A hedge fund manager that funneled investors' cash to Bernard Madoff is facing civil fraud charges after being accused of lying to investors about the due diligence it performed on his business.
Connecticut-based Fairfield Greenwich was charged by authorities in Massachusetts, who alleged that the firm's employees were "blinded" by the performance fees they were earning thanks to Mr Madoff's gravity-defying returns, the Times reports.
Massachusetts secretary of state William Galvin said the firm "did not engage in meaningful due diligence and turned a blind eye to any fact that would have burst their lucrative bubble".
The fund manager, which was founded by US socialite Walter Noel, worked with Mr Madoff's firm for 18 years, the newspaper added.
According to Mr Galvin, the firm pumped $7.2 billion - or around 95 per cent of the assets managed by its three funds - into Mr Madoff's company.
He said it had funneled around $14.8 million to the brokerage days before Mr Madoff's arrest in December.
The Massachusetts lawsuit seeks repayment of investors' losses, plus the return of related performance fees.
According to the BBC, Fairfield Greenwich intends to "vigorously" contest the charges.
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