Attorney Wants Phantom Fees Returned to Madoff "Survivors"

July 3, 2009. By Brenda Craig

Miami, FL: Lawyers at Dimond, Kaplan & Rothstein have seen a lot of hurt investors over the years—many of them victims of ponzi schemes less elaborate than the one Bernie Madoff ran, but ponzi schemes all the same. “The moral compass of people who commit those kinds of crimes is something that my partners and I will never understand,” says Jeffrey Kaplan. “You either have a moral compass, or you don’t. We’ll never be able to understand what goes through the head of someone who can commit such a heinous fraud.”

As Madoff begins his 150-year prison sentence, “Madoff survivors” as Kaplan prefers to describe his clients who had their life savings stolen, are looking to recover some of those lost assets.

Kaplan and his firm believe they have found a way to get at least some of the lost assets returned. He has recently filed a class action suit against Standard Chartered Bank International (Americas) Limited and Standard Chartered Private Bank on behalf of a couple who live in Mexico and other customers of the bank who invested in the Fairfield Sentry Hedge Fund.

Standard Chartered charged customers a quarterly fee to invest in the Fairfield Fund, which it is now known, turned out to be little more than a feeder fund for Madoff’s crazy pyramid scheme.

Although it is regular practice to charge clients a fee based on the amount in their portfolio, Kaplan argues these funds were essentially worthless. That means the fees being charged, based on the value of their investments, were at the very least too high.

The suit, which has yet to be certified, asks that plaintiffs be refunded millions in fees charged by Standard Chartered alleging that the bank was unjustly enriched by what he calls “phantom fees”.

“It is unjust to have been enriched by these fees when the fees were charged – at rates much higher than should have been charged,” Kaplan says. “You (the bank) pocketed the money.”

In addition, Kaplan argues, the bank was in breach of contract. “You take a fee based on a million dollars when in fact it was only worth $10,000 dollars, is that fair? Ha! No!” says Kaplan. “It is pretty clear that the value of the Madoff funds were unfunded for years.”

The firm where Kaplan is a name partner specializes in recovering losses for investors who have been victimized by the negligence or misconduct of a stockbroker or a brokerage firm.

Jeffrey Kaplan is a graduate of the Miami School of Law (1994) and holds a Bachelor of Science in Business Administration from Northeastern University in Boston (1990). Kaplan is an AV-rated lawyer and was named as a “Top Lawyer” by the South Florida Legal Guide.


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