Plaintiffs' Personal Injury Law Firm

Merrill Lynch Gets Sued for Investments with Bernard Madoff

A complaint by a Florida-based foundation seeking $30 million in damages from Merrill Lynch claims the Wall Street financial advisory firm was taken in by Bernard Madoff at a face-to-face meeting months before his investment empire collapsed in fraud. The MorseLife Foundation alleges Merrill Lynch breached its fiduciary duties, was negligent and failed to advise the foundation properly. The decades old charity provides senior housing and health care services.

The lawsuit contends Merrill Lynch agreed to advise MorseLife on its investments and initially was skeptical about the Madoff fund. The financial advisory firm changed its tune following a meeting with Madoff in July 2008. "Merrill advised MorseLife that Merrill did not see any down side and recommended maintaining and even agreed to increasing MorseLife's concentration of its investments in the Madoff portfolio," the pleadings explain.

MorseLife said it sank $11.8 million in Madoff's fraud from 1995 to 2006. The investment allegedly ballooned to $33.5 million last November but is now worthless.

 In March 2008, Merrill Lynch recommended MorseLife diversify its portfolio, noting nearly 58 percent of its investment portfolio was tied up with Madoff. At MorseLife's behest, a Merrill Lynch official followed up by meeting with Madoff in person, along with the foundation's chief executive officer, senior vice president and a trustee in July 2008.

 Following the meeting, John Lacy, a vice president with Merrill's global wealth management group in West Palm Beach, reversed his initial position and touted Madoff as a conservative investment -- as opposed to a hedge fund or alternative investment -- in a "highly favorable" report, the complaint said.

 If you have suffered financial losses as a result of your broker's advice to invest with Bernard Madoff, we can help. Contact Napoli Bern Ripka LLP at 212-267-3700