Foundation That Is Tied to Madoff Faces Suit

A major investor with Bernard Madoff who ran a well-known philanthropic fund received annual returns of as high as 950% and sought "fictitious gains" for numerous accounts, alleged the trustee of Mr. Madoff's investment firm in a lawsuit Tuesday.

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William Zabel, a lawyer for the Picowers, said they were "totally shocked" by Mr. Madoff's fraud and "were in no way complicit in it." He said they and their foundation, now closed, lost billions.

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Mr. Picard's suit alleges that in several instances Mr. Picower or an associate of his directed the Madoff firm to credit certain gains to his accounts, including gains that would be applied to prior months and years. By asking to "backdate" gains more than a year in the past, the lawsuit says, Mr. Picower and others at his firm "knew or should have known that they were participating in fraudulent activity."