A hedge fund manager facing $1.4bn in losses from Bernard Madoff's record-breaking Wall Street fraud has been found dead in his Manhattan office, his wrists slit and a bottle of sleeping pills by his side.
The apparent suicide of René-Thierry Magon de la Villehuchet, who set up his own company after rising to become one of the most powerful Frenchmen on Wall Street, was discovered early yesterday morning.
Mr Madoff's historic swindle was uncovered less than two weeks ago, and investors around the world have been struggling to cope with losses that are estimated at $50bn. Charities that placed their endowments with the Wall Street veteran have been forced to shut down, wealthy individuals from Mr Madoff's social circles in New York and Florida have been wiped out, and the pressure is being felt most intently by the hedge fund managers who trusted their own fortunes and those of their clients to Madoff Investment Securities – only to discover that the business was, in Mr Madoff's words to the FBI, "all just one big lie".
M. de la Villehuchet, 65, a former head of Credit Lyonnais Securities in the US, was the scion of an aristocratic French family who appeared as well-connected in Europe as Mr Madoff was in the US. His hedge fund, Access International Advisors, enlisted intermediaries with links to the cream of Europe's high society to garner clients. Among them was Philippe Junot, a French businessman and friend who is the former husband of Princess Caroline of Monaco. Another was Prince Michel of the former Yugoslavia.
On Monday night, M. de la Villehuchet told Access International's cleaning staff he wanted them out by 7pm so that he could work late, then locked the door and placed a waste paper basked under his desk to catch blood from his wrists. Security staff found him the next morning, still sitting at his desk, with a box-cutter on the floor beside him.
Such was Mr Madoff's pedigree, as a trader of almost 50 years standing and a former chairman of the Nasdaq stock exchange, that investors clamoured to be let into his fund.
Access International had placed about $1.4bn with Madoff Investment Securities, putting intolerable pressure on M. de la Villehuchet, according to a friend who spoke last night to La Tribune newspaper in France. "He had been searching day and night for a way to recover the funds of his investors. He couldn't bear the blame game that broke out among Europeans."
M. de la Villehuchet lived with his wife in a suburb of New York and was known for his love of sailing, regularly taking part in regattas as a member of the exclusive New York Yacht Club. The couple had no children.
As Mr Madoff remains under house arrest at his Manhattan apartment, a legal firestorm has broken out over the fund managers who handed clients' money to him to invest. Furious investors say these managers should have done more investigation before handing over billions of dollars, and should have known the high returns he was claiming were simply too good to be true.
Several big names in the hedge fund industry are among those facing scrutiny. Walter Noel's Fairfield Greenwich placed $7.5bn with Mr Madoff, including funds it was managing for local authorities and public sector pension funds. Yesterday, Mr Noel wrote to investors saying: "At this point in time, the value of the company's investment in Madoff is not certain. There may be residual assets in Madoff to be distributed or, alternatively, there may be no assets."
Lawsuits have also been filed against the Securities and Exchange Commission – the Wall Street regulator, whose botched investigation into allegations against Mr Madoff in 2006 failed to uncover the fraud – and against KPMG, which audited one fund of funds, Tremont Group, which lost $3.3bn.
Mr Madoff was feted on Wall Street for generating annual returns of more than 10 per cent, year in, year out, but the results were not real. Instead, he was paying his existing clients with money coming in from new investors. Investigators believe the scheme could have been running undetected for more than two decades.