Two Sue AIG Seeking Insurance Recoveries For Madoff Losses
20 August 2009 - 7:53AM
Dow Jones News
Two investors who claim they lost money to convicted
Ponzi-scheme operator Bernard Madoff sued American International
Group Inc. (AIG) on Wednesday, alleging the insurer is refusing to
honor a fraud-protection provision in their homeowner's insurance
policy.
The lawsuit, filed in U.S. District Court in Manhattan, alleges
the insurer, through its units AIU Holdings and American
International Insurance Co. of California, has refused to honor a
claim by Robert and Harlene Horowitz, both of Los Angeles, under
their homeowner's insurance policy with AIG Fraud SafeGuard
coverage. They had invested money with Madoff's firm since about
1997.
The complaint claims AIG has refused to pay for amounts beyond
any initial investments with Madoff and has denied claims related
to "any alleged gains, growth or appreciation."
The Horowitz Family Trust, with Robert Horowitz, reportedly had
$8.5 million in its account with Madoff as of Nov. 30, 2008,
according to the lawsuit.
The lawsuit is seeking class-action status on behalf of all AIG
policyholders who lost money in the Madoff scam and held AIG
homeowner's policies with the fraud protection. The lawsuit was
filed by law firm Milberg LLP.
Madoff, 71 years old, is serving a 150-year sentence in a
federal prison in North Carolina after admitting in March to
running a decades-long Ponzi scheme that bilked thousands of
investors out of billions of dollars.
He ran the scam for years through the investment advisory arm of
his business, Bernard L. Madoff Investment Securities LLC, by
promising steady returns and by presenting an air of exclusivity by
not taking all comers and recruiting investors via friends and
associates.
Madoff claimed to have as much as $65 billion in his firm's
accounts at the end of November, but prosecutors have said the
accounts only held a small fraction of that.
An AIG spokeswoman didn't immediately return a phone call
seeking comment Wednesday.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com