By Heather Grossmann
DNAinfo News Editor
MANHATTAN — Attorney General Andrew Cuomo filed a lawsuit against a hedge fund management firm and two of its executives on Tuesday, saying they deceived clients for years about Bernie Madoff's fraudulent investments, the AG's office announced Tuesday.
Cuomo said internal communications from Ivy Asset Management — a subsidiary of Bank of New York Mellon — show that the company knew for a decade that Madoff was not conducting his investments "as advertised," but hid the information so that the company could continue to bring in millions in fees.
Ivy’s clients — which included dozens of New York union pension and welfare plans — lost over $227 million when the Ponzi scheme collapsed.
Cuomo's fraud suit said that Ivy garnered over $40 million in fees between 1998 and 2008 for counseling clients with large Madoff investments, all the while knowing that Madoff's investments were suspect.
“Ivy and its former co-principals saw the trouble with Madoff coming around the bend, but instead of guiding their clients through the financial waters, they sold them down the river,” said Attorney General Cuomo.
The lawsuit also names Ivy's former CEO Lawrence Simon and its former Chief Investment Officer Howard Wohl.
A spokesman for Ivy said the company would fight back against the lawsuit, the New York Post reported.
“Ivy informed its clients that it had questions about Madoff that it could not answer and recommended to its clients that they reduce their exposure to Madoff,” the spokesman said in a written statement, according to the Post.
