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					Case 1:10-cv-20695-FAM                   Document 1        Entered        on      FLSD Docket 03/08/2010        Page         1 of 69


                                                                                                         FILED by                         D.C.

                                                                                                               MAR 0 8 2010
                                          UNITED STATES DISTRICT COURT
                                                                                                         STEVEN       1% LARM4ORE
                                      FOR THE SOUTHERN DISTRICT OF FLORIDA                               CLERK Li       S. DIST CT
                                                                                                          3,   p.   of FLA     MIfli

                                          CASE NO.




                                                                                       JURY TRIAL DEMANDED
    SOLYMAR            INVESTMENTS,
                                  LTD, a Cayman
   Islands Corporation, ASTROLITE INVESTMENTS,
   LTD., a Cayman Islands corporation, ETERNALITE
   INVESTMENTS,         LTD., a    Cayman   Islands
   corporation, SUNRAYS INVESTMENTS, LTD., a
   Cayman Islands corporation,


                                           Plaintiffs,

                 against

   BANCO    SANTANDER,     S.A.,    BANCO:
   SANTANDER INTERNATIONAL,     SANTANDER:
   BANK   AND    TRUST,  LTD.,    OPTIMAL:
   INVESTMENT   SERVICES  S.A.,    MANUEL:
   ECHEVERRIA FALLA, MANUEL SANCHEZ:
   CASTILLO, and ANA MARIA JAUREGUIZAR

                                                         Defendants.




    BANK   OFAMERICA TOWER                                                                          WESTON CORPORATE CENTER
           SUITE 1200                                                                                         SUITE 317
   100 SOUTHEAST 2ND S'FREET                        LASH &GOLDBERG,
                                                              ATTORNFY, AT I AW
                                                                                                         2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050   FAX
                                                          www.lashgoldberg.com                     954   384   2500   954    384   2510   FAX
Case 1:10-cv-20695-FAM                     Document 1     Entered       on      FLSD Docket 03/08/2010    Page       2 of 69

                                                                                   CASE NO.


                                                   TABLE OF CONTENTS


                                                                                                               Page
   I.           NATURE OF THE ACTION                                                                            4

   II.          THE PARTIES                                                                                     7

   III.         RELEVANT NON-PARTIES                                                                            12

   IV.          SUBJECT MATTER JURISDICTION AND VENUE                                                           13

                A.       The Court Has Subject Matter Jurisdiction Pursuant
                         to TheEdge Act                                                                         14

                B.       The Court Has Subject Matter Jurisdiction Pursuant
                         to the Securities Exchange Act of 1934                                                 15

                C.       The Court Has Subject Matter Jurisdiction and
                         Personal Jurisdiction Over Echeverria Because BMIS Acted
                         as Agent and Attorney-In-Fact of Optimal SUS                                           23

   V.           SUBSTANTIVE ALLEGATIONS                                                                         24

                A. Plaintiff's         Relationship With Santander                                              24

                B. The Madoff Fraud                                                                             52

   COUNT I               BREACH OF FIDUCIARY DUTY AGAINST
                         SANTANDER SPAIN, SANTANDER MIAMI, SANTANDER                                 BAHAMAS,
                         SANCHEZ CASTILLO, AND JAUREGUIZAR                                                      92

   COUNT II              GROSS NEGLIGENCE AGAINST SANTANDER SPAIN,
                         SANTANDER MIAMI, SANTANDER BAHAMAS,
                         SANCHEZ CASTILLO, AND JAUREGUIZAR                                                      96

   COUNT III             NEGLIGENCE AGAINST SANTANDER SPAIN,
                         SANTANDER MIAMI, SANTANDER BAHAMAS,
                         SANCHEZ CASTILLO, AND JUAREGUIZAR                                                      99

   COUNT IV              BREACH OF FIDUCIARY DUTY AGAINST OIS,                           ECHEVERRIA,
                         AND SANTANDER SPAIN                                                                    102

   COUNT V               GROSS NEGLIGENCE AGAINST, OIS,                          ECHEVERRIA,   AND
                         SANTANDER SPAIN                                                                        108




   BANK    OF   AMERICA TOWER                                   2                                 WESTON CORPORATE CENTER
            SUITE 1200                                                                                      SUITE 317
   100   SOUTHEAST 2ND STREET                         LASH &GOLDBERGHT
                                                             ATTt-TNEW AT LAW
                                                                                                       2500 WESTON ROAD
   MIAMI, FI.ORIDA     3313i-2158                                                                FT. LAUDERDALE, FI.ORIDA 33331
 305 347 4040     305 347 4050   FAX
                                                         www.lashgoldberg.com                    954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                Document 1   Entered          on        FLSD Docket 03/08/2010         Page        3 of 69

                                                                                CASE NO.


   COUNT VI             NEGLIGENCE AGAINST OIS,             ECHEVERRIA,
                        AND SANTANDER SPAIN                                                                         111

   COUNT VII            UNJUST ENRICHMENT AGAINST OIS, SANTANDER
                        MIAMI AND SANTANDER BAHAMAS                                                                 114

   COUNT VIII PURSUANT TO FLORIDA STATUTE SECTIONS 517.301
              AND 517.211 AGAINST SANTANDER MIAMI,
              SANTANDER BAHAMAS, OIS, SANCHEZ CASTILLO,
              AND JAUREGUIZAR RELATED TO MADOFF INVESTMENTS...                                                      116

   COUNT IX             FOR VIOLATIONS OF RULE 10b-5(b) AND SECTION 10(b)
                        OF THE EXCHANGE ACT AGAINST SANTADER MIAMI,
                        SANTANDAR BAHAMAS, OIS, AND ECHEVERRIA                                                     121

   COUNT X              FOR VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE
                        ACT AGAINST SANTANDER SPAIN AND ECHEVERRIA                                                  126

   COUNT XI             FOR DECLARATORY RELIEF RELATED TO THE
                        "EXCHANGE AGREEMENT"                                                                        127

   PRAYER FOR RELIEF                                                                                                138

   JURY TRIAL DEMAND                                                                                                139




    BANK   OF AMERICA TOWER                                3                                    WESTON CORPORATE CENTER
            SIAM 1200                                                                                     SUITE 317
   100   SOUTHEAST 2ND STREET                 LASH &GOLDBERG„,,
                                                       A-Eall(NF, S AT I AW
                                                                                                     2500 WESTON ROAD
    MIAMI, FLORIDA    33131-2158                                                               FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050   FAX
                                                   www.lashgoldherg.com                         954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                       Document 1             Entered         on       FLSD Docket 03/08/2010             Page 4 of 69

                                                                                                CASE NO.




                                                                      COMPLAINT

                Plaintiffs SOLYMAR INVESTMENTS, LTD., ASTROLITE INVESTMENTS, LTD.,

   ETERNALITE                  INVESTMENTS, LTD., and SUNRAYS INVESTMENTS, LTD. (collectively

   "Plaintiffs") herby              sue    Defendants BANCO SANTANDER, S.A.                           ("Santander Spain"),          BANCO

   SANTANDER INTERNATIONAL                                 ("Santander Miami"), SANTANDER BANK AND TRUST,

   LTD.      ("Santander Bahamas"),                OPTIMAL INVESTMENT SERVICES S.A.                                   ("OIS") (collectively
   the     "Santander           Entities"),       MANUEL           ECHEVERRiA                   FALLA    ("Echeverria"),         MANUEL

   SANCHEZ CASTILLO                        ("Sanchez Castillo"),        and ANA MARIA JAUREGUIZAR                          ("Jaureguizar")

   (collectively,          the "Santander           Individuals")       for compensatory              damages, punitive damages,

   declaratory relief, pre-judgment interest, post-judgment interest, attorneys'                                       fees and costs and

   other relief as set forth herein               as    follows.

   I.           NATURE OF THE ACTION

                1.          Plaintiffs      are   and   were   at all times relevant hereto             personal      investment     holding

   companies based              in the     Cayman Islands          owned    by two related shareholders who are citizens                  and

   residents of the            Republic      of Panama. The          companies' only business                is the   holding   of financial

   assets.


                2.          Plaintiffs seek redress for Defendants' violations of their statutory and                              common


   law duties and           responsibilities as Plaintiffs'           investment managers, advisers and custodian.

                3.          Plaintiffs' claims arise from two                  sources.         First, Defendants recommended and

   implemented            an   investment strategy that             directly       contravened Plaintiffs' stated          objectives     and

   risk tolerance in order to generate substantial fees in total                                 disregard    of Defendants'       fiduciary
   duties to Plaintiffs.                  This is the     principal    basis for Plaintiffs' claims from which the most

   substantial         damages arise.

    BANK   OFAMERICA TOWER                                                 4                                            WESTON CORPORATE CENTER
           SUITE 1200                                                                                                           SUITE 317
   Too SOUTHEAST 2N1) STREET                                 LASH &GOLDBERG.
                                                                       A 1-TORNEY,, 1- LAW
                                                                                                                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
 303 347 4040        305 347 4050   FAX
                                                                   W/Ww.lashgoldberg.com                               954 384 2300 954 384 2510 FAX
Case 1:10-cv-20695-FAM                       Document 1               Entered             on       FLSD Docket 03/08/2010                  Page         5 of 69

                                                                                                      CASE NO.


