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Masons Ask 2nd Circ. To Revive Madoff Feeder Fund Suit

December 2, 2015

Law360
By Stewart Bishop

A Pennsylvania Masonic lodge on Wednesday asked the Second Circuit to revive its suit against Meridian Capital Partners Inc. over losses from Bernard Madoff’s Ponzi scheme, saying the hedge fund’s reckless actions should be reason enough.

[…]

Sidney Liebesman of Montgomery McCracken Walker & Rhoads LLP told the panel that Meridian perpetrated its own fraud — not merely neglecting to discover Madoff’s scheme — noting that it lied to Grand Lodge about how its funds would be invested and the purported heightened level of due diligence which Meridian assured Grand Lodge it would provide.

Liebesman cited the standard for finding a strong inference of scienter laid out in the Second Circuit’s 2000 ruling in Novak v. Kasaks.

“It’s not intent; recklessness is sufficient,” he said.

Libesman further argued that the scienter standard in Novak was met by Meridian’s failure to properly monitor Grand Lodge’s investment as promised, even after vowing to go to extraordinary lengths to protect it.

[…]

To view a PDF of the full article, click here.

–Additional reporting by Cara Salvatore. Editing by Rebecca Flanagan.

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