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UNITED STATES DISTRICT COURT             
SOUTHERN DISTRICT OF NEW YORK 
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                                   : 
UNITED STATES OF AMERICA           :  
                                   : INFORMATION 
     - v -                         : 
                                   :    23 Cr. _____ (    ) 
ELIEZER TILSON,                    : 
                                   : 
                    Defendant.     : 
                                   : 
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COUNT ONE 
(Travel Act) 
 
      The United States Attorney charges: 
BACKGROUND 
          1.  Unless stated otherwise, at all times relevant to 
this Information: 
               a.  ELIEZER TILSON, the defendant, was a resident 
of Israel. 
               b.  Pancho Real Estate Capital, LLP and Pancho 
Memory Care REIT, LLC were entities controlled by TILSON. 
               c.  Victim 1 and Victim 2 (collectively, the 
"Victims") were investors living in Brooklyn, New York.  The 
Victims each invested in the development of elder care 
facilities promoted by TILSON named, respectively, Pancho Memory 
Care and Pancho Tomball, prior to the time period relevant to 
this Information. 
               d.  The Domus Multifamily Real Estate Trust No. 2 

 
 
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("Domus II") was an investment fund that focused on multifamily 
residential real estate projects in the United States.  Domus II 
had contracted to buy two properties in or near Phoenix, 
Arizona.  Domus II had no relationship to Pancho Memory Care, 
Pancho Tomball, Pancho Real Estate Capital, LLP or Pancho Memory 
Care REIT, LLC other than TILSON's solicitation of funds on 
behalf of these entities. 
USE OF INTERSTATE FACILITIES 
          2.  In or about October 2019, ELIEZER TILSON, the 
defendant, solicited investments in Domus II from each of the 
Victims.  TILSON and the Victims met for dinner in a restaurant 
in Manhattan to discuss Domus II on or about October 30, 2019. 
          3.  On or about October 31, 2019, ELIEZER TILSON, the 
defendant, instructed the Victims to wire their funds for 
investment in Domus II to an account held by Pancho Real Estate 
Capital, LLP that was controlled by TILSON and was domiciled in 
New Jersey. 
          4.  On or about November 1, 2019, Victim 1 wired 
$150,000 as an investment in Domus II from a bank account 
domiciled in New York to the account designated by ELIEZER 
TILSON, the defendant.  Victim 1 wired an additional $250,000 as 
an additional investment in Domus II from the same New York 
account to the same account designated by TILSON on or about 

 
 
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November 4.  Victim 2 wired $150,000 on or about November 1, 
2019 and an additional $100,000 on or about November 5, 2019, 
both from a bank account domiciled in New York, as investments 
in Domus II to the account designated by TILSON.  
  5.  ELIEZER TILSON, the defendant, never transmitted 
any of the Victims' funds to Domus II.  Instead, between on or 
about November 1, 2019 to on or about November 5, 2019, TILSON 
wired a total of $396,000 from the Pancho Real Estate Capital, 
LLP account in New Jersey to an account held by Pancho Memory 
Care REIT, LLC in New Jersey.  Between on or about November 1, 
2019 to on or about November 4, 2019, TILSON transmitted funds 
from the Pancho Memory Care REIT, LLC account to Victim 1 and 
individuals and entities in the Southern District of New York 
and elsewhere in amounts exceeding $10,000 as dividends on their 
investments in Pancho Memory Care or as payments on prior debt 
incurred by entities unrelated to Domus II.  Prior to the wire 
of $396,000 from the Pancho Real Estate Capital, LLP account, 
the Pancho Memory Care REIT, LLC account did not have sufficient 
funds with which to make these transfers. 
  6.  On or about November 12, 2019, the Victims asked 
why their funds had not arrived at Domus II.  On or about 
November 13, 2019, ELIEZER TILSON, the defendant, falsely stated 
in relevant part to the Victims in an email sent in foreign 

 
 
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commerce that: 
I spoke to the [promoter of Domus II] first 
thing . . . and I assure you that the funds 
are definitely not floating anywhere.  We 
have the funds and you are very much part of 
the deal . . ..  I feel like there have been 
a few admin failures on my part recently 
which should not be. 
 
  7.  On or about November 23, 2019, ELIEZER TILSON, the 
defendant, falsely stated in relevant part to the Victims in an 
email sent in foreign commerce that: 
First of all 100% this is just technical I 
initiated the wire to [the promoter of Domus 
II] and it has not gone through yet.  I have 
had issues in the past with [TILSON'S bank]. 
 