                4.          Second, Defendants violated                   state and federal securities laws and                      regulations by

   negligently, recklessly,                 and/or       intentionally making deceptive                          and untrue statements and

   omissions of material fact to induce Plaintiffs to                                       purchase         shares of fraudulent investments


   placed       with Bernard L. Madoff                      ("Madoff') through                     his investment firm Bernard L. Madoff

   Investment Securities LLC                    ("BLMIS").           As      a   result of Defendants'             intentional, reckless and/or

   negligent conduct, Plaintiffs have                       suffered substantial               damages.
                5.          With     regard     to   the first   source          of harm, Defendants Santander Miami, Santander

   Bahamas and their officers,                   employees          and agents           Jaureguizar, Javier Echave,               Sanchez Castillo,


   Miguel        Barron and Sandra Reif                 promised         to:     (a)    construct a well diversified and low                      volatility
   investment program;               (b) continually monitor and rebalance the program to track                                a    modest 3 month

   LIBOR         plus     3% benchmark               (the    "3L3    Benchmark"); and (c) "preserve capital                           and achieve              a



   modest rate of return."

                6.         Instead, Defendants Santander Miami, Santander Bahamas, Jaureguizar, Echave

   and Sanchez Castillo,                  Miguel      Barron and Sandra Reif                       utterly   failed to deliver the competent                  or



   comprehensive investment advisory services, low volatility, broad diversification and rebalancing to

   closely      track the 3L3 Benchmark                     they promised Plaintiffs, resulting                  in   significant    financial losses

   well in       excess     of what Plaintiffs would have suffered had Defendants fulfilled their duties and


   promises. These losses                 are   in addition to and exceed the losses Plaintiffs suffered                            as a   result of the

   Madoff fraud further described below.                            As   a    result, Plaintiffs incurred substantial damages for

   which    they seek redress.

                7.         With      regard     to the Madoff related                 claims, BLMIS operated                as a   Ponzi scheme in

   that the money received from                      investors, including Plaintiffs,                  was    not set aside to     buy securities as

   purported, but instead,                was   primarily used to make the distributions to,                          or   payments       on     behalf of,



    BANK   AMERICA TOWER
           OF                                                                     5                                            WESTON CORPORATE CENTER
         SUITE 1200                                                                                                                    SUITE 317
   WO SOUTHEAST 2ND STREEr                                      LASH &GOLDBERG,
                                                                             AF1A, RNEYS AI I AW
                                                                                                                                    2500 WESTON ROAD
                                                                                                                              FT. LAUDERDALE, FLORIDA 33331
   MIAMIFIDRIDA 33131-2158
  305 347 4040       305 347 4050   FAX
                                                                     WWW.lashgoldberg.com                                     954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                       Document 1           Entered            on       FLSD Docket 03/08/2010                      Page   6 of 69

                                                                                                 CASE NO.


   other investors. The money sent to BLMIS for investment                                       was         simply used to keep the operation

   going    and to enrich                 Madoff, his associates and others, including the Defendants, until the

   requests for redemptions in December 2008 overwhelmed the flow of                                                      new      investments and

   caused the Ponzi scheme to                    collapse.

                8.           On December 11, 2008, Madoff's Ponzi scheme                                     was   disclosed to the       public. The

   U.S. Government filed criminal                     charges against           Madoff to which Madoff                     plead guilty, and the

   SEC is       investigating BLMIS               and related entities. Madoff is                 now         incarcerated in federal       prison.

                9.           Madoff could not perpetrate the fraud                              on      his     own.      Defendants facilitated

   Madoff's fraud              by investing        billions of dollars of their clients' money,                                including    Plaintiffs'


   money, with Madoff and his related entities without                                   conducting adequate               due    diligence, despite
   the existence of obvious "red                   flags"    that did   or     reasonably            should have revealed the fraudulent

   nature       of Madoff's           operations      to   Defendants,          who touted themselves                     as    highly    skilled and


   professional          investment advisers and investment fund managers.

                10.          Optimal Multiadvisors,            Ltd.     ("Optimal Funds"), through                         its sub-fund       Optimal

   Strategic         US      Equity,      Ltd.   ("Optimal SUS"),          acted         as one       of the "feeder funds" that               helped
   Madoff perpetuate the fraud. The vast                       majority       of the          capital    of the     Optimal     SUS sub-fund      was



   invested with Madoff and his related entities. OIS                                 was      the fund manager for the               Optimal     SUS

   fund.        Echeverria          was     the Chief Executive Officer and Chief Investment Officer of OIS.

   Santander          Spain,    in turn, owned OIS.

                11.          On December           14, 2008, Santander Spain issued                            a   press release in response to

   Madoff's arrest. The press release disclosed that Santander                                       Spain's clients'          exposure to Madoff


   through       the    Optimal        SUS Fund reached          approximately                   2.33 billion          ($3.1 billion).      Santander

   Spain's       clients' losses from Madoff investments                        are    by     far the        largest reported by      a   single bank.


    BANK   OF   AMERICA TOWER                                               6                                                    WESTON CORPORATE CENTER
            SUITE     1200                                                                                                                 SUITE 317
   100 SOUTIIEAST 2ND STREET                                 LASH &GOLDBERG
                                                                        ATTOI2NEYS AI I AV/
                                                                                                     LI l'                            2500 WESTON ROAD
                                                                                                                                FT. LAUDERDALE, FIORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040       305 347 4050   FAX                          WWW.lashgoldbcrg.com                                           954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                          Document 1                   Entered       on       FLSD Docket 03/08/2010                   Page        7 of 69

                                                                                                      CASE NO.


   Santander           Spain itself reported losses of only                            17 million         22.61     million) due       to the Madoff


   fraud.

                 12.           Similarly,      Santander's            Proprietary Optimal Arbitrage Fund                    had monies invested

   with Madoff, and those funds                          were   also lost.

                 13.           Plaintiffs invested and retained substantial                           sums   with   Optimal        SUS and         Optimal

   Arbitrage           based        on   the recommendation of Defendants Santander Miami,                                  Jaureguizar,           Sanchez

   Castillo, and non-parties Javier Echave, Miguel                                         Baron and Sandra Reif.                  Echave, Sanchez

   Castillo, Baron and Reif                        were     Plaintiffs' investment advisors                  during   the    course        of Plaintiffs'

   relationship           with Santander Miami.                        Plaintiffs' investments in the                 Optimal        SUS Fund              are



   worthless and               a   portion of their investments               in the     Optimal Arbitrage          Fund    are   worthless because


   they were           invested with Madoff. As                   a   result, Plaintiffs suffered substantial damages.

                 14.           In    addition,      as   explained       in detail       below, Plaintiffs seek         a   declaratory judgment

   declaring       the         "Exchange Agreement"                   that   was    negotiated         in connection with the          parties' initial
   settlement discussions                   regarding the         Madoff related          claims,     to be void ab initio because the               parties
   never     reached           a   final, enforceable agreement and because the Exchange Agreement,                                    in   general, and
   the arbitration             provision,     in   particular,     were      procured by fraud.          A copy of the      Exchange Agreement
   is attached hereto               as   Exhibit    "I."!

   II.           THE PARTIES

                 15.           Plaintiffs     are    and     were at      all times relevant hereto             personal investment holding

   companies           based in the           Cayman         Islands. Their            only     business is the     holding       of financial assets.

   The two individual shareholders                          are   citizens and residents of the              Republic   of Panama.



    Certain confidential personal and financial information has been redacted from the exhibits and in the attachments
   to the Complaint filed with the Court to protect Plaintiffs' privacy. In addition, only the first name of Plaintiffs'
   director is disclosed in the Complaint to protect privacy. Reference to "Victor" is to Plaintiffs' U.S. corporate
   counsel.

    BANK    OF   AMERICA TOWER                                                     7                                              WESTON CORPORATE CENTER
             SUITE     12.00                                                                                                              SUITE 317
   100   SOUTHEAST      2ND    STREEJ                              LASH &GOLDBERG',
                                                                               Al ILILNEYS WI LAW
                                                                                                                                    2500 WESTON ROAD
                                                                                                                              FT. LAUDERDALE, FI.ORIDA
   MIAMI, FLORIDA 33131-2158                                                                                                                                          33331
 305 347 4040      305 347 4050       FAx
                                                                         www.lashgoldberg.com                                 954    384   2.500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                      Document 1             Entered          on      FLSD Docket 03/08/2010              Page         8 of 69

                                                                                               CASE NO.


                 16.       Defendant Banco Santander, S.A. is the parent bank of                                  Grupo Santander, the

    leading      financial institution in           Spain„   and   one   of the      largest financial conglomerates           in the world.

    As of the end of the second quarter                       2009, Santander had total                assets    exceeding $1.5         trillion

    dollars,     more     than 132, 000            employees,      and the        largest     market   capitalization      of any bank in

    continental         Europe. Through wholly owned subsidiaries, Santander has                                numerous       offices in the

    United States,         including Miami,           New     York, Houston, Los Angeles, San Diego and Seattle. Its

    corporate headquarters              are   located in Ciudad            Grupo Santander, Avda.               de Cantabria     s/n,    28660

    Boadilla del Monte            (Madrid), Spain.

                17.        Santander        Spain     conducts substantial and not isolated                     activity   in the state of

    Florida and either           directly     or   through its agents         committed tortious acts in and from the State of

    Florida      as    alleged    herein.      Santander's continuous and not-isolated contacts with the United

    States and Florida          are    further evidenced       by the following:

                           a.          Santander has submitted annual reports to the SEC pursuant to the


    Exchange           Act since 1999       by filing   Forms 20-F. As set forth in the Form 20-F filed                         on    June 30,

    2009, for the annual period ending December 31, 2008, Santander had three different securities

    registered with the          SEC:    (i) American Depositary Receipts,                     each   representing the right to         receive

    one    Share of       Capital      Stock of Santander           ("ADRs"), (ii)            shares of   Capital Stock,      and    (iii)   non-



    cumulative          guaranteed preferred          stock of Santander Finance. The ADRs trade                         on   the New York

    Stock   Exchange.           There    were      8.0 billion shares of capital stock                outstanding   as   of December 31,

    2008.


