Fiserv, a publicly traded technology company formerly in the financial-custody business, was slapped with a lawsuit yesterday alleging that it failed to protect investors’ nest eggs from self-confessed swindler Bernie Madoff.
“There are more than 1,000 people with north of a billion in losses” as a result of Fiserv’s negligence, said Jacob Zamansky, one of the attorneys on the case, which was filed in federal court in Denver and which is seeking class-action status.
According to Zamansky, Fiserv had a quid-pro-quo relationship with Madoff, whereby people seeking to have their IRAs or other retirement assets managed by Madoff were told, usually by Madoff himself, that they had to use Fiserv as the official custodian. All retirement assets are required to have custodians, and, in some cases, trustees.
Fiserv, Zamansky told The Post, then turned a blind eye to Madoff’s activities and gave him complete control of the assets.
“Most people were under the impression that Fiserv was holding the assets,” Zamansky said.
Brokerage firm TD Ameritrade Holding Corp. was also named as a defendant in the lawsuit for allegedly seeing and ignoring the situation when it acquired Fiserv’s custodial business in 2007.
According to the suit, TD Ameritrade bought all of Fiserv’s custodial accounts except those invested in Madoff, which the lawsuit argued was a sign that TD Ameritrade realized that it was a potentially dangerous situation.
A TD Ameritrade spokeswoman declined to comment. Officials from Fiserv failed to return repeated calls for comment.
It’s not the first time that Fiserv has been accused of collecting fat fees for funneling money to scam artists. The Brookfield, Wis., company was recently the subject of a lawsuit tied to the $300 million Ponzi scheme perpetrated by legendary boy-band impresario Louis J. Pearlman, founder of the Backstreet Boys.
As in the Madoff suit, Fiserv was accused of acting as custodian for so-called self-directed IRAs that were invested in Pearlman’s scheme.
Attorneys told The Post that the lawsuits point to the dangers of self-directed IRAs, which allow people to invest their nest eggs in less-traditional investments, like loans and real estate.