  8.  On or about November 25, 2019, ELIEZER TILSON, the 
defendant, sent Victim 1 via email sent in foreign commerce a 
document purportedly from his bank showing a balance of 
$837,956.26 in the Pancho Real Estate Capital, LLP account to 
which the Victims had wired their money.  That account was 
overdrawn as of that date. 
  9.  On or about November 26, 2019, ELIEZER TILSON, the 
defendant, falsely stated in relevant part in an email sent in 
foreign commerce to the Victims that: 
Please see attached message confirming that 
the $400,000 went out to [Victim 1] and also 
I sent an update Available balance.  I am 
not sure why but I did not receive a message 
for [Victim 2] yet, I will follow up first 
thing in the morning. I definitely sent for 
both.  I should get another message at one 

 
 
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point today which has the confirmation 
number on in it. Once I receive it, I will 
send it to you.  [Victim 2,] I am on it 
first thing in the AM for you to make sure 
this goes through.  
 
Attached to the email were:  a) a purported bank document 
falsely indicating that an ACH payment for $400,000 had been 
made on or about November 25, 2019 to Victim 1's account; and b) 
a purported bank document falsely indicating that the Pancho 
Real Estate Capital, LLP account had a balance of $437,931.26 
when the balance of that account was negative. 
          10.  In a telephone call with the Victims on or about 
December 2, 2019, ELIEZER TILSON, the defendant, responded to a 
question about where the Victims' money had gone by stating in 
substance and in part "I, I, I used it to bridge other things, 
and I was planning on money coming in right away to get you 
Domus." 
STATUTORY ALLEGATION 
          11.  From in or about October 2019 to in or about 
December 2019, in the Southern District of New York and 
elsewhere, ELIEZER TILSON, the defendant, knowingly used and 
caused to be used facilities in interstate and foreign commerce 
with intent to promote, manage, establish, carry on, and 
facilitate the promotion, management, establishment, and 
carrying on, of an unlawful activity, namely engaging in 

 
 
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monetary transactions in property derived from fraud in the sale 
of securities, a specified unlawful activity, in violation of 
Title 18, United States Code, Section 1957, and thereafter did 
perform and attempt to perform an act to promote, manage, carry 
on, and to facilitate the promotion, management, establishment, 
and carrying on of such unlawful activity, to wit TILSON 
converted the Victims' funds to his own use by sending multiple 
wires of funds in amounts exceeding $10,000 and by sending 
emails to assure the Victims their funds would be returned to 
them.  
(Title 18, United States Code, Sections 1952(a)(3) and 2.) 
 
FORFEITURE ALLEGATION 
          12.  As the result of committing the Travel Act 
offense in violation of Title 18, United States Code, Section 
1952 as charged in Count One of this Information, ELIEZER 
TILSON, the defendant, shall forfeit to the United States, 
pursuant to Title 18, United States Code, Section 981(a)(1)(C) 
and Title 28, United States Code, Section 2461, all property, 
real and personal, that constitutes or is derived from proceeds 
traceable to the commission of the offense. 
 Substitute Asset Provision 
          13.  If any of the above-described forfeitable 
property, as a result of any act or omission of the defendant: 

 
 
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   a.  cannot be located upon the exercise of due 
diligence; 
   b.  has been transferred or sold to, or deposited 
with, a third person; 
   c.  has been placed beyond the jurisdiction of 
the Court; 
   d.  has been substantially diminished in value; 
or 
   e.  has been comingled with other property which 
cannot be subdivided without difficulty; 
it is the intent of the United States, pursuant to Title 21, 
United States Code, Section 853(p), to seek forfeiture of any 
other property of the defendant up to the value of the above 
forfeitable property. 
 (Title 18, United States Code, Section 981(a)(1)(C); 
 Title 21, United States Code, Section 853(p); 
 Title 28, United States Code, Section 2461.) 
 
 
 
       ______________________ 
       DAMIAN WILLIAMS 
       United States Attorney 
 
 

DAMIAN WILLIAMS  
United States Attorney 
Southern District of New York 
By:  PIERRE G. ARMAND 
Assistant United States Attorney 
86 Chambers Street, 3rd Floor 
New York, New York 10007 
Telephone: (212) 637-2724 
Email: [email protected]  
 
UNITED STATES DISTRICT COURT  
SOUTHERN DISTRICT OF NEW YORK 

 
 
 
 
 
 

18 Civ. 9160 (VEC) 
 
 
 
COMPLAINT-IN-
INTERVENTION OF THE 
UNITED STATES OF 
AMERICA 
 
 
JURY TRIAL DEMANDED 

 

 
 

The United States of America, by its attorney, Damian Williams, United States 

Attorney for the Southern District of New York, alleges for its complaint-in-intervention as 

follows: 

UNITED STATES OF AMERICA ex rel. CABOT SQUARE 
LLC, 
 

Plaintiff, 
 

v. 
 