                           b.          Santander's contacts with and business activities in the United States and

   the State of Florida           are   further established        by the following:




    BANK    AMERICA TOWER
           OF                                                               8                                        WESTON CORPORATE CENTER
          SUITE 1200                                                                                                           SUITE 317
   100 SOUTHEAST 2ND STREET                                  LASH                OLDBERGILI
                                                                         ATTORNEYS AT LAW
                                                                                                                          2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                   www.lashgoldberg.com                             954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                          Document 1      Entered      on      FLSD Docket 03/08/2010             Page        9 of 69

                                                                                       CASE NO.


                                                  Santander has permanent offices located at 45 East 53rd Street,

   New         York, New York 10022. Santander also has                       a   permanent office located       at 1401 Brickell


   Avenue, Miami, Florida 33131.

                                                  An SEC No Action            Letter, dated August 18, 2008,              states that


   Santander also conducts securities business in the continental U.S.                         through   Santander Investment

   Securities Inc., Banesto                Securities, Inc., and Abbey National Securities,         Inc.

                                                  Santander has at least 28 different subsidiaries in the United States,

   as    set   forth in its 2007 Form            20-F.2

                                   iv.            On      January 30, 2009, Santander acquired Sovereign                        Bank.

   Sovereign           Bank     was    the 19th    largest financial institution        in the United States,    by assets,         as    of

   December 31, 2007, per its last annual report.                          Sovereign Bank's       current home page            on        the



   2
         The 28 subsidiaries   (1) Abbey National (America) Holding, Inc., 100% indirectly owned,
                                         are:

   holding company; (2) Abbey National Employment Services Inc., 100% indirectly owned,
   employment services; (3) Abbey National North America Corporation, 100% indirectly owned,
   finance; (4) Abbey National North America LLC, 100% indirectly owned, finance; (5) ANSI,
   100% indirectly owned, Broker-Dealer; (6) ANFP (US) LLC, 100% indirectly owned, finance;
   (7) Santander Miami, 95.89% directly owned, banking; (8) Santander Puerto Rico, 90.59%
   indirectly owned, banking; (9) Banesto Delaware Inc., 89.19% indirectly owned, finance; (10)
   Banesto Securities, 89.19% indirectly owned, finance; (11) BST International Bank, Inc.,
   99.72% indirectly owned, banking; (12) Crefisa, Inc., 100% directly owned, finance; (13) Island
   Insurance Corporation, 90.59% indirectly owned insurance; (14) NW Services CO, 88.40%
   indirectly owned, e-commerce; (15) Santander Asset Management Corporation, 90.59%
   indirectly owned, asset management; (16) Santander BanCorp, indirectly owned, holding
   company; (17) Santander Central Hispano Finance (Delaware) Inc., 100% directly owned,
   finance; (18) Santander Consumer USA Inc., 90% directly owned, finance; (19) Santander
   Financial Services, Inc., 90.59% indirectly owned; lending company; (20) Santander Insurance
   Agency, Inc., 90.59% indirectly owned; insurance brokerage; (21) Santander International Bank
   of Puerto Rico, Inc., 90.59% indirectly owned; banking; (22) SIS, 100% indirectly owned,
   registered broker-dealer; (23) Santander Overseas Bank, Inc., 100% indirectly owned; banking;
   (24) Santander PR Capital Trust I, 90.59% indirectly owned, finance; (25) Santander Private
   Advisors, Ltd., 100% directly owned, holding company; (26) Santander Securities Corporation,
   90.59% indirectly owned; broker-dealer; (27) Totta & Acores Inc. Newark, 99.72% indirectly
   owned; banking; and (28) Universia Puerto Rico, 100% indirectly owned; internet. (See 2007
   Form 20-F at F-206-217).

   BANK    OF   AMERICA TOWER                                         9                                     WESTON CORPORATE CENTER
               SUITE   1200                                                                                        SUITE 317
   100   SOUTHEAST      2ND   STREET                        LASH &GOLDBERG,
                                                                   AIL,
                                                                     NRNEYS Ar LAW
                                                                                                                 2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                              FT. LAUDERDALE, FLORIDA 33331
 305 347 4040 305 347 4050 FAX                                 www.lashgoldberg.com                        954   384   2500   954   384 2510   FAX
Case 1:10-cv-20695-FAM                  Document 1         Entered        on        FLSD Docket 03/08/2010                          Page        10 of 69

                                                                                           CASE NO.


    internet states, at the top and in bold red letters, "Santander,                        Sovereign is now part of one of the

   world's        largest      and safest banks."      (emphasis      in    original). Sovereign has                    750 branches and


    2, 300 ATMs in the United States.

                                  v.           Santander has been       registered          to conduct business in Florida since


    May 9, 1980,           and files annual reports with the Florida                        Department          of State.           Santander's


   registered agent is John Villamil Morel,              c/o Santander              Miami,    1401 Brickell           Avenue, Suite 1500,

    Miami, Florida 33131.

                                  vi.          Santander is   planning          to build a new                84-story office             tower in


    downtown Miami.

                18.       Defendant Banco Santander International                             is   a   wholly     owned            subsidiary         of

    Santander         Spain,    which conducts business in the United States                           as an    Edge         Act    corporation

    organized         under Section 25A of the Federal Reserve Act, 12 U.S.C.                                    611 et seq. Santander

    Miami is          supervised by      the Federal Reserve Board.                  Its   headquarters         are    in    Miami,       at    1401

    Brickell Avenue, Miami, Florida 33131. It also has offices in New York, Houston, Los                                                  Angeles,

    San    Diego,      and Seattle. In 2007, it earned $233 million in net income, had total assets of $42

    billion, and had loans outstanding of approximately $32 billion. Santander Miami conducts

    substantial and not isolated activities in the State of Florida and, either                                 directly       or   through the

    acts of its       officers, employees, and/or agents committed tortious                            acts   in and from the State of

    Florida      as   alleged herein.

                19.       Defendant Santander Bank and Trust, Ltd. is                        an    indirect wholly owned              subsidiary

    of Santander         Spain,   which is located at P.O. Box N-1682 Bahamas Financial Center, Charlotte &


    Shirley Streets, Nassau,            Bahamas. Santander Bahamas                  was    the custodian for Plaintiffs' accounts.

    Santander Bahamas served              as   the custodial bank for the Plaintiffs' funds, but its                         relationship        with



    BANK   OFAMERICA TOWER                                        10                                                   WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
   100 SOUTHEAST 2ND STREET                            LASH &GOLDBERG'',
                                                               Ant /RNEYS Al I AW
                                                                                                                              2500 WESTON ROAD
                                                                                                                      FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    303 347 4050   FAX                       www.lashgoldberg.com                                        954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                          Document 1           Entered        on       FLSD Docket 03/08/2010                    Page        11 of 69

                                                                                                CASE NO.


    Plaintiffs    was        managed exclusively by employees, officers and/or directors of Santander                                             Miami

    located in         Miami, Florida.                 Business and communications between Plaintiffs and Santander

    Bahamas       were        conducted almost              exclusively through mail,           email and facsimile between Plaintiffs

    and Santander Miami's                  employees,         officers and/or       directors, including,        but not limited to, Patrick

    Villolda,     Ana        Jaureguizar,        Manuel Sanchez Castillo, Javier Echave,                    Miguel Barron,             Sandra Reif,

    and Francisco "Felix"                  Rodriguez,         all of whom also acted               as    agents for Santander Bahamas.

    Santander Bahamas conducts substantial and not isolated activities in the State of Florida and,

    either   directly        or   through the acts           of its officers,   employees,        or    agents committed tortious                 acts in


    and from the State of Florida                     as   alleged herein

                20.          Defendant          Optimal        Investment Services S.A. is                  an   investment management

    company,          incorporated         in Switzerland in           July 2001, with almost $10 billion                       in assets under


    management           as   of January 7, 2008. Its              principal offices are located            at 5-7 Rue     Ami-Lévrier, CH-

    1201, Geneva, Switzerland, with additional offices located in New York, Miami, and Madrid.

    OIS was, and continues to be, the investment manager for                                    Optimal Multiadvisors, Optimal SUS,
    and   Optimal Arbitrage               and either        directly or through the           acts of its   officers, employees              or   agents

    located in Miami, committed tortious acts in and from the State of Florida                                      as   alleged herein.

                21.          OIS served          as   the investment manager for the                Optimal      SUS fund. The               Optimal
    SUS fund           was     marketed          by    Santander      Spain     and its        affiliates, including Santander Miami.

    Santander         Spain owns         99% of OIS           through which it has absolute              control   over   the    Optimal family
    of funds.

                22.          Defendant Manuel Echeverria FaIla                          was    the Chief Executive Officer and Chief

    Investment Officer of OIS from its                        inception   in June 2001 until June 2008, when Echeverria left

    OIS. Echeverria               was    also   one    of three Directors of Optimal Multiadvisors                  during the majority of


    BANK   OF   AMERICA TOWER                                                11                                            WESTON CORPORATE CENTER
             SUITE    1200                                                                                                           SUITE 317
   TOO   SOUTHEAST     2ND   STREET                             LASH &GOLDBERG,,,,
                                                                          ATTORNEYS AT LAW
                                                                                                                                2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                                     www.lashgoldherg.com                                 954   384   2500   954   384 2510   FAX
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                                                                                              CASE NO.


   the time relevant to this              Complaint.       Prior to that,          beginning      in 1989, he   was      Executive Vice

   President of Santander               (Suisse)   S.A. and served            as   manager of the Portfolio          Management        and

   Fund     Management Group for                the International Private                Banking     Division of     Grupo Santander.

   During this time, Echeverria built Santander's expertise                              in alternative investment        strategies, i.e.,

   hedge    funds. On November 11, 2009, Mr. Echeverria                                  was   criminally charged by       a   Swiss court

   in Geneva for criminal               mismanagement in connection with his management of OIS.

