Tuesday, December 30, 2008

Houston Lawyers Plan Madoff Counterattack

In the Houston Chronicle today was an article about Houston law firm Susman Godfrey's recently formed Financial Fraud Task Force. The group is the result of Bernard Madoff, a former NASDAQ chairman who helped pioneer electronic stock trading, and now alleged architect of the world's first global Ponzi scheme that authorities say siphoned an estimated $50 billion from investors. Madoff also victimized his own community in defrauding Jewish philanthropic and educational institutions. Particularly hard hit were the Elie Wiesel Foundation for Humanity and Yeshiva University in New York City.

The exposure of Texas investors to Madoff's alleged criminal activities thus far appears to be limited. An Austin-based hedge fund, Austin Capital Management, reportedly invested funds from New Mexico and Massachusetts public pension funds in the Madoff entities.

Perhaps the most stinging impact of the scandal in the Lone Star state was felt in Dallas, where a foundation that had provided funding for the Innocence Project to conduct DNA testing of convicts closed because of donor losses. The JEHT Foundation had already provided $400,000 for the testing, which has exonerated more than a dozen persons wrongly convicted in Dallas County. The loss of funding may cripple attempts to expand the testing program to other Texas counties.

At least one Houston law firm is gearing up to represent the scheme's victims. Susman Godfrey's recently formed Financial Fraud Task Force is conducting an investigation of the scandal for contingency clients who invested directly with Madoff or through investment advisers. Talk about mining a niche, a very commendable business-minded approach to rainmaking. How can today's headline news result in increased billables for your practice area?

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