FULCRUM CAPITAL HOLDINGS LLC, MATTHEW 
HAMILTON, TIMOTHY HORRIGAN, FONDACO 
SGR S.P.A., COMPAGNIA DI SAN PAOLO, and 
CARAC, 

                                     Defendants. 

UNITED STATES OF AMERICA, 
 

Plaintiff-Intervenor, 
 
                              v. 
 
FULCRUM CAPITAL HOLDINGS LLC, 

 
 Defendant. 



 

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PRELIMINARY STATEMENT 

1. This is a civil fraud action brought by plaintiff-intervenor the United States of 

America (the “United States” or the “Government”) against defendant Fulcrum Capital 

Holdings LLC (“Fulcrum” or “Defendant”), an investment firm based in Austin, Texas, to 

recover damages and civil penalties arising from Fulcrum’s violations of the False Claims 

Act (the “FCA”), 31 U.S.C. § 3729 et seq., in connection with fraudulently obtaining 

remission payments from the Madoff Victim Fund (the “MVF”). 

2. The MVF was created by the United States Department of Justice (“DOJ” or the 

“Department”) to compensate victims of the massive Ponzi scheme perpetrated by Bernard 

L. Madoff through a process called remission.  The United States Attorney’s Office for the 

Southern District of New York (the “SDNY”) has provided funds to the MVF through civil 

and criminal asset forfeiture recoveries for pro rata distribution to Madoff fraud victims.  

To ensure equitable distribution of MVF funds, all claimants are required to disclose to the 

MVF any Madoff-related collateral recoveries they have obtained, meaning any monies 

received from sources other than the MVF, such as insurance, private lawsuits or 

settlements, the court-supervised liquidation of Madoff’s firm, or proceeds from selling 

their Madoff-related investments and/or recovery rights to another party.  To prevent MVF 

claimants from receiving duplicative recoveries, the MVF is required to reduce remission 

payments paid to claimants by the amount of any collateral recoveries they received. 

3. Fulcrum purchased from multiple third parties who had submitted remission claims 

to the MVF their shares in Madoff feeder funds,  as well as the claimants’ rights to receive 

remission payments from the MVF.  Because claims for remission cannot legally be 

assigned, these victims outwardly retained their status as MVF claimants, but privately 

agreed to promptly pass on any distributions they received from the MVF to Fulcrum. 



 

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4. When the MVF sent notices to the claimants requiring them to disclose, under 

penalty of perjury, any collateral recoveries they had received, Fulcrum directed the 

claimants to submit false collateral recovery update documentation to the MVF concealing 

the vast majority of the amounts that Fulcrum had previously paid them for the Madoff 

feeder fund shares and attendant rights and remission claims.  As a result of this deception, 

the MVF paid the claimants larger recoveries than they should have received.  The 

claimants then passed most of these amounts on to Fulcrum.   

5. As a result of the foregoing conduct, Fulcrum violated the FCA, and submitted or 

caused to be submitted false claims for payment to the MVF. 

JURISDICTION AND VENUE 

6. This Court has subject matter jurisdiction over the Government’s claims under the 

FCA pursuant to 31 U.S.C. § 3730(a) and 28 U.S.C §§ 1331 and 1345.  

7. This Court may exercise personal jurisdiction over Fulcrum pursuant to  

31 U.S.C. § 3732(a), which provides for nationwide service of process.  Further, because 

Fulcrum transacts business in this District and, in furtherance of the fraud alleged, caused 

false claims or statements to be submitted to the MVF in this District, venue is proper in 

this District pursuant to 31 U.S.C. § 3732(a) as well as 28 U.S.C. §§ 1391(b) and 1391(c). 

PARTIES 

8. Plaintiff is the United States of America.  Through DOJ, the United States 

administers the MVF.   

9. Defendant Fulcrum, a Delaware limited liability company, is an investment firm  

with its principal place of business in Austin, Texas. 