                23.           Defendant Manuel Sanchez Castillo is the Director for                          Advisory Services          for

   Santander Private Bank.                 Sanchez Castillo is based out of Santander Miami's office located at

    1401 Brickell Avenue.                Upon information          and belief, Sanchez Castillo is              a   resident of Miami,


   Florida,      owns        real property in Miami, Florida and conducts substantial and not isolated business

   activities in Miami, Florida.

                24.           Defendant Ana Maria              Jaureguizar          is   a    Vice President of Santander Miami.


   Jaureguizar         is based out of Santander Miami's office located at 1401 Brickell Avenue.                                      Upon

   information and belief,              Jaureguizar   is   a   resident of Miami, Florida,            owns   real property in Miami,

   Florida and conducts substantial and not isolated business activities in                              Miami, Florida.

   III.         RELEVANT NON-PARTIES

                25.           Optimal Multiadvisors,              Ltd.    ("Optimal Multiadvisors"),                 which is not         a



   Defendant in this action,              was   incorporated      in 1995      as an         International Business      Company under

   the laws of the Commonwealth of the Bahamas.                                Optimal         Multiadvisors is     an   investment fund

   classified         as a     Standard Fund pursuant to the                  provisions of the         Investment Funds Act and


   Regulations          of The Bahamas. The            registered address of Optimal Multiadvisors is                          Fort Nassau


   Centre, Marlborough Street, P.O. Box N-4875, Nassau, Bahamas.




    BANK   OF   AMERICA TOWER                                            12                                          WESTON CORPORATE CENTER
            SUITE     1200                                                                                                     SUITE 317
   IOU   SOUTHEAST     2N1)   STREET                       LASH6zGOLDBERG,,
                                                                    ATTORNEYS AT LAW
                                                                                                                          2500 WESTON ROAD
                                                                                                                    FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    305 347 4050    FAX
                                                                www.lashgoldberg.com                                954 384 2500 954 384 2510 FAX
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                                                                                          CASE NO.


                26.      Anthony       L.M. Inder Reiden is                  a    Director of        Optimal   Multiadvisors.               Inder

    Rieden served         as a     director of the   prior administrator                of   Optimal SUS,       Fortis Fund Services

    (Bahamas) Ltd., until 2002. Inder Rieden's address                                is Euro-Dutch Trust       Company (Bahamas)

    Ltd., Charlotte House, Charlotte Street, P.O.                  Box       N-9204, Nassau, Bahamas.

                27.      Brian Wilkinson        together         with Echeverria and Inder Rieden is                          a   Director of

    Optimal      Multiadvisors and upon information and belief is                        a   resident of Ireland.

                28.      Miguel Barron ("Barron") is                a   former officer and            employee of Santander Miami
    who    provided investment advisory services                     to      Plaintiffs      on     behalf of Santander Miami and

    Santander Bahamas from 2006              through early March 2008.

                29.      Sandra Reif      ("Reif")    is   a   former officer and             employee     of Santander Miami who


    provided investment advisory            services to Plaintiffs               on   behalf of Santander Miami and Santander

    Bahamas from March 2008               through early December 2008.

                30.      Francisco J. Faraco         ("Faraco") is            a   Vice President of Santander Miami. Faraco

    took   over   the management of the Plaintiffs'              portfolios as          of January 2009.

                31.      Francisco "Felix"       Rodriguez ("Felix") is the Director of Latin America for

    Santander Private        Banking and works from              Santander Miami's offices.

    IV.         SUBJECT MATTER JURISDICTION AND VENUE

                32.      This Court has     jurisdiction pursuant                to Section 632 of the         Edge Act,          12 U.S.C.

    632, and Section 27 of the Securities Exchange Act, 15 U.S.C.                                   78aa, and 28 U.S.C.              1331.

                33.      This Court has      jurisdiction         over       the state law claims pursuant to the Court's


    supplemental jurisdiction,          28 U.S.C.      1367(a);         and




    BANK   01   AMERICA TOWER                                           13                                         WESTON CORPORATE CENTER
           SUITE 1200                                                                                                        SUITE 317
   100 SOUTHEAST 2ND STREET                          LASH &GOLDBERG,
                                                                   ATTORNEYS AT LAW
                                                                                               i,                       2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                     FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
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                34.        This Court also has    jurisdiction       over     the state law claims pursuant to the Court's


   diversity jurisdiction under 28           U.S.C.   §1332(a).        Plaintiffs'      damages, exclusive        of attorneys' fees

   and costs, exceed           $75, 000.

                35.        Venue in this     judicial District      is proper pursuant to 15 U.S.C.                    78aa, and 28

   U.S.C.             1391(b), because      substantial acts in furtherance of the                 alleged   fraud and the other

   claims asserted herein and/or their effects have occurred within this District.                                     Additionally,

   certain of the Defendants maintain offices and conduct substantial and not isolated business in

   this District.

                36.        Jurisdiction is further established for the               reasons   set forth below.


                A.         THE COURT HAS SUBJECT MATTER JURISDICTION PURSUANT TO
                           THE EDGE ACT

                37.        The Court has     subject matter jurisdiction pursuant to               Section 632 of the     Edge Act,
   12 U.S.C.            632, which provides that:

                           Notwithstanding      any other       provision of law, all suits of a civil
                           nature at common law            or   in equity to which any corporation
                           organized under the laws of the United States shall be a party,
                           arising out of transactions involving international or foreign
                           banking, or banking in a dependency or insular possession of the
                           United States, or out of other international or foreign financial
                           operations, either directly or through the agency, ownership, or
                           control of branches or local institutions in dependencies or insular
                           possessions of the United States or in foreign countries, shall be
                           deemed to arise under the laws of the United States, and the district
                           courts of the United States shall have original jurisdiction of all
                           such suits.

                38.        Plaintiffs meet all elements         required by           632.   First, this suit brings   common     law

   claims. Second, Santander Miami is                 an   Edge     Act     banking corporation organized            under Section

   25A of the Federal Reserve               Act, 12 U.S.C.             611 et seq.           Third, the suit herein arises      out of


   transactions         involving international     or   foreign banking and             out of other international       or   foreign


    BANK   OFAMERICA Tow F R                                         14                                        WESTON CORPORATE CENTER
           SUITE 1200                                                                                                    SUITE 317
   100 SOUTHEAST 2ND STREET                           LASH &GOLDBERG,
                                                                  ATTORNEYS AT LAW
                                                                                                                    2500 WESTON ROAD
                                                                                                              FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040       305 347 4050   FAX                     www.lashgoldberg.com                              954 384 2500 954 384 2510 FAX
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                                                                                            CASE NO.


    financial     operations. Accordingly,             this Court has         original jurisdiction of all          common         law claims

    which       are   deemed to arise under the laws of the United States.

                B.          THE COURT HAS SUBJECT MATTER JURISDICTION PURSUANT TO
                            THE SECURITIES EXCHANGE ACT OF 1934

                            1.          Defendants Purposefully Availed Themselves Of The Benefits Of
                                        Having Plaintiffs Invest 100% Of Optimal SUS In The United States;
                                        It Was Foreseeable That Defendants Would Be Hailed Into Court In
                                        The United States

                39.         The   Optimal Funds' Explanatory Memoranda ("EM") explained that the Optimal

    SUS fund          was   to be   invested, exclusively and entirely, in the United                     States with      a   U.S.     registered
    Broker-Dealer. The sole purpose of investing in                           Optimal      SUS      was   to invest in the United States


    and in United States            equities   that   are   part of the Standard & Poor's 100 Index. The                          name         itself,

    Optimal Strategic            U.S.    Equity, denotes      a   U.S. based investment. The June 2004 EM, and every


    subsequent EM, in sum or substance, said:

                            the Fund     [Optimal Multiadvisors] and Optimal SUS have
                            established   a discretionary account with a US broker-dealer

                            ("Broker-Dealer") registered with both the U.S. Securities and
                            Exchange Commission (the "SEC") and the National Association
                            of Securities Dealers, Inc. ("NASD").



                            The assets of the fund          are   deposited with the Broker-Dealer [in the
                            United States].



                            Most of the stocks for which [the Broker-Dealer] acts as                           a   market
                            maker are also listed on the New York Stock Exchange.



                            The strategy utilized by the Broker-Dealer... entails...
                            purchasing a basket of thirty to forty large-capitalization S&P 100
                            stocks.... purchasing... S&P Index put options.... selling S&P
                            100 Index call options.

                            In practice the Broker•Dealer [in the United States] usually invests
                            in US Treasury Bills [when not executing the split strike
                            conversion strategy].

    BANK   OFAMERICA TOWER                                               15                                           WESTON CORPORATE CENTER
            SUITE 1200                                                                                                          SUITE 317
   ][00 SOUTHEAST 2ND STREET                                LAS H &GOLDBERG
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                                                                                             i i,                          2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050    FAX
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                                                                                         CASE NO.




              40.          The EM further reassured investors that the investments                                by   the Broker-Dealer

    were     made pursuant to the                   regulations   and the laws of the United States:                                "[Optimal

    Multiadvisors], Optimal SUS, [OIS],                     and the Broker-Dealer must                    comply       with various        legal

    requirements, including requirements imposed by the                                 federal securities         laws,       tax laws and


    pension laws."

              41.          Defendants, thus, knew that the             sole     objective         of   Optimal    SUS       was   for 100% of

    the monies to be invested with Madoff in New York. All                               significant conduct (including trading
    and due      diligence       on    Madoff)   was     supposed to   take     place in New York. Defendants understood

    that   Optimal         SUS    was run      by   a   Broker-Dealer in New York, and Plaintiffs                           were   advised     by
    Defendants that         Optimal      SUS     principally invested       in U.S.     equities.

