On Wednesday, December 17, 2008, a shareholder in limited partnership interests of Gabriel Capital, L.P. filed a proposed class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons and entities who invested in limited partnership interests of Gabriel Capital, L.P. between December 12, 2002 through and including December 12, 2008 and also retained their investment through that date, as well as all Gabriel limited partners as of the end of the period, with respect to plaintiff’s claims of breach of fiduciary duty only.
According to the complaint the plaintiff alleges that defendants, including Gabriel Capital, L.P., J. Ezra Merkin (”Merkin”) and BDO Seidman, L.P. (”Seidman”) Gabriel, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, common law fraud, negligent misrepresentation and breach of fiduciary duty under the laws of New York State. According to the lawsuit the case arises from a massive fraudulent scheme perpetrated by Bernard L. Madoff through his investment firm, Bernard L. Madoff Investment Securities, LLC, and others. The complaint alleges that the defendants recklessly or with gross negligence and/or in breach of fiduciary duties owed to plaintiff and other class members, caused and permitted at least 27% of the investment capital of Gabriel to be handed over to Madoff to be “invested” for the benefit of plaintiff and the other limited partners of Gabriel and that the plaintiff’s investment in Gabriel has been decimated as a direct result.