Couple Sue Stockbroker for Fraud, Seeks $16 Million

Among the alleged victims of the Bernie Madoff debacle are Richard Sonking, 60, and his elderly mother, who claim they lost $6 million to Madoff's $65 billion Ponzi scheme. According to the 3/18/10 edition of the Boston Herald, the Sonkings are now suing for stockbroker fraud.

Sonking, from New Hampshire, has teamed up with his mother in a lawsuit against Robert Jaffe and other executives of Cohmad Securities, the investment firm that handled Sonking's investments. The plaintiffs are seeking to recover their $6 million as well as $12 million in punitive and other damages.

Cohmad Securities allegedly served as a "feeder firm" for Madoff. Jaffe headed up the Boston office of Cohmad, an enterprise that eventually saw its license for the Boston office revoked after state regulators ruled that Cohmad failed to cooperate with investigators. The Herald reports that a judge later overturned the ruling. However, the company's license remains under suspension as legal maneuvers continue.

Couple Sue Stockbroker for Fraud, Seeks Million

Couple Sue Stockbroker for Fraud, Seeks Million

Jaffe is alleged to have pocketed at least $150 million from Madoff over 12 years while placing some $1 billion worth of clients' funds with Madoff. The latter partly owned Cohmad and the two firms shared office space in Manhattan. Jaffe also owned a small stake in Cohmad.

"Jaffe brought investors in to [Madoff] while knowing or disregarding facts indicating [that] Madoff was engaging in securities fraud,'' the Sonkings allege.

The US Securities and Exchange Commission (SEC) alleged that Jaffe ignored various red flags—allegations the Sonkings further explore in their lawsuit. To that end, the plaintiffs claim that Jaffe's personal account with Madoff earned up to 46 percent a year, while investors connected with Madoff by Jaffe earned only about 15 percent per annum.

The SEC sued Jaffe for fraud and other alleged wrongdoing in June 2009, seeking the return of $150 million in commissions allegedly earned from Madoff. Court papers reveal that Jaffe took the Fifth Amendment during meetings with the SEC.

It should be noted that on February 3 of this year a judge dismissed all SEC charges against Jaffe, ruling that regulators failed to establish a plausible case to support the charge that Jaffe actually knew about the Madoff Ponzi scheme. The court allowed the SEC until April 2 to file revised charges.

The Sonkings are pursuing their stockbroker fraud action against Jaffe nonetheless.

Couple Sue Stockbroker for Fraud, Seeks $16 Million

Stock Broker Legal Help

ADD YOUR COMMENT ON THIS STORY