              42.          Further, in creating a fund whose sole objective was                         to invest in the United          States,

    Defendants took             advantage   of the      exemplary reputation           of the laws and securities markets of the

    United States          as   being    the best       regulated and    most         efficient markets in the world.                   Having
    benefited from the              advantages      of the United      States, they          are now      subject      to    the laws of the

    United States.

              43.          Accordingly,        all Defendants availed themselves of the benefits and                              privileges   of

    investing       in the United States, pursuant to its laws and                       regulations.        It   was       foreseeable that,

    having    chosen to operate           an   investment fund that         was       100% invested in the United                  States, and

    acknowledging           that Plaintiffs' accounts would be              subject     to   U.S. securities laws, all Defendants

    could be hailed into Court in the United States.




    BANK OF AMERICA TOWER                                              16                                              WESTON CORPORATE CENTER
            SUITE   1200                                                                                                       SUITE 317
   100   SOUTHEAST   2ND   STREET                          LASH &GOLDBERG
                                                                  ATTORNEYS AT I AW
                                                                                              P                               2500 WESTON ROAD
    MIAMI, FLORIDA 33130-2158                                                                                       FT.     LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050    FAX
                                                              www.lashgoldberg.com                                     954   384 2500 954 384 2510   FAX
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                                                                                               CASE NO.


                         2.            The Conduct And Effects Tests for Jurisdiction Are Both Met:
                                       Defendants' Conduct In The United States Was "More Than Merely
                                       Preparatory, And The "Culpable Failures To Act Within The United
                                       States Directly Caused The Losses"

                                       a.       Santander Spain, Santander Miami, OIS, And Echeverria Had
                                                A Substantial Presence In New York And Miami And Their
                                                Conduct In New York and Miami Establishes Subject Matter
                                                Jurisdiction

                44.      Santander          Spain   and Santander Miami had offices located at 45 East 53rd Street

    in New York        City and at          1401 Brickell Avenue in Miami. OIS had offices                          on   the 6th floor of the


    building     in New York and upon information and belief conducted business from the                                         building   in

    Miami.

                45.      OIS's         presentations   and EMs all confirmed that OIS had offices and                             personnel

    based in New York                   City.    Many of the presentations prepared by OIS, including those

    concerning Optimal SUS,                  listed   on   the   cover   of the         presentations the cities         in which OIS had


    offices, and always included New York.

                46.      Another         presentation titled, "Optimal             Investment Services:             Optimal Strategic     US


    Equity,      and dated October 2008, showed that OIS had raised the number of analysts dedicated

    to due      diligence     in New York from four to six. This                         was   the     highest   number of professionals,

    together with London, dedicated to                 due   diligence      outside of OIS's             headquarters in Geneva. (Id.).

                47.      Because of OIS's presence in New                      York, Madoff sent the trade confirmations                    to


    OIS's offices there. A trade confirmation that appears in the                                 January    2008 internal      presentation
    made    by    OIS to Santander sales officers shows that the trade confirmations                                     were   addressed   as


    follows:


                         Optimal SUS
                         Banco Santander
                         45 East 53rd Street, 6th Floor
                         New York, New York 10022


    BANK    AMERICA TOWER
           OF                                                            17                                              WESTON CORPORATE CENTER
          SUITE 1200                                                                                                             SUITE 317
   MO SOUTHEAST 2ND STREET                                 LASH &GOLDBERG
                                                                     ATTORNEYS AT LAW
                                                                                                i I,                        2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
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                 48.     OIS also had             key       senior officers based in New York,                       including        officers

    specifically dedicated             to due    diligence     of US based funds                e.g.,   Optimal   SUS.     According         to    a



    presentation prepared by                 OIS in   or    about 2006, the           following   OIS    analysts   were    based in New

    York:


                         Hugh Burnaby Atkins, CFA, FRM, Senior Research Analyst
                         Mr. Burnaby-Atkins is based in New York and responsible for
                         research, due diligence, fund monitoring and selection of a full
                         range of hedge fund strategies....

                         Balkir Zihnali, CFA, Senior Research Analyst
                         Mr. Zihnali is based in New York and responsible for research,
                         due diligence, fund monitoring and selection of US-based
                         managers           focusing on equity strategies....

                         Jonathan Clark, Research Analyst
                         Mr. Clark is a Research Analyst in New York responsible for
                         research, due diligence, and fund monitoring of US-based
                         managers, focusing on relative value and event-driven strategies.

                         Tom Lileng, Research Analyst
                         Mr. Lileng is a Research Analyst based in New York responsible
                         for research, fund monitoring and due diligence of US-based
                         managers,             focusing      on    long/short equity             and event        driven
                         strategies.

    (OIS   2006 Presentation;               emphasis supplied).

             49.         As set forth in detail             herein, the due diligence conducted in                  New York did not

    meet the       adequate      standard of       care     and, thus constituted conduct that                                than
                                                                                                                was more              merely

    preparatory        to the    wrongdoing           and    directly     caused Plaintiffs' losses related to their Madoff

    related claims.

                                       b.       Santander Miami Sent Communications And Information
                                                From Miami, Even To Clients With Accounts Not Based In
                                                Miami

             50.         Santander           Miami     and      Santander           Geneva      were     the two      headquarters           for

    Santander's International Private Bank. Santander Miami's office                                    on   Brickell Avenue in      Miami,

    BANK OF AMERICA TOWER                                                  18                                        WESTON CORPORATE CENTER
           SUITE 1200                                                                                                          SUITE 317
   100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG.,
                                                                        ATTORNFYS AT LAW
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    MIAMI, FLORIDA 33131-2158                                                                                       FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    303 347 4050   FAX
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    Florida, served           as   the   headquarters      for Santander's International Private Bank in Latin America.

    Santander Miami                began selling        OIS investments           as       early   as    1996, before OIS        was         created in

    2001. In       1996, the Santander funds                were     sold under the brand                name   BPI, which stood for Banca

    Privada Internacional                     Spanish    for International Private Bank.                    Optimal     SUS at the time               was


    called "BPI M.STRATEGIC."

                 51.         Santander Miami sent investment offers and                                 proposals, performance data, fact

    sheets, and other documents relating                        to    Optimal SUS, including                    to   Plaintiffs, regardless               of

    whether       they had         an    account at Santander Miami or at                          a   non-U.S.-based Santander               banking
    affiliate.

                                         c.       Santander Miami                Opened            Plaintiffs' Bank Accounts in the
                                                  Bahamas

             52.             Santander Miami             employees, including Jaureguizar,                           Patrick    Villoldo, Susan

    Casal, Javier Echave and Sanchez Castillo, all of whom                                   were       based in   Miami, offered        to and did


    open Plaintiffs' bank accounts at Santander Miami's affiliate in the Bahamas.                                                             Initially,
    Santander Miami            prepared the        account      opening documents                  as   United States based accounts with

    Santander Miami.                 Villoldo wrote to Plaintiffs' counsel:                              "Initially,   you     were     incorrectly
    provided the         Miami version of this document                 [the    Terms and              Conditions]     so we    worked from the

    Bahamas version                  [resulting]    in   some   minor     changes".
             53.             From the outset, Santander Bahamas                             was        the custodian bank and Santander

    Miami    was        to   provide the advisory services              and      oversee       and coordinate all transactions in the

    accounts.          Prior to     signing     the account      opening agreements,                     Plaintiffs' counsel confirmed the

   nature of the        relationship by correspondence with Patrick Villoldo stating: "My                                      client has elected

   to open the Account in the                   Bahamas, notwithstanding that it will be administered by the Miami




    BANK OF AMERICA TOWER                                                  19                                              WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                SUITE 317
   100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG.,
                                                                        ATTORNEYS AT LAW
                                                                                                                                2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                                   www.lashgoldberg.com                                   954   384   2500    954   384   2510   FAX
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    office." Thus, while the accounts                      were   opened      at Santander       Bahamas, they        were   documented

    (and maintained throughout) to comply with United                             States' laws and        regulations.

                54.      Plaintiffs thus had              no   contact whatsoever with any person at Santander Bahamas


    during      the   negotiation           process.      Once the    negotiations           were   completed,    the     signed   account


    opening documents                  were       sent   by    Santander Miami to Santander Bahamas for                         signature.
    Santander Bahamas             signed the         account     opening   documents and all other documents                 prepared and

   negotiated by        Santander Miami              during the    course     of the      relationship.

                                       d.          Santander Bahamas Account Statements Were Mailed From
                                                   Miami

                55.      Plaintiffs         regularly     received   monthly        and    quarterly reports    via e-mail transmitted

   from Santander Miami's office.                          The   monthly     bank statements         were     also sent via     overnight
   courier from Miami             or    the      Bahamas, but the sealed envelopes contained in the overnight courier

   deliveries all had Miami return addresses.                         Upon information              and belief, all statements       were



   printed in Miami.

                56.      Further, virtually every facsimile                   sent to Plaintiffs      regarding    their accounts     was


   sent from a facsimile number in                            Miami, namely 305-539-5154.                  Similarly, virtually     every

   facsimile sent        by Plaintiffs            to Santander      regarding        their accounts,      including   to authorize and


   confirm orders for the               purchase         and sale of securities for their accounts,            were      sent to the same


   facsimile number in Miami,                     namely      305-539-5154.

