed against Dallas-based Aldus Equity Partners, which advised the board on private equity investments.
Aldus Equity was fired by the board earlier this year after the company's role in a New York state pension fund scandal became public.
The company's founding partner, Saul Meyer, has pleaded not guilty to a charge of paying kickbacks in exchange for New York state pension fund business.
Several of the people involved in the New York case also did business with the ERB and the State Investment Council.
Federal grand jury subpoenas released by the board Thursday show that federal law enforcement authorities are looking into Aldus Equity's involvement with state investment in New Mexico.
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