EBSA News Release: [02/27/2013]
Contact Name: Michael Trupo or Jason Surbey
Phone Number: (202) 693-6588 or x4668
Release Number: 13-0355-NAT
US Labor Department recovers more than $43 million for Madoff victims
Settlement with Austin Capital to benefit worker retirement, health care plans
WASHINGTON The U.S. Department of Labor has reached a settlement that provides for payment of more than $34 million to compensate employee benefit plans for losses suffered through investments in funds managed by Austin Capital Management, which indirectly invested in Bernard L. Madoff's Ponzi scheme. The agreement follows an earlier settlement with Austin Capital's parent company, KeyCorp, for more than $9 million. Recoveries from both settlements total more than $43 million for plan investors in funds managed by Austin Capital.
"This settlement will benefit thousands of workers and retirees whose hard-earned retirement savings and health plans were affected by Bernard Madoff," said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi.
The settlement, with Austin Capital Management Ltd. and its general partner, Austin Capital Management GP Corp., involves employee benefit plans' investments in certain funds managed by Austin Capital Management. Those funds invested a percentage of their assets in the Rye Select Broad Market Prime Fund L.P. offered by Tremont Partners Inc. (the "BMP Fund") which, in turn, was 100 percent invested with Bernard L. Madoff.
Under the settlement agreement announced today, $34,363,636 will be paid to a settlement fund for the plan investors. In the settlement entered into on Dec. 13, 2012, KeyCorp, Austin Capital's parent company, paid $9,090,909 to a settlement fund for plans that invested with Austin funds, for a total recovery for the plans of $43,454,545. The money in both settlement funds will be distributed to the plans by an independent fiduciary selected by the department. Austin Capital Management also will pay a civil penalty of $4,345,455.
Based on its investigation, the department contended that Austin Capital violated the Employee Retirement Income Security Act by causing or permitting certain funds to imprudently invest the assets of ERISA-covered plans with Madoff through investments in the BMP Fund. The funds involved were the Austin Safe Harbor ERISA Dedicated Fund, Safe Harbor Portable Alpha Offshore Fund One, Safe Harbor Portable Alpha Offshore Fund Two, Safe Harbor Offshore Fund, All Seasons Qualified Purchaser Fund, All Seasons Offshore Fund and the Balanced Offshore Fund.
The settlement resulted from an investigation conducted by the Labor Department's Employee Benefits Security Administration's Dallas Regional Office with the assistance of the department's Office of the Solicitor, Plan Benefits Security Division, in Washington.
Workers in employer-sponsored health and retirement benefit plans who feel that they have been denied a benefit inappropriately, or have questions about benefits laws, can contact a benefits advisor at http://www.askebsa.dol.gov or by calling 866-444-EBSA (3272).
For information about ERISA enforcement, visit http://www.dol.gov/ebsa/erisa_enforcement.html.