Texas firm settles US charges it fraudulently took Madoff victims' money

The U.S. Department of Justice said Fulcrum Capital Partners violated the federal False Claims Act between October 2016 and October 2022 by causing the Madoff Victim Fund (MVF) to make inflated payouts to victims, which they then turned over to Fulcrum, a “non-victim” of Madoff’s fraud.

In a civil complaint filed in Manhattan federal court, the Justice Department said Fulcrum bought recovery rights from Madoff victims and required them to conceal from the fund how much it paid for those rights.

The Justice Department said Fulcrum specializes in trading distressed assets, including shares in “feeder funds” that sent investor money to Madoff.

“Fulcrum is a claim buying financial firm that never lost a penny from Madoff’s conduct,” Richard Breeden, the former U.S. Securities and Exchange Commission chairman who oversees the Madoff fund, said in a statement. “The inevitable consequence of orchestrating false reports to MVF was diminishing the help that… could be provided to real fraud victims.”