Madoff Investor’s Suicide Was an ‘Act of Honor,’ Brother Says

Date: Monday, January 5, 2009
Author: Alan Katz, Bloomberg

Thierry Magon de La Villehuchet’s sense of honor led the descendent of French army officers and an ennobled shipping family to commit suicide after he put his friends and family in a “catastrophic” financial situation by investing with Bernard Madoff, his brother said.

Villehuchet, 65, chief executive officer of Access International Advisors, believed that he had lost all of the funds invested with Madoff’s eponymous investment firm, including the $1.4 billion LUXALPHA SICAV-American Selection managed by Access, Bertrand Magon de la Villehuchet said in an interview.

“For him, it was a positive act of honor,” said Bertrand, 74, who lives in Paris and received a note from his brother after Thierry’s death. “He brought his friends and clients, and a lot of them were his friends, to a catastrophic situation.”

Access managed $3 billion and had 26 employees, according to marketing documents dated September. The firm’s investors last year raised the proportion of funds with Madoff to about 75 percent from 30 percent previously, because Madoff appeared to generate positive returns while many other hedge funds crumbled, said Bertrand Magon de la Villehuchet. Madoff was arrested Dec. 11 for allegedly running a $50 billion Ponzi scheme.

Bertrand Magon de la Villehuchet said he put 20 percent of his own wealth into LUXALPHA. His brother entrusted his entire fortune to Madoff.

“I was bragging at parties that I’d only lost 5 percent this year,” Bertrand said at his apartment on the Place des Vosges in Paris. “Now I guess I’ve lost 25 percent.”

Body Found

Thierry Magon de La Villehuchet’s body was found Dec. 23 with his feet propped up on his desk and a trash pail nearby to collect blood, New York Police Commissioner Raymond Kelly said. Villehuchet had cuts made by a box-cutter in the area of his biceps and his wrist, and pills were found nearby.

His death came as lawsuits mounted in connection with investors victimized by Madoff. Fairfield Greenwich Group, a hedge-fund firm that had $7.5 billion invested with Madoff, has been sued for allegedly failing to protect its clients’ assets. Madoff is now under house arrest at his apartment in New York.

Villehuchet was chairman and CEO of Credit Lyonnais Securities USA, the U.S. investment banking arm of the French bank, according to Access marketing documents. Prior to joining Credit Lyonnais in 1987, he ran Interfinance, an international broker specializing in French, Belgian and Italian stocks that he founded in 1983. He worked at Banque Paribas from 1970 to 1983.

Prince and Princess

Villehuchet founded Access in 1994 with Patrick Littaye, whom he had met at Paribas in 1970. Littaye, 69, also received a letter from Villehuchet.

“He assured me of his friendship and asked me to look out for his wife,” Littaye said in a telephone interview from Brussels.

One of the firm’s partners was Philippe Junot, according to the marketing documents. Junot is the former husband of Princess Caroline of Monaco. Prince Michel of Yugoslavia is an investor relations executive, according to the documents.

Those contacts helped the firm attract clients.

Liliane Bettencourt, the world’s wealthiest woman, also lost money through Access after she entrusted part of her $22.9 billion fortune to the fund manager, two people familiar with the matter said. The 86-year-old daughter of L’Oreal SA founder Eugene Schueller was the first investor in the LUXALPHA fund, the people said, speaking on condition of anonymity because her investment isn’t public.

Access registered in Luxembourg to manage funds there on July 3, 2003, according to documents held by the Luxembourg register of companies, the Registre de Commerce et des Societes. Among shareholders were Banque Degroof Luxembourg SA.

Jean Peeters, marketing and communications manager of Banque DeGroof in Brussels, said he couldn’t comment.

Concentration Risk

The proportion of Access’s fund with Madoff rose to around 75 percent by December 2008 because of his perceived performance.

“We expected our investors would diversify naturally in 2009 as other managers who hadn’t done well this year, but who are good managers, had rebounds that would make them look better than Madoff,” Littaye said. “We didn’t worry enough about the concentration risk.”

After years as a money manager, Thierry’s passion remained sailing, Bertrand said. From the age of six, the Paris-born Thierry was most at home on a boat, engaging in regattas and aspiring to become a naval officer. He went to university in Paris instead and studied economics after eye exams showed his vision was too poor to be accepted into the officer corps.

Provincial Aristocracy

His move into finance was unplanned, yet was in line with the family trend, said Bertrand, who owned a media and publishing company and is now retired. Thierry’s parents were the first of his family to hold “regular” jobs -- his father was an insurance broker and his mother the editor of a French home and garden magazine. The two boys and their sister grew up in a house in Paris’s 16th arrondissement, Bertrand said.

“Traditionally, the provincial French aristocracy didn’t care at all about business,” Bertrand said. “They only cared about their land and they all ended up penniless, just like my family, and my parents were determined to change that.”

Yet a whiff of the old ways clung to Thierry, who also sent letters explaining his decision to his wife, Claudine, and another associate, Bertrand said.

“He didn’t go around like an old aristocrat from 1750,” Bertrand said. “He was a modern man, but there is an essence of that honor that has stayed with our family.”

To contact the reporter on this story: Alan Katz in Paris at akatz5@bloomberg.net.