The Madoff Ponzi scheme scandal is sparking an explosion oflegal actions that will likely hit fund investors, as well asinsurers, auditors and lawyers, among others, a panel of legalexperts advised today.

Their comments came during a Webinar organized by New York-basedconsulting firm Advisen, which included David Bradford, Advisenexecutive vice president and chief knowledge officer; Mike Adler,vice president of Ironshore Claims LLC; Ray DeCarlo, Frank Crystal& Company senior management director; Marshall Gilinsky, ashareholder in Anderson Kill & Olick; and Karen Mariscal,counsel with Edwards Angell Palmer & Dodge.

Mr. Adler said hedge funds and other firms that invested withthe Bernard Madoff investment fund operation, includingnot-for-profits, are likely to be targeted for litigation.Defendants will include directors and officers, as well asfinancial advisors, auditors and attorneys. Actions will also befiled between insureds and insurers, along with suits coming fromattorneys general and securities regulators.

The losses created by Mr. Madoff's rob-Peter-to-pay-Paul pyramidscheme, Mr. DeCarlo noted, are "enormous" and litigation is likelyto dwarf actions that resulted from the Enron scandal, optiontiming cases and subprime investments.

Causes of action, he said, could include lack of due diligenceand failure to diversify, and there will be issues over how gainsfrom the fund should be apportioned against market losses.

As Mr. DeCarlo described matters, there are "thousands of funds"involved, and "we don't know how many got caught up in this."

Mr. Gilinsky said policies that could provide coverage fordamage related to the Madoff fund could include coverage for errorsand omissions and directors and officers, as well as coverage formisdeeds by investment advisors, accountants and auditors.

He also mentioned general partners legal liability, commercialgeneral liability, crime and fidelity bond, and homeownersprotection against theft of securities. "Leave no insurance policyunturned," he counseled.

Ms. Mariscal said insurers hit with Madoff claims could seek torescind D&O and E&O policies on the basis thatmisrepresentations were made to secure the coverage concerning duediligence.

Mr. Madoff's scheme, she said, was "brilliant. He even got hisauditor not to ask questions."

She said Mr. Madoff had told investors if they asked for hismethods they would be thrown out of his fund. Insurers, she said,will probably initially take a wait-and-see attitude to find outwhat the fallout is from revelations about the Madoff fund and willlikely rescind coverage where they believe the insured was in onthe scam.

Defense costs from Madoff cases, she advised, are likely to behigh.

Panelists said that investors could be the subject of "clawback"suits from the Madoff fund bankruptcy trustee looking to recoupwhat they earned.

Nonprofits, they said, could be hit with suits from donorscharging mismanagement of charitable assets by failure todiversify.

Mr. DeCarlo said there would not be enough insurance coverage tocover the $50 billion Mr. Madoff's scheme is said to havevaporized.