As the case against Madoff feeder funds grows stronger, the first of them, Fairfield, has been charged with criminal activity, going beyond negligence. As pointed out previously, it is clear that any fund of fund investor who bothered to do any analysis on Madoff, would have had to conclude that its performance had to be fraudulent or illegally produced. Given the protestations by the feeder funds of the amount of due diligence they had done, it is plausible to assume they knew they were getting involved in a criminal activity, but felt it was worth the money they were getting.
Fairfield and its owners have had assets frozen, while Santander is quietly winding down Optimal, its own feeder fund. Clearly the bank will continue pretending it has no liability, but as the legal moves progress, this is looking increasingly shaky.
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