                57.     All but             a    handful of emails sent               by    Plaintiffs to the Santander Entities,


   Jaureguizar, Echave,                Sanchez Castillo,          Miguel      Barron and other officers and                employees    of

   Santander Miami          regarding their accounts at               Santander Bahamas             were   sent to Santander Miami's


   office in Miami.              Similarly,         all emails sent      by     the Santander        Entities, Jaureguizar, Echave,

   Barron, Sanchez Castillo and other officers and employees of the Santander Entities                                        to Plaintiffs



    BANK   OFAMERICA TOWER                                              20                                          WESTON CORPORATE CENTER
           SUITE 1200                                                                                                         SUITE 317
   100 SOUTHEAST 2ND STREET                                    LASH &GOLDBERG,,,
                                                                      ATTORNEY', AT LAW
                                                                                                                         2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                  www.lashgoldberg.com                              954 384 2500 954 384 2510 FAX
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                                                                                            CASE NO.


   regarding          their accounts         were   emailed   by    Santander Miami's                  officers, employees and agents

    from Miami.

                58.       This    course      of conduct continued throughout the time relevant to this                            Complaint.
                          3.           Santander Miami Officers Offered to Sell and Sold                                Optimal            SUS To
                                       Plaintiffs From Miami.

                59.       Santander Miami's officers and                 employees         based in Miami, Florida offered to sell

    and sold     Optimal       SUS and        Optimal Arbitrage to Plaintiffs.

                60.       Jaureguizar         and Sanchez Castillo offered to sell Plaintiffs shares in                            Optimal        SUS

    from Santander Miami's office in Miami, via                         telephone, facsimile,            mail and email. For              example,

   by   email dated March 14, 2005,                    just days   before Plaintiffs' accounts              were    opened, Jaureguizar

    sent Plaintiffs       an   email        advising   that the    Optimal       SUS Fund, which             was    previously closed                  to


    Plaintiffs, had opened and                 was     available for Plaintiffs' investment                 over    the next few weeks.


    (March 14,         2005 email and          attachment, Ex. 2 hereto). Plaintiffs accepted this offer and initially

   purchased shares in Optimal                 SUS based      on   this offer.

                                       a.       OIS's Documents State That Santander Miami Was Not
                                                Authorized To Distribute Any Information About Optimal
                                                SUS From Miami

                61.       Despite       Santander Miami's           pervasive            and continuous         activity selling Optimal

    SUS from          Miami, Florida, OIS's documents clearly                     state that such        activity   was      prohibited.          OIS


   provided monthly booklets to                  investors of its various funds.                  The   cover   page   typically explained
   the contents of the booklet: "This booklet contains detailed and relevant                                        monthly data                 about


    Optimal      funds. In       particular,     it groups in     one   printable page the following information [for                            each

    fund]: NAV,          fund    description, portfolio allocation, structure, monthly performance,                                       statistical

    analysis, cumulative return, distribution                 of returns and distribution                by strategy."        In each        one       of




    BANK   OFAMERICA TOWER                                               21                                             WESTON CORPORATE CENTER
           SUITE 1200                                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG
                                                                     A1TORNFYS AT I AW
                                                                                              I   I,                         2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                                WWW.lashgoldberg.com                                   954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                      Document 1          Entered        on      FLSD Docket 03/08/2010                   Page        22 of 69

                                                                                            CASE NO.


    those pages,         including      the page dedicated to            Optimal        SUS and the page dedicated to                 Optimal

    Arbitrage, the booklet stated:

                          Units in the Optimal Funds and any other funds described in this
                          document may not be offered, sold or distributed in or from the
                          UK, the USA and their territories. Not FDIC insured no bank
                          guarantee may lose value.

    (Emphasis supplied).

                62.       These booklets           were   distributed to      some      investors, but they      were    not     provided         to


    Plaintiffs     by OIS      or   Santander Miami.         Rather,     OIS and Santander Miami                simply disregarded the
    fact that    they were       not authorized to         offer, sell   or   distribute the       Optimal    Funds to Plaintiffs from

    the United States and did               so   anyway,   thereby committing tortious acts                in the State of Florida.

                63.       All the Santander Entities functioned                        as   one,   regardless   of location and local

    regulations.         The   advisory      services   were   provided by          Santander Miami, and the             custody      services

    were   provided by          Santander Bahamas. OIS served                   as     fund manager for the       Optimal Funds,              and

    Santander         Spain owned           and controlled all of these entities                   as   subsidiaries.     Together, they
    worked       as an   integrated unit.

                                       b.         Santander  Miami Officers Made Offers and                                      Negotiated
                                                  Agreements On Behalf of Santander Bahamas

                64.       Santander Miami officers and                    employees           made offers and           negotiated legal

    agreements         on      behalf of Santander Bahamas.                     Specifically,           after December 2008, when

    Santander         Spain    announced that all monies in              Optimal        SUS had been         lost, Santander Miami's

   officers and        employees        offered to settle any claims           arising      from that loss.     They     offered to do            so



   through       an   "Exchange Agreement."                Pursuant to that agreement, investors in                Optimal        SUS       were


   to   exchange       their    Optimal      SUS shares      (now worthless) for             a   Santander   hybrid security          that   was


   worth    a    fraction of the       original Optimal       SUS investment.



    BANK OF AMERICA TOWER                                                22                                         WESTON CORPORATE CENTER
           SUITE 1200                                                                                                         SUITE 317
   100 SOUTHEAST 2ND STREET                                LASH &             OLDBERGIII
                                                                    ATTORNEYS AT LAW
                                                                                                                         2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                WWW.lashgoldberg.com                               954   384   2500   954   384   2510   FAX
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                                                                                                 CASE NO.


                 65.         The    Exchange Agreement              was   to be executed between the account holder                                    (i.e.,
    the investor in          Optimal SUS)        and the Santander affiliate at which the account                              was        held. Drafts

    of the      Exchange Agreement reflected                  Santander Bahamas                   as     the Santander        entity making the

    agreement, but it was proposed, negotiated, and delivered by Santander Miami.

                 66.         Officers of Santander Miami met with Plaintiffs and their counsel in Miami and

    attempted          to   negotiate, unsuccessfully,         the settlement agreement which                          was    to settle Plaintiffs


    Madoff related claims                against Defendants.

                 67.         Specifically, Plaintiffs         and their counsel met                      on   January    5 and 6, 2009 with

    Sanchez       Castillo, Jaureguizar and Francisco Faraco                       to discuss Plaintiffs' Madoff losses.                         At that

    meeting,         Sanchez Castillo stated that Santander                  Spain        was    working        on a   plan   to   fully    reimburse

    Plaintiffs for their initial investment in Madoff. Plaintiffs believed this reimbursement would be

    a   cash reimbursement. The               Exchange Agreement was not discussed.
                68.          In late     January 2009,   Sanchez Castillo and                    Jaureguizar      called Plaintiffs'            director,

    Elias, from Miami, and asked him                 to return to Miami to receive the offer                            regarding          the Madoff

    losses.       Elias met with Sanchez Castillo and                       Jaureguizar            on     January 29,        2009 at Santander

    Miami's office            on   Brickell Avenue            At that      meeting,         Sanchez Castillo handed Plaintiffs the

    proposed Exchange Agreement in Spanish.

                C.           THE  COURT HAS SUBJECT MATTER JURISDICTION AND
                             PERSONAL JURISDICTION OVER ECHEVERRIA BECAUSE BMIS
                             ACTED AS AGENT AND ATTORNEY-IN-FACT OF OPTIMAL SUS AND
                             OIS

                69.          Pursuant to the EMs dated June 2004 and                        thereafter,        BMIS acted          as    the agent and

   attorney-in-fact of Optimal                SUS.   Echeverria served                    as a   director of      Optimal      SUS and/or OIS

   during       the time that BMIS served             as      agent and attorney-in-fact of Optimal SUS.                                   BMIS thus

   acted in New York for the benefit                 o   f,   on   behalf of, and with the                    knowledge      and consent of the


    BANK    AMERICA TOWER
           OF                                                             23                                               WESTON CORPORATE CENTER
          SUITE 1200                                                                                                                 SUITE 317
   100 SOUTHEAST 2ND STREET                               LASH &GOLDBERG
                                                                       ATTORNEYS AT LAW
                                                                                                   IL,                          2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                              FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                                   www.lashgoldberg.com                                      954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                     Document 1            Entered           on       FLSD Docket 03/08/2010                   Page        24 of 69


                                                                                                 CASE NO.


    OIS and Echeverria.                Accordingly,       this Court has              personal jurisdiction            over    Echeverria.             In

    addition, the Court has subject                matter jurisdiction           pursuant        to the   Exchange      Act    over   Echeverria

   because BMIS's conduct in New York                         can   be   imputed to Echeverria.

   V.           SUBSTANTIVE ALLEGATIONS

                A.          PLAINTIFFS' RELATIONSHIP WITH SANTANDER

                            1.         The   History    of Plaintiffs'          Relationship with Santander
                70.         Plaintiffs   were    clients of Coutts & Co.                    (Cayman)      Ltd   ("Coutts Cayman").           Coutts


   Cayman         was      owned   by    the   Royal   Bank of Scotland                 ("RBS"). When Plaintiffs                were      clients at

   Coutts       Cayman, they had          87% of their funds invested in the Coutts Orbita                         hedge funds (the "Orbita

   Funds").          The Orbita Funds          were   fully   diversified funds of funds that                   provided      consistent returns

   with low       volatility     year after year. The Orbita Funds had                          no    exposure to Madoff        or   BLMIS and,

   during       the relevant times in this          Complaint, they continued                    to meet their investment            objectives        of

   consistent returns with low volatility relative to the markets.

                71.         On   or      about     May 13, 2003,                 Santander            Spain purchased           Coutts      (USA)

   International           ("Coutts Miami"), the Miami-based Latin American private banking operations of

   the Coutts         Group, from RBS.           Coutts   Cayman was              not       part of the sale.