BACKGROUND 

A.  The False Claims Act 



 

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10. The False Claims Act was originally enacted in 1863 to address fraud on the 

Government in the midst of the Civil War, and it reflects Congress’s objective to “enhance 

the Government’s ability to recover losses sustained as a result of fraud against the 

Government.” See S. Rep. No. 99-345, at 1 (1986), reprinted in 1986 U.S.C.C.A.N. 5266.  

11. As relevant here, the FCA establishes treble damages liability to the Government 

where an individual or entity:  

(A) “knowingly presents, or causes to be presented, a false or fraudulent claim for 
payment or approval,” 31 U.S.C. § 3729(a)(1)(A); or 

(B) “knowingly makes, uses, or causes to be made or used, a false record or statement 
material to a false or fraudulent claim, id. § 3729(a)(1)(B). 

In addition to treble damages, the FCA also provides for assessment of a civil 

penalty for each violation or each false claim.  “Knowing,” within the meaning of the FCA, 

is defined to include a defendant acting in reckless disregard or deliberate indifference of 

the truth or falsity of information, as well as actual knowledge of such falsity by defendant.  

See id. § 3729(b)(1).  

B.  The Madoff Fraud, the Madoff Victim Fund, and the Remission Process 

13. From as early as the 1970s through December 2008, Bernard L. Madoff perpetrated 

the largest Ponzi scheme in history, defrauding thousands of direct and indirect investors in 

Bernard L. Madoff Investment Securities LLC (“Madoff Securities”) of billions of dollars 

(the  “Madoff Fraud”).  In March 2009, Madoff pleaded guilty to eleven federal felonies, 

including securities, mail, and wire fraud, and in June 2009, Madoff was sentenced to serve 

150 years in prison and forfeit over $170 billion.    

14. The SDNY has recovered over $9 billion related to the Madoff Fraud through civil 

and criminal asset forfeiture proceedings.  



 

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15. In 2013, DOJ created the MVF to distribute certain funds forfeited to the United 

States related to the Madoff Fraud to victims pursuant to DOJ remission regulations, 28 

C.F.R §§ 9.1-9.9 (the  “Regulations”), and appointed Richard Breeden as special master to 

oversee the MVF and assist DOJ in connection with remission proceedings for victims of 

the Madoff Fraud.    

16. From November 2013 through April 2014, the MVF received remission claims 

from tens of thousands of victims of the Madoff Fraud, and in November 2017, the MVF 

began making distributions to victims whose claims were approved by DOJ.  To date, the 

MVF has made eight distributions to more than 40,000 approved claimants.  

17. The MVF remission process is governed by the Regulations and the Plan of 

Distribution for the MVF approved by DOJ.  The MVF has published the Plan of 

Distribution on its website in the form of answers to frequently asked questions since 

November 2013. 

18. The Plan of Distribution and Regulations provide, among other things, that only 

victims of the Madoff Fraud are eligible to receive remission payments from the MVF, 

meaning that claimants must have lost their own money through the Madoff Fraud.  

Specifically, the Plan of Distribution states: 

a. To be eligible to participate in payments from the MVF, a person must be a 
“victim” of the fraud perpetrated through Madoff Securities. Any person who is not a 
victim of the Madoff fraud is not eligible to receive a payment of remission. 
 

b. Federal law defines a “victim” as “any person” who suffered a “pecuniary 
loss” as a “direct result” of crime. For purposes of the MVF, you qualify as a victim if 
you lost your own money as a direct result of investments that were rendered worthless 
by the Madoff fraud. 
 

19. The Plan of Distribution further states: “A victim is the person or entity that 

suffered a pecuniary loss as a direct result of the criminality that gave rise to the forfeiture 



 

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of assets in this case. That status cannot be purchased or transferred; indeed, the forfeiture 

laws and regulations forbid it. You are either a victim or you are not.”  The Regulations 

similarly provide that purchasers of remission rights are not eligible victims.  See 28 C.F.R. 

§ 9.2 (a victim for purposes of remission is “a person who has incurred a pecuniary loss as a 

direct result of the commission of the offense underlying a forfeiture” and generally “does 

not include one who acquires a right to sue the perpetrator of the criminal offense for any 

loss by assignment, subrogation, inheritance, or otherwise from the actual victim”). 

20. The Plan of Distribution and Regulations further provide that victims may recover 

only their pro rata share of the net losses they incurred as a result of the Madoff Fraud, 

calculated on a cash-in, cash-out basis, and that any collateral recoveries the victim has 

received from any source other than the MVF must be deducted from the net loss amount.  

