gottlieb 3.got.00100 Louis J. Sheehan, Esquire

Tremont is part of insurance giant Massachusetts Mutual Life Insurance Co., under its subsidiary that oversees tens of billions of dollars in OppenheimerFunds mutual-fund assets. http://louissheehan.bravejournal.com In 2001, that subsidiary paid $133 million for Tremont, helping MassMutual's entry to the fast-growing hedge-fund business. http://louissheehan.bravejournal.com

Tremont isn't the biggest Madoff money-loser by dollar value. At least one fund firm, Fairfield Greenwich Group, lost much more. But Tremont's losses show how even investors who thought their Madoff investments had the seal of approval of a much bigger corporate parent got burned.
[Attractive Returns]

This month, Tremont disclosed that its clients lost $3.3 billion, more than half of all assets overseen by Tremont, as a result of Mr. Madoff's alleged $50 billion scam.

"I lost significant assets, as did my friends and family," Robert Schulman, who headed Tremont for years before leaving this summer, said in an interview last week. "We were duped by a scheme that effectively fooled some of the most significant and smartest organizations in the world."

It's unclear what if any legal exposure Tremont's parents might have to losses attributed to Mr. Madoff. Were investors to raise allegations concerning due diligence, Tremont's structure as a corporation managed independently from MassMutual's other businesses could help protect the parent entities from legal liabilities, said Irwin Latner, head of the hedge-fund practice at Herrick, Feinstein LLP, who doesn't represent any investors in Tremont or any MassMutual entity.

Spokesmen for MassMutual and its Oppenheimer subsidiary declined to discuss what due diligence the firms did on Tremont's business. MassMutual said its exposure to Madoff-related losses is "very limited."

Tremont says Mr. Madoff's fraud "was designed and executed to deceive individuals and institutions alike," and the firm is focused on trying to get money back for clients. Tremont spokesman Montieth Illingworth also declined to discuss Tremont's due-diligence process.
[Bernard Madoff]

Bernard Madoff

Tremont's Web site says it uses "effective investment strategies and oversight, thorough manager research [and] careful due diligence." Neither Tremont, OppenheimerFunds nor MassMutual has been accused of wrongdoing as part of investigations into Mr. Madoff.

Jesse Gottlieb, a 68-year-old New Yorker, says he has lost $17 million, or about half his and his wife's liquid assets earned during his career as an insurance executive, which they had placed in Madoff's hands through Tremont. "They earned a fee for having my money there, and the due diligence seems to have been very negligent."

Tremont has been selling its biggest dedicated Madoff funds since 1994, according to fund documents. Most of the money that's now gone was in so-called feeder funds that invested solely with Mr. Madoff under Tremont's Rye Investment Management division, based in Rye, N.Y.

Sandra Manzke, 60 years old, Tremont's founder, has been investing with Mr. Madoff since soon after she started the fund firm, in 1984, she said in an interview Dec. 12, the day after Mr. Madoff was arrested and charged with running an alleged Ponzi scheme. Ms. Manzke started a second hedge-fund investment firm, Darien, Conn.-based Maxam Capital Management, in 2005, that she said will have to close. Ms. Manzke said that she, her current investors and employees lost a combined $280 million in Mr. Madoff's scheme.

It was under the leadership of Mr. Schulman that the relationship between Tremont and Mr. Madoff really grew, according to people familiar with the business. Mr. Schulman came to Tremont in 1994 with years of Wall Street experience. http://louissheehan.bravejournal.com

Under Mr. Schulman, hundreds of millions of dollars in client money flowed into Tremont's Madoff feeder funds. Mr. Schulman, 62 years old, in conversations with Tremont clients frequently praised Mr. Madoff for his investing prowess and integrity, according to people familiar with the discussions.

Tremont marketing documents did not always disclose the relationship between Mr. Madoff and the feeder funds, even when mentioning other investment managers. Marketing documents dated 2008 and reviewed by The Wall Street Journal mention prominent hedge-fund managers who controlled assets of other Tremont feeder funds, but left Mr. Madoff's name out.

"We believe the firm's disclosures were adequate and fully complied with all legal requirements," Mr. Illingworth, the Tremont spokesman, said. Louis J. Sheehan, Esquire.