                72.         Jaureguizar      was   Plaintiffs' account            representative          at Coutts.    Jaureguizar worked
   at Coutts Miami at its Miami office located at 701 Brickell                                    Avenue, Suite 2300, Miami, Florida

   33131. As           a   result of the   acquisition, Jaureguizar became                       an   officer and   employee of Santander
   Miami located at its Miami office at 1401 Brickell Avenue, Suite 1500,                                         Miami, Florida 33131.

                73.         After Santander        acquired     Coutts       Miami, Jaureguizar represented                    to Plaintiffs that


   Coutts had sold all its Latin American                     operations        to Santander and that Coutts              Cayman would                 no



   longer       be able to service Plaintiffs' accounts.                    Jaureguizar represented                that Plaintiffs would be

   required       to   leave Coutts          Cayman.      Jaureguizar urged                    Plaintiffs to transfer their accounts to

    BANK   OF AMERICA TOWER                                                24                                             WESTON CORPORATE CENTER
             SUITE 1200                                                                                                             SUITE 317
   100   SOUTHEAS1 2ND STREET                             LASH &1JOLDBERGATTORNEYS AT LAW
                                                                                                      p                        2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                            FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                www.lashgoldberg.com                                     954   384 2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1                Entered        on       FLSD Docket 03/08/2010                     Page     25 of 69

                                                                                                  CASE NO.


    Santander and to retain                  Jaureguizar, Plaintiffs' long-standing                            account       representative,      and

    Santander Miami to              provide Plaintiffs           with   comprehensive             account       management and investment

    advisory services for all of Plaintiffs' accounts, including accounts at CIBC                                      Bank & Trust      Company

    (Cayman)          Ltd   ("CIBC").

                74.         Jaureguizar      told Plaintiffs that Santander had better and safer                               hedge   funds than

    Coutts and that Plaintiffs would be well-served                         moving their relationship                  to Santander.        Plaintiffs

    were   very       pleased with     their Coutts Orbita funds and informed                             Jaureguizar   of their desire to retain

    the Coutts Orbita funds            indefinitely.

                75.         Plaintiffs, having been informed they were required to leave Coutts Cayman, having

    invested substantial          resources     and time in        negotiations            with   Santander, being promised Santander

    had better and safer               hedge    funds than Coutts Orbita funds, and based                                on    the   long-standing

    relationship       with    Jaureguizar, decided they would negotiate                           with Santander Miami              (for advisory

    services) and           Santander Bahamas           (for custodial services),                 but would not transfer their assets to

    Santander Bahamas until              a   formal agreement was finalized.

                76.         Jaureguizar      and other       employees         of Santander Miami then assisted Plaintiffs to

    instruct Coutts          Cayman      on    the    liquidation       of the Plaintiffs'                portfolios   and the transfer of the


    proceeds to CIBC,            with the intention that Plaintiffs would transfer the funds to Santander Bahamas

    once   the negotiations with Santander were                    completed.
                77.         Given   Jaureguizar's long standing relationship with Plaintiffs,                            she   was   well   aware   of

    Plaintiffs low risk tolerance and                had,   in   fact, recommended and implemented                       a   low risk investment

   program for Plaintiffs at Coutts                   Cayman.           Based      on      this   relationship         and her    knowledge      and


   understanding            of Plaintiffs' low risk tolerance, Plaintiffs decided to continue their                              relationship   with




    BANK   OFAMERICA TOWER                                                25                                                  WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                   SUITE 317
   100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG
                                                                        AM,I1NEYS AT LAW
                                                                                                   i iP                            2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                                FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                                   WWW.lashgoldberg.com                                      954 384 2500 954 384 2510 FAX
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                                                                                                CASE NO.


    Jaureguizar at         Santander Miami. She              promised Plaintiffs that the                 low risk investment program she

    helped create at Coutts would be continued and improved upon at Santander.

              78.              Negotiations      on    the     account        opening documents with Santander Bahamas

    commenced in mid 2004. All                    negotiations between                Plaintiffs and Santander Miami             regarding the
    creation of accounts to be held at Santander Bahamas                                 were   conducted        by officers, employees           and

    agents of Santander Miami, including, without limitation, Patrick Villoldo, Susan Casal and

    Jaureguizar.

              79.              Santander Miami told Plaintiffs that Jaureguizar would manage the                            relationship from

    Miami, just           as   she had at Coutts        Cayman.          Santander Miami                 prepared marketing      materials and


   proposals       in Miami and sent the documents to Plaintiffs via                                mail, e-mail, facsimile and overnight

    courier from Miami.

              80.               Plaintiffs asked       Jaureguizar       about the financial              strength   of Santander Bahamas

    and    requested           that Santander    Spain       issue   a   Comfort Letter             standing   behind Santander Bahamas

    as a    condition           precedent   to   opening       the accounts at Santander Bahamas.                           Santander Miami


    negotiated the             terms of the Comfort Letter on Santander                             Spain's behalf, which approved                the

    form of the Comfort Letter                    as    a   condition       precedent          to   Plaintiffs    signing   account       opening
    documents. Santander                 Spain issued the requested               Comfort Letter dated            May 9,    2005.

              81.              The Comfort Letter confirms, inter alia, that "Santander Bank & Trust Limited


    (SB&T)       is   a    100%     indirectly controlled subsidiary                 of Santander          Spain Central Hispano, S.A.,              a



    Spanish      chartered bank          ("Banco")";        that "Banco does not               presently envisage      a    situation     whereby
    SB&T would not be able to meet its liabilities                       as   they become due;             and Banco agrees to inform you

    in   writing    as soon as       legally permissible         of any       change         of ownership of SB&T, if such               change     of




    BANK OF AMERICA TOWER                                                    26                                          WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
   TOO SOUTHEAST 2ND STREET                                   LASH &GOLDBERG,,
                                                                          ATTORNEYS AT LAW
                                                                                                     P                        2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050      FAX
                                                                     www.lashgoldberg.com                               954   384 2500    954   384 2510   FAX
Case 1:10-cv-20695-FAM                      Document 1           Entered        on       FLSD Docket 03/08/2010                      Page            27 of 69

                                                                                             CASE NO.


    ownership would result in Banco no longer controlling SB&T."                                     The Comfort Letter was                a   material

    inducement to Plaintiffs              moving their accounts to Santander Bahamas.

                 82.         Another material inducement Santander Miami's officers and                                  employees              offered

    Plaintiffs     so   they      would    move   their accounts from Coutts               Cayman       to Santander Bahamas                   was     that

    Santander Miami would provide                  advisory services for Plaintiffs'                 financial    holdings at three financial
    institutions        so    Plaintiffs could obtain           comprehensive portfolio management                        services and full

    diversification.              Santander stated this        was    a    significant "value added" benefit                   to     moving the

    relationship        from Coutts         Cayman      to   Santander.      Once the custodial accounts                were        established at

    Santander          Bahamas, the        account statements sent to Plaintiffs              provided analysis          of all of Plaintiffs'

    accounts at the          three financial institutions       as one     well diversified          portfolio.

                83.          In sum, Santander Miami's               officers, employees and agents and Santander Spain

    promised Plaintiffs that Santander Miami and Santander Bahamas and their affiliates had                                                          better

    and safer         Optimal hedge funds           than the Coutts Orbita Funds;                     they   would    improve         on       the low

    risk, low volatility investment                     program started at Coutts                      Cayman; they           would            provide

    comprehensive investment advisory services for Plaintiffs'                               accounts at three financial institutions


    and, therefore, Plaintiffs would be better off moving                                to Santander and          purchasing        Santander's

   proprietary Optimal               Funds.

                             2.          Santander Miami and Its                         Officers      and    Employees'             Investment
                                         Proposals and Offers
                84.          Before Plaintiffs     opened their           accounts at Santander              Bahamas, Sanchez Castillo,

   Mariano Escolar and                   Jaureguizar,   all   employees        of Santander Miami, visited with Plaintiffs in

   Panama        City, Panama,           to discuss investments to          replace       the Orbita Funds which Plaintiffs had not

   yet sold. The Santander Miami officers and employees told Plaintiffs that Santander's proprietary

   Optimal Funds were superior to the                   Coutts Orbita Funds.


    BANK   OFAMERICA TOWER                                                27                                            WESTON CORPORATE CENTER
           SUITE 1200                                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                                   LASH &GOLDBERG,
                                                                      ATTORNEYS AT LAW
                                                                                               I P                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                                 WWW.1ashgoldberg.com                                   954   384   2500       954   384   2510   FAX
Case 1:10-cv-20695-FAM                    Document 1           Entered      on       FLSD Docket 03/08/2010                Page     28 of 69

                                                                                        CASE NO.


                85.       Plaintiffs had      an   excellent   experience with the             Orbita Funds and believed that,

    based    on   Santander's written and oral          representations,             Santander   was   substituting its proprietary

    Optimal       Funds for the Coutts Orbita funds and that                     by doing      so, Santander would continue             or



    improve       upon the       same     low risk, low   volatility investment            program that     was so        successful at

    Coutts      Cayman.

                86.       Specifically,      the   presentation,    entitled "Investment               Management:           Evaluating

    Alternatives", reviewed Plaintiffs               current   holdings       at Coutts        Cayman   which     were     allocated    as



    follows:

                      o   87.2% in Coutts Orbita hedge           funds;
                      o   11.5% in fixed income; and
                      o   1.3% in preferred shares.

                87.       Santander Miami, Sanchez Castillo, and                      Jaureguizar recommended that Plaintiffs

   keep     the   same     Coutts asset allocation, but substitute different                     products   to   replace the       Coutts

    Orbita Funds,         as   follows:

                Based on the current portfolio [i.e., the Coutts portfolio],                     we    propose    a    portfolio
                which continues the same structure and management.

                For that,       we propose similar investment vehicles in which we have tried to

                optimize       the risk-reward ratio compared to those previously held.