Specifically, the Plan of Distribution states: 

a. It is your responsibility to establish to the satisfaction of the Ruling Official 
within the Department that you suffered a specific, net loss. 
 

b. There is a limited amount of money to compensate an enormous group of 
victims, some of whom have not yet received a penny. So, no double dipping will be 
allowed, and no one is eligible to recover more than his or her actual “net loss” on a cash-
in, cash-out basis.  
 

c. The starting point in measuring your loss is all the cash you invested in 
Madoff Securities, less any cash you received back. This establishes the cash that was 
taken from you, less your recoveries during the years of the fraud. 
 

d. Once your original “net loss” is known, the Department’s regulations require 
all “collateral recoveries” you have already received, or that you will receive in the future, 
to be deducted from a claim for remission.  
 
21. The Regulations generally require remission to be granted  “on a pro rata basis … 

when petitions cannot be granted in full due to the limited value of the forfeited property,” 

28 C.F.R. § 9.8(f), and prohibit remission where the victim already has been “compensated 

for the wrongful loss” or has “recourse reasonably available to other assets from which to 



 

7 

obtain compensation for the wrongful loss,” id. §§ 9.8(b)(4), 9.2(b)(5).  The Regulations 

further require any victim receiving remission payments to reimburse the United States “to 

the extent the individual later receives compensation for the loss … from any other source.”  

Id. § 9.8(g). 

22. The Plan of Distribution defines “collateral recoveries” broadly to cover any 

compensation a victim may receive from any source.  Specifically, the Plan provides: 

a. Collateral recoveries include any payments you received from the [Securities 
Investors Protection Corporation], all bankruptcy distributions (directly or through an 
intermediary) on all accounts you held, insurance or class action recoveries, or any other 
form of compensation you have received. You will have to certify under penalties of 
perjury the completeness and the accuracy of the disclosure of your recoveries to date.  
 
23. The MVF has issued Collateral Recovery Update (“CRU”) Notices to all eligible 

claimants in advance of each of its distributions.  Completion of the CRU form attached to 

the Notice or other updated collateral recovery disclosure is a condition precedent for being 

considered for a MVF distribution.  The CRU  Notices make clear that all collateral 

recoveries must be disclosed and that collateral recoveries include compensation from any 

source, including proceeds from the sale of claims for Madoff recoveries.  For example, the 

CRU Notices provide the following: 

a. [I]f you HAVE received payment relating to your Madoff losses from your 
investment fund, from class action litigation, from bankruptcy distributions, from the sale 
of your claim, or from any other source, then you must update us on your recoveries.   
 

b. The reason MVF needs this information is simple. Federal law prohibits MVF 
from paying anyone more than their actual losses. In addition, the amount of your next 
payment will be a specific percentage of your eligible Madoff fraud loss LESS all prior 
recoveries. Without knowing your prior recoveries, we can’t determine how much you 
should be paid. 
 

c. As with all prior MVF payouts, in order to be eligible for a payment you must 
complete a collateral recovery update.  If you are eligible for a … payment, the amount of 
your payment will be the distribution target recovery percentage of your approved fraud 
loss amount, less all prior recoveries from any source and previous MVF distributions.  
Therefore, MVF must ask you to update information on your total recoveries in order to 
calculate your potential payment.  



 

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24. From 2013 through the present, the MVF posted multiple notices on its website 

providing further clarification on what constitutes a collateral recovery and further 

explaining the importance of disclosing collateral recoveries to permit the MVF to properly 

calculate remission payments.  For example: 

a. August-December 2017 Update:  MVF previously sent you a collateral 
recovery update request explaining that: “Collateral recoveries include bankruptcy 
distributions, litigation recoveries, settlement proceeds, insurance recoveries, or any other 
compensation received for your Madoff losses.” Essentially, anything you received from 
anyone due to your Madoff loss is a collateral recovery. In particular, you need to report 
to MVF all payouts from the Madoff bankruptcy, as well as any proceeds you received as 
a result of the sale or assignment of your claim in either the bankruptcy or MVF 
proceedings.  
 

b. Spring 2018 Update:  MVF calculates individual victim payments based on 
what amount is required to bring an individual victim to a total percentage recovery of 
their eligible fraud loss, including all prior recoveries from other sources (sometimes 
called “collateral recoveries”). We describe that payout percentage… as the baseline 
recovery percentage, and it is likely to go up with each MVF distribution. Because the 
amount of recoveries from all sources received by a victim is part of the payment 
computation, every victim has been asked to provide periodic updates on their own 
recoveries from sources other than MVF.  Absent disclosure of outside recoveries, some 
investors would be paid more than the recovery percentage being paid to everyone else. 
 

