NEW YORK, Sept 22 (Reuters) - A U.S. judge has again thrown out a $3 billion lawsuit by investors in two "feeder funds" that sent money to Bernard Madoff, one of the largest lawsuits tied to his Ponzi scheme, after her original dismissal had been overturned.
In a 145-page decision released on Thursday, U.S. District Judge Deborah Batts in Manhattan said the investors lacked standing to pursue all 28 claims against Tremont Group Holdings Inc and other managers, consultants, administrators and auditors for Kingate Global Fund Ltd and Kingate Euro Fund Ltd.
Applying the laws of Bermuda and the British Virgin Islands, Batts said the investors' claims overlapped those belonging to the funds themselves, and that letting them go forward could result in a "double recovery" from the defendants.
"Plaintiffs have not alleged sufficient wrongdoing on the part of the defendants that would incapacitate the funds from bringing their claims, as is required," Batts wrote.
The decision is dated Wednesday. It was issued 17 months after the federal appeals court in Manhattan revived the case, saying a 1998 federal law meant to thwart abusive securities litigation did not preclude the lawsuit.
Investors accused the Kingate funds of investing $1.73 billion with Bernard L. Madoff Investment Securities LLC from 1994 to 2008.
They said the value of these investments had grown to more than $3 billion, based on account statements from Madoff now known to be bogus, by the time the con man's Ponzi scheme was uncovered in December 2008.
In her decision, Batts said 10 of the 28 claims were precluded under the 1998 law, and there was not enough evidence supporting eight claims.
She said the final 10 claims, including gross negligence, did not exist under Bermuda and British Virgin Islands law.
Batts previously dismissed the case in March 2011.
Seth Schwartz of law firm Skadden, Arps, Slate, Meagher & Flom representing Tremont said the decision "finally lays to rest the numerous claims" brought by the investors.
David Barrett, a Boies, Schiller & Flexner lawyer representing the investors, said his clients are reviewing their next steps. "We are gratified that the court ruled in our favor on some issues," he said.
Litigation by Madoff feeder fund investors is separate from litigation by Irving Picard, a court-appointed trustee who has recouped $11.22 billion for investors with Madoff himself.
Madoff, 78, is serving a 150-year prison term.
The case is In re: Kingate Management Ltd Litigation, U.S. District Court, Southern District of New York, No. 09-05386. (Reporting by Jonathan Stempel in New York; Editing by Cynthia Osterman)
