Local attorneys have been spending the last few weeks fielding calls from L.A. clients that invested in the alleged $50 billion Ponzi scheme of New York fund manager Bernard Madoff.
Teams of lawyers are reviewing the financial documents of local private investors and charitable organizations, and are devising litigation strategies to recoup losses.
The main targets of such suits are likely to be advisers and institutional investors that funneled money to Madoff's Manhattan firm. Attorneys said defrauded investors have a better chance of recovering lost money from such third parties because they can potentially be held responsible for failing to conduct reasonable due diligence.
"Obviously, the real issue would be the culpability of people outside Madoff," said L.A. plaintiff's attorney Thomas Girardi. "These are the types of transactions that you don't do by yourself. They are subject to a lot of other individuals and companies looking at them."
Girardi said his firm has already received calls from foreign governments, and people in California and New York who have lost money with Madoff. Girardi, and several other local attorneys working with Madoff investors, said that lawsuits will be filed in the coming months. However, the lawyers could not put a number on how many plaintiffs will be involved in such suits; two already have been filed.
"We haven't filed any suits yet," said Robbin Itkin, a partner in the L.A. office of Steptoe & Johnson LLP. "We are gathering all the facts, and determining what common grounds and strategies we can provide to clients so that there are efficiencies in representation."
L.A.'s Jewish and Hollywood community, including powerbrokers Steven Spielberg and Jeffrey Katzenberg, appear to have been hit particularly hard by the alleged fraud.
"The Curious Case of Benjamin Button" screenwriter Eric Roth invested with Madoff through Stanley Chais, head of Beverly Hills investment firm Brighton Co. Roth filed suit against Chais on Dec. 24 in Los Angeles Superior Court, claiming he suffered "massive losses" through Chais. He is seeking unspecified compensatory and punitive damages.
A second lawsuit was filed in federal court in Los Angeles earlier last month against Chais and Brighton. The suit, brought by Arlington, Va., investor Michael Chaleff, claims that he and other investors lost about $250 million on investments that Brighton made with Madoff.
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