March 10, 2010

Cacoulidis suing Madoff over investment lossThis is a 6-60-1 dummy headyne yyyyy

By TUX TURKEL Staff Writer


Staff Writer

The New York developer who wants to build a 30-story office tower in Portland is trying to recover an estimated $2 million invested indirectly with the now-defunct company managed by Bernard Madoff, court documents show.

John Cacoulidis, president of Grand Metro Builders of New York Corp., claims that an investment firm overseeing money for his company's retirement plan improperly invested it with Bernard L. Madoff Investment Securities LLC.

Madoff was sentenced to prison last month for defrauding investors in the nation's largest Ponzi scheme.

In an interview Monday with the Portland Press Herald, whose downtown properties he just purchased, Cacoulidis downplayed the impact of the loss on his family, calling it ''small stuff.'' He also said it would have no bearing on his ability to invest in property in Maine's largest city.

''Anything I do in Portland, I pay cash anyway,'' he said. ''I have the funds to do it.''

Cacoulidis and his wife, Phyllis, are plaintiffs in a class action lawsuit seeking to recover money from defendants including Beacon Associates Management Corp.; Ivy Asset Management Corp.; and The Bank of New York Mellon Corp.

The couple served as trustees of the retirement plan and were the plan's dominant beneficiaries. The fund was forced into liquidation, and most of the money was lost.

Filed in U.S. District Court in New York, the Cacoulidis lawsuit is one of several pending against so-called feeder funds that directed money to Madoff. These actions are seeking a total of $13.7 billion, according to the trustee liquidating the assets of Madoff's former investment advisory firm.

Other defendants with higher losses -- health and retirement funds for trade groups that include plumbers and steamfitters -- also have filed lawsuits. The cases were recently consolidated, with the plumbers fund being appointed lead plaintiff.

Based in Jericho, N.Y., Cacoulidis owns Hope Island in Casco Bay and commercial property in the Portland area, including Two Monument Square. The office tower had a listing price of $14 million when he bought it in 2003.

Two years earlier, he proposed a massive project at the mouth of Portland Harbor that became controversial and was never built.

Cacoulidis came into the news again this summer when he purchased the Press Herald buildings on Congress Street and announced plans to build the largest office complex north of Boston, across the street from the newspaper office building at its former printing plant site.

Those plans are just in the earliest stages and will face months of public review. Cacoulidis said Monday that he would need financing to move ahead with the project, which could cost $300 million.

Cacoulidis said he began an investment relationship with Ivy Asset Management at least 15 years ago, after the company became a tenant in a building he owned in New York. A subsidiary of The Bank of New York Mellon, Ivy was the investment consultant that introduced Cacoulidis to Beacon Associates.

In the lawsuit, filed last January, Cacoulidis argues that he and other fund investors were misled by Beacon Associates and its principals, beginning in 2004. They were given an offering memorandum stating that their money would be conservatively invested and monitored by Beacon Associates.

In fact, the lawsuit alleges, the vast majority of the assets were given to Madoff's firm to manage, with no oversight. Beacon and the other defendants ignored numerous warning signs, the suit says, that Madoff's operation was suspicious.

It was later shown to be a massive scheme, orchestrated by Madoff, in which money from earlier investors was used to pay subsequent clients.

''The offering materials provided to them didn't disclose the potential dangers of investing with Madoff,'' said Demet Basar, a New York attorney representing Cacoulidis.

Cacoulidis and the other plaintiffs are asking for compensation and punitive damages. They also want a jury trial.

Lewis Liman, a lead attorney representing Ivy Asset Management and The Bank of New York Mellon, couldn't be reached for comment Monday.

Dan Dornfeld, the general counsel for Grand Metro Builders, said the company also has filed a claim with the trustee in charge of Madoff's assets. He doesn't have high hopes for recovering money via that route, however -- roughly 15,400 customer claims have been filed.

''It's a lot of money for anybody,'' Dornfeld said of the $2 million loss. ''But John is very conservative with his money. It doesn't have any impact on his ability to do business up there.''

Staff Writer Tux Turkel can be contacted at 791-6462 or at:

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