McGladrey & Pullen has been sued by a hedge fund for failing to detect red flags in Bernard Madoff’s investment schemes, leading the hedge fund to lose $280 million.
The lawsuit states that McGladrey and the firm it acquired in 2007, Goldstein Golub Kessler, produced unqualified audit opinions in 2006 and 2007 of Darien, Conn.-based Maxam Absolute Return Fund, despite the fund’s investments with Madoff. Madoff (pictured) was arrested in December after admitting to losing at least $50 billion of his clients’ money in a gigantic Ponzi scheme.
Maxam is suing its auditors for negligence, claiming the fund relied on the auditors’ expertise in examining Madoff’s firm, according to Reuters. “Maxam intends to pursue its legal rights to ensure that proper restitution is made to its investors,” said Jonathan Cogan, a partner at Kobre & Kim, the law firm that is representing Maxam, in a statement.
McGladrey spokesperson Betsy Weinberger declined to comment to WebCPA. “Obviously, like any company, we can’t specifically comment on pending litigation,” she said. “Professional standards preclude us from doing that. We acted with due care and conformed to professional standards.”
Cogan did not immediately respond to a request for comment.
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