FACTUAL ALLEGATIONS 
 

Fulcrum Engaged in a Scheme to Fraudulently Obtain  
Inflated Remission Payments From the MVF 

 
25. From at least October 2016 through October 2022, Fulcrum violated the FCA by 

fraudulently obtaining, as a non-victim of the Madoff Fraud, remission payments from the 

MVF to which it was not entitled.  Specifically, Fulcrum purchased recovery rights from 

various Madoff Fraud victims who had submitted remission claims to the MVF and 

compelled them to transfer any remission payments they received from the MVF to 

Fulcrum.   

26. Fulcrum also fraudulently compelled the claimants whose Madoff recovery rights it 

had purchased to submit false disclosures to the MVF, concealing the amounts Fulcrum 



 

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paid for those recovery rights.   As explained above, to prevent MVF claimants from 

receiving duplicative recoveries, the Regulations and MVF Plan of Distribution require (i) 

MVF claimants to report all collateral recoveries received, including proceeds from the sale 

of any Madoff recovery rights or MVF claims, and (ii) the MVF to reduce remission 

payments by the amount of such  collateral recoveries.  Compliance with these 

requirements would have resulted in Fulcrum obtaining substantially smaller remission 

payments from the MVF.  Therefore, as a result of Fulcrum’s fraudulent concealment of 

these collateral recoveries, the MVF made inflated remission payments to the victims, 

which they in turn paid over to Fulcrum. 

A.  Fulcrum Purchased Madoff Recovery Rights From MVF Claimants 

27. Through a number of transactions during 2014-2019, Fulcrum purchased Madoff 

claims and MVF recovery rights from multiple victims of the Madoff Fraud. 

28. Luxalpha SICAV (“Luxalpha”) was a Luxembourg-based investment fund that 

operated as a Madoff Securities feeder fund, and its underlying investors suffered losses as 

a result of the Madoff Fraud.   

29. Among the persons and entities who were beneficial owners of Luxalpha shares 

were:  (i) Carac, a public pension fund based in Paris, France; (ii) a group of investors in a 

fund called “Fondaco Absolute Return,” which was managed by Fondaco SGR S.p.A. 

(“Fondaco”), an institutional asset management company based in Torino, Italy (the 

“Fondaco Investors”), including Compagnia di San Paolo (“CSP”), a foundation based in 

Torino, Italy; and  (iii) a group of individuals located in France, named Bruno Plancke, 

Michel Plancke, Olivier Plancke, Thierry Plancke, and Virginie Reant Plancke (the 

“Planckes”). 



 

10 

30. In February, March and April 2014, Carac, the Fondaco Investors, and the Planckes 

(the “Claimants”) each filed claims with the MVF seeking remission payments for losses 

they claimed to have incurred as a result of their investments in Madoff Securities through 

Luxalpha.  

31. Fulcrum subsequently purchased the Claimants’ Luxalpha shares and attendant 

rights and MVF claims.  Specifically, Fulcrum purchased Fondaco’s Luxalpha shares in 

July 2014, Carac’s Luxalpha shares in October 2014, and the Planckes’ Luxalpha shares in 

January 2019.  Fulcrum immediately resold the Fondaco and Carac shares to third parties, 

but purported to retain rights to most of the Claimants’ MVF remission payments.  In 

particular, Fulcrum entered into Purchase and Sale Agreements (“PSAs”) with Carac, CSP, 

and the Planckes pursuant to which Fulcrum purported to acquire their rights to receive 

remission payments from the MVF.    

32. Fulcrum knew that, pursuant to the Regulations and the Plan of Distribution, 

Fulcrum was not eligible to receive remission payments directly from the MVF because 

Fulcrum was not a Madoff Fraud victim and had merely purchased the Claimants’ 

Luxalpha shares and attendant rights and MVF remission claims.  Accordingly, as part of 

the PSAs, Fulcrum required Carac, CSP, and the Planckes to transfer any amounts they 

received from the MVF to Fulcrum.  Specifically, as part of the PSAs, Carac, CSP, and the 

Planckes agreed that they would retain no beneficial interest in any distributions they 

received from the MVF, that they would hold any such distributions as agents of Fulcrum, 

and that they would deliver any such distributions to Fulcrum within five days of receipt.   

B.  Fulcrum Fraudulently Directed the Claimants to Submit False Claims or 
      Statements to the MVF in Order to Obtain Inflated Remission Payments 
 
33. Fulcrum knew that, pursuant to the Regulations and Plan of Distribution, the 

Claimants were required to report to the MVF all collateral recoveries they received, 



 

11 

including proceeds from the sale of their Luxalpha shares and MVF remission claims, and 

that the MVF would reduce any remission payments to the Claimants by the amount of the 

collateral recoveries they reported.   

34. For example, in internal emails in or about August 2017, Fulcrum representatives 

circulated and discussed the MVF’s August-December 2017 Update reiterating that 

collateral recoveries, which reduce remission payments, include “any proceeds [claimants] 

received as a result of the sale or assignment of [their] claim in either the bankruptcy or 

MVF proceedings.”   

35. To ensure that the MVF would not reduce the Claimants’ remission payments by 

the amounts Fulcrum had paid the Claimants for their Luxalpha shares and attendant rights 

and MVF remission claims, Fulcrum acquired the right to control Carac’s, CSP’s, and the 

Planckes’ communications with the MVF and fraudulently required them to conceal this 

collateral recovery information from the MVF. 

36. Specifically, under the PSAs, Carac, CSP, and the Planckes granted Fulcrum 

irrevocable power of attorney with respect to the remission claims and authorized Fulcrum 

to act in each of their names, places, and steads with respect to those claims.  Further, 

Carac, CSP, and the Planckes agreed to deliver all correspondence they received from the 

MVF to Fulcrum and take all actions requested by Fulcrum to effectuate the terms of the 

PSAs. 

37. From October 2016 through October 2022, the MVF sent multiple CRU Notices to 

the Claimants requesting that they identify all compensation received from any source 

other than the MVF, including proceeds from the sale of Madoff claims.  Pursuant to the 

PSAs, Fulcrum received Claimants’ copies of the CRU Notices, and fraudulently instructed 

or otherwise caused the Claimants to submit false CRU responses to the MVF that failed 



 

12 

fully to disclose the amounts the Claimants had received from selling their Luxalpha shares 

and related rights and remission claims to Fulcrum.      

38. For example, in September 2017 and May 2019 pursuant to the PSA and at 

Fulcrum’s behest, Carac submitted two CRU responses to the MVF that falsely represented 

that Carac had received no collateral recoveries, when in fact it had received significant 

sales proceeds from Fulcrum.  

39. Similarly, from February 2017 through July 2019, pursuant to the PSA and at 

Fulcrum’s behest, CSP submitted four CRU responses to the MVF that falsely failed to 

disclose the full amount that CSP had received from Fulcrum for its Luxalpha shares and 

related rights.  CSP stated that it had sold its remission claim to an unidentified secondary 

market player for a specified amount, but this amount reflected only the smaller amount 

CSP received from Fulcrum for the purported sale of its remission rights, rather than the 

total proceeds CSP received from Fulcrum for the sale of its Luxalpha shares and related 

rights.   

40. In or about August 2017, representatives of CSP encouraged Fulcrum to reach out 

to the MVF to confirm whether the sales proceeds Fulcrum had received constituted 

collateral recoveries, but Fulcrum refused to do so, and instead insisted that CSP submit 

false disclosures to the MVF concealing the Fondaco Investors’ sale of their Luxalpha 

shares and attendant rights to Fulcrum. 

41. From February 2017 through July 2019, the Fondaco Investors other than CSP 

likewise submitted twenty-eight CRU responses to the MVF that falsely represented that 

these investors had received no collateral recoveries, when in fact they had received 

significant sales proceeds from Fulcrum.  



 

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42. From August 2019 through October 2020, pursuant to the PSA, and at Fulcrum’s 

behest, the Planckes submitted twenty CRU responses to the MVF that falsely represented 

that the Planckes had received no collateral recoveries other than those they received from 

a financial intermediary in connection with a litigation settlement, when in fact they had 

received significant additional proceeds from Fulcrum for the sale of their Luxalpha shares 

and attendant rights and MVF remission claims.   

43. Fulcrum knew that the aforementioned CRU responses that the Claimants submitted 

to the MVF were false.  

44. Fulcrum’s misrepresentations concerning collateral recoveries were material to the 

MVF’s and DOJ’s remission payment decisions.  As noted above, prior to each MVF 

distribution, MVF claimants have been required to certify under penalty of perjury to the 

truthfulness and accuracy of their CRU responses as a condition precedent to receiving a 

remission payment.  Had Fulcrum disclosed, or caused the Claimants to disclose, the 

amounts the Claimants had received from Fulcrum for the sale of their Luxalpha shares and 

attendant rights and MVF remission claims, the MVF would have reduced the Claimants’ 

respective remission payments by the amount of those sales proceeds. 

45.  As a result of Fulcrum instructing or otherwise causing the Claimants to submit 

false collateral recovery information as described above, the MVF distributed remission 

payments to the Claimants that they were not entitled to receive.  Pursuant to the PSAs, 

Carac, CSP, and the Planckes then transferred the amounts they had improperly received 

from the MVF to Fulcrum. 

 

 

 



 

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CLAIMS FOR RELIEF 

FIRST CLAIM 

Violations of the False Claims Act: Presenting False Claims for Payment 
31 U.S.C. § 3729(a)(1)(A) 

 
46. The Government incorporates by reference paragraphs 1 through 45 above as if 

fully set forth in this paragraph. 

47. The Government asserts claims against Fulcrum under 31 U.S.C. § 3729(a)(1)(A). 

48. Fulcrum knowingly, or acting with deliberate ignorance or reckless disregard for 

the truth, presented, or caused to be presented, false or fraudulent claims for payment or 

approval to the MVF in violation of 31 U.S.C. § 3729(a)(1)(A).  Specifically, Fulcrum 

fraudulently instructed or otherwise caused the Claimants to submit false claims to the 

MVF that failed to identify collateral recoveries the Claimants had received from Fulcrum 

for the sale of their Luxalpha shares and attendant rights and remission claims to the MVF. 

49. As a result of these false or fraudulent claims, the MVF made inflated remission 

payments to the Claimants to which they were not entitled.  Carac, CSP, and the Planckes 

then transferred these amounts they had unlawfully received from the MVF to Fulcrum. 

50. By reason of the false or fraudulent claims or statements that Fulcrum knowingly 

presented, or caused to be presented, for payment or approval, the Government has been 

damaged in a substantial amount to be determined at trial, and is entitled to recover treble 

damages plus a civil monetary penalty for each false claim. 

SECOND CLAIM 
  

Violations of the False Claims Act: Use of False Statements 
31 U.S.C. § 3729(a)(1)(B) 

 
51. The Government incorporates by reference paragraphs 1 through 50 above as if 

fully set forth in this paragraph. 



 

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52. The Government asserts claims against Fulcrum under 31 U.S.C. § 3729(a)(1)(B). 

53. Fulcrum knowingly, or acting with deliberate ignorance or reckless disregard for 

the truth, made, used, or caused to be made or used, false records or statements that were 

material to false or fraudulent claims for payment submitted to the MVF.  Specifically, 

Fulcrum fraudulently instructed or otherwise caused the Claimants to submit false 

disclosures to the MVF that concealed collateral recoveries the Claimants had received 

from Fulcrum for the sale of their Luxalpha shares and attendant rights and  remission 

claims to the MVF. 

54. As a result of these false or fraudulent disclosures, the MVF made inflated 

remission payments to the Claimants to which they were not entitled.  Carac, CSP, and the 

Planckes then transferred these amounts they had unlawfully received from the MVF to 

Fulcrum. 

55. By reason of these false records or statements, the Government has been damaged 

in a substantial amount to be determined at trial and is entitled to recover treble damages 

plus a civil monetary penalty for each false record or statement. 

PRAYER FOR RELIEF 

 WHEREFORE, plaintiff, the Government, requests that judgment be entered in its 

favor as follows: 

1. On the First and Second Claims for relief (violations of the FCA, 31 U.S.C. §§ 

3729(a)(1)(A) and 3729(a)(1)(B)), a judgment against Fulcrum for treble the 

Government’s damages, in an amount to be determined at trial, plus a civil penalty in the 

maximum applicable amount for each violation of the FCA by Fulcrum; 

2. An award of costs incurred by the Government pursuant to 31 U.S.C. § 

3729(a)(3); and  



 

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3. Such further relief as is proper. 

Dated: New York, New York 
 September __, 2023 
      DAMIAN WILLIAMS 

United States Attorney for the 
Southern District of New York 
       

     By:  /s/  Pierre G. Armand   
PIERRE G. ARMAND 
Assistant United States Attorney 
United States Attorney’s Office 
86 Chambers Street, 3rd Floor 
New York, NY 10007 
Tel: (212) 637-2724 
Email:  [email protected] 
Attorney for the United States of America