In the first trial of an auditor arising from Bernie Madoff’s Ponzi scheme, a Washington state jury has found Ernst & Young liable for the losses of an investment firm that invested $200 million with Madoff through a feeder fund.

FutureSelect Portfolio Management claimed it was entitled to recoup a portion of its $112 million in losses from Ernst & Young because the Big Four firm failed to properly audit Rye Funds, which were managed by Tremont Group Holdings.

The jury in Seattle found E&Y liable for half of the $20.3 million in damages it awarded FutureSelect. With interest, the firm is on the hook for about $25 million, a FutureSelect lawyer told Bloomberg.

“The one jury that has heard these facts has said that an auditor’s job is to be the gatekeeper and Ernst & Young didn’t do its job,” Steven Thomas, FutureSelect’s attorney, said. “In the biggest fraud in history, Ernst & Young didn’t do its job.”

An Ernst & Young spokeswoman said the firm is considering an appeal and doesn’t believe it was responsible for the investors’ losses. “While we regret the investors’ losses, no audit of a Madoff-advised fund could have detected this Ponzi scheme,” Amy Call Well said.

Tremont was the second-biggest feeder into Madoff’s multibillion-dollar fraud after Fairfield Greenwich Group. FutureSelect alleged that Ernst & Young, which audited Tremont’s funds from 2000 to 2003, would have uncovered the fraud if it had taken even the most basic steps to verify Madoff’s assets.

According to Thomas, E&Y relied on information provided by Madoff or his firm when it vouched for the accuracy of financial statements. “Because Ernst & Young said the numbers were good, FutureSelect invested. Ernst & Young said over $4.2 billion in assets were real; they were fake,” he told the jury.

Ernst & Young lawyer James Bennett said the onus was on investors like FutureSelect to research its investments, and they could have concluded that the returns that Madoff offered “were too good to be true.”

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