                In Alternative Investments [i.e., hedge funds], we can provide you not only better
                returns and less volatility compared to prior positions (Orbita), but [we can
                also offer] greater liquidity (monthly) and more transparency in the securities
                held in the Optimal funds recommended. Finally, it is worth noting the possibility
                of constructing portfolios with weightings and rebalancing which permit
                additional flexibility to the client not only as to asset allocation but also as to
                management of the portfolio.

                (Emphasis supplied).




    BANK   OF AMERICA TOWER                                        28                                             WESTON CORPORATE CENTER
            SUITE 1200                                                                                                      SUITE 317
   TOO   SOUTHEAST 2ND STREET                          LASH &GOLDBERG
                                                                 ATTORNEY', AT LAW
                                                                                           P                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                    FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX                       WWW
                                                                  lashgoldberg.com                               954   384 2500 954 384 2510   FAX
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                                                                                             CASE NO.


                88.      The     presentation then describes market cycles, showing that portfolio adjustments

    are   required      to reflect different market             cycles.       Santander        Miami,       as    the investment      advisor,

    promised to make these adjustments.

                89.      The     presentation further stated (in translation from Spanish):

                Santander Central Hispano puts at your disposition through its International
                Private Bank [located in Miami] the best team of portfolio managers.

                Our     teams, with headquarters in Miami and Geneva, have a profound
                understanding of portfolio management ...with more than 80 specialized analysts.

                We optimize and bring current this management constantly thanks to the support
                of the local offices of Grupo Santander, which permits us to understand with
                perfection the changing needs of our clients and adapt to them. (Emphasis
                supplied).

                90.      The     presentation describes Santander's three-step investment                              process.      The first


    phase    is to do     an     individual    analysis   and determine the client's investment parameters.                                The

    second      phase   is to define the investment strategy, structure the                          portfolio,   and then    implement the

    investment strategy. The third              phase   is to   provide oversight and control results.

                91.      The     presentation    states that the        "pivot point"          of the entire investment process is

   the client's risk tolerance.

                92.      With        regard to hedge funds, the presentation stated:

                We    present series of analysis in which we show with real results based on actual
                                 a

                assets how a fixed income portfolio is benefitted by the inclusion of an
                alternative investment component. (Emphasis in original).


                The conclusions of the analysis permit us to affirm that not only are returns
                optimized, but more importantly, there is a reduction in volatility, optimizing
                the risk-reward ratio. (Emphasis in original).


                93.      The     presentation describes         the three types of hedge                 funds, explaining that relative

   value     hedge funds had           "low   volatility (5-7%)      and little correlation with                  equity   markets." It also

   states:


    BANK   OFAMERICA TOWER                                             29                                              WESTON CORPORATE CENTER
           SUITE 1200                                                                                                            SUITE 317
   TOO SOUTHEAST 2ND STREET                             LASH i&GOLDB ERG
                                                                    AT11 12.NEYS AT LAW
                                                                                               I,,                          2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                www.lashgoldberg.com                                   954   384 2500 954 384   2510   FAX
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                                                                                           CASE NO.


                 The inclusion of absolute return instruments, correctly implemented, reduces
                 volatility at the same time as it optimizes returns. The percentages will be
                 adjusted based on the expectations of the different markets environments and the
                 portfolio makeup will also be subject to adjustments and modifications                                        in the
                 strategies selected based on the markets. (Emphasis supplied).

                 94.       Santander       Miami, Sanchez Castillo, and Jaureguizar                          were   clearly representing      to


    Plaintiffs that the investment program              they were recommending would have low volatility, optimize

    returns, and be periodically rebalanced.

                 95.       The   presentation further confirmed that Santander Miami, Jaureguizar, and Sanchez

    Castillo      agreed   to    accept Plaintiffs'    trust and confidence in connection with the
                                                                                                                             management of

    Plaintiffs' investment             portfolios, establishing a fiduciary duty to                so   in   good faith and for the benefit
    of Plaintiffs' best interests.

                 96.     The      presentation also provided five                      different asset allocation              models, with

    standard deviations            ranging from       1.97% to 3.65%.                  Standard deviation            measures      risk.    The

    higher   the standard         deviation, the higher the risk. According                        to   the   presentation,    the historical

    standard deviation of the S&P 500,                an   all   equity U.S. index,          at that time         was   17.46%. Given the

    substantial difference in the standard deviations for the                          proposed asset allocations models and the
    S&P 500, Plaintiffs understood that Santander                           was        offering    them       a   low risk, low     volatility
    portfolio.

             97.         The     presentation then discussed the "value added" services provided by Santander:

             The investment process is not complete without a professional analysis and
             explanation of the cause and effect which are produced by the portfolio. This
             double function of oversight and control is vital for the control of exposure [to
             markets], structure, risks and results, in a triple dimension, client, manager and for
             the bank entity itself It is a process which is undertaken for all and each one of the
             investment proposals and which we will be seeing examples with the different
             portfolios which are proposed. We articulate them in four phases:

                         Periodic revision of the objectives and                strategies.
                         Readjust the distribution of Assets.

    BANK OF AMERICA TOWER                                              30                                                WESTON CORPORATE CENTER
           SUITE 1200                                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                             LASH &GOLDBERG,                      I P                             2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                       ATTORNFYS AT LAW
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             WWW.lashgoldberg.com                                       954 384 2500 954 384 2510 FAX
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                                                                                                 CASE NO.


                           Causes for the results obtained.
                           Information        on   the results.

                 (Emphasis in original).

                 98.       Plaintiffs instructed Santander Miami, Sanchez Castillo and Jaureguizar to                                  develop a
    proposal based          on   the low       volatility represented.               Plaintiffs relied      on   the truth and accuracy of

    Santander Miami's information. Based                            their     prior experience              Coutts   Cayman      and their
                                                               on                                      at                                      long

    standing relationship              with and trust in       Jaureguizar, Plaintiffs              had     no reason   to believe that any


    information         provided by Santander Miami                 was       false     or    materially misleading. Santander            Miami

    and    Jaureguizar      were       simply continuing           and     improving           upon the low      risk, low volatility, fully

    diversified investment program that had been                     so     successful at Coutts            Cayman.
                99.        Santander Miami's            presentation,            upon information and             belief,   was    prepared by
    Santander Miami in Miami. The basis for Plaintiffs' belief is that all of the                                       representatives who
    visited Panama         were        employed      at Santander Miami in its Miami office and all came to Panama


    from Miami.

                 100.     Santander Miami then                prepared,           in    Miami,     a   second    presentation       to propose

    investments for Plaintiffs to              purchase     once    their accounts at Coutts                Cayman were liquidated             and

    the accounts at Santander Bahamas                    were     established.

                 101.     The second           presentation compared                   a     host of alternative      hedge       funds which

    Plaintiffs asked Santander Miami to consider.                              In almost all cases, Santander Miami                   provided
    statistical information            showing      that the      Optimal Funds, including Optimal                    SUS and        Arbitrage,
    were    safer and better alternatives.                      Santander              Miami, Jaureguizar and               Sanchez Castillo

   represented          that the Santander          Optimal    Funds                   superior because       of their lower                   and
                                                                           were
                                                                                                                                  volatility
   better risk-reward ratio,            as   measured    by the Sharpe ratio.



    BANK   OFAMERICA TOWER                                                  31                                           WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
   100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG.
                                                                         ATTORNE1S AT I AW
                                                                                                                              2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                  www.lashgoldberg.com                                  954   384 2500 954 384 2510   FAX
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                                                                                                  CASE NO.


                 102.    The second          presentation       then     proposed             two recommended               portfolios made      up

    predominately of Santander proprietary hedge funds.                               The first        portfolio had a standard deviation of
    2.85% and       a   Sharpe    Ratio of 1.95. The second                portfolio          had      a   standard deviation of 3.09% and        a



    Sharpe Ratio of 1.87.

                 103.     Based        on   this statistical information                     provided       to   Plaintiffs, Santander Miami,

    Sanchez Castillo and           Jaureguizar clearly understood                    that Plaintiffs wanted their investment                profile
    to be low risk.           Plaintiffs            relying        the statistical            analysis       and the   promised    low
                                            were              on
                                                                                                                                          volatility
   when    reviewing       the investment program recommended                                by   Santander Miami. Low            volatility/risk,
   diversification and           rebalancing were         the   key factors for Plaintiffs.                   Santander Miami made it clear,

   in writing, that the        proposed investment program was structured to meet these objectives.

             104.        The second         presentation then reviewed the investments in the existing portfolios and

   made    recommendations, comparing existing positions primarily                                         to Santander    proprietary products.
   It recommended "a structural               position based on fund of fund hedge products...                               we   will   proceed to
   substitute the actual funds [Coutts                Orbita] for those alternatives [Optimal],                        but that process will be

   done   selectively and optimizing the exposure to the current market."

             105.        The     presentation then presented a correlation coefficient analysis and concluded:

             In this    manner weobtain additional protection                         against losses not only of the markets
             but also of [against] the managers....

                         3.            Plaintiffs State That        They Want A Conservative                           Investment Profile

             106.        As stated          above, while        at Coutts            Cayman, Jaureguizar                   was   instrumental in

   promoting        the Coutts Orbita              Capital    Return     Fund, which                  was    Plaintiffs'   largest holding     and

   provided consistent returns.               It   was   classified   by Coutts as                a   conservative investment.

             107.        While     Jaureguizar clearly          understood Plaintiffs' conservative investment                           objectives
   from her        prior management            of Plaintiffs'      portfolios            at   Coutts, and despite Santander Miami's

    BANK OF AMERICA TOWER                                                 32                                                 WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                  SUITE 317
   TOO SOUTHEAST 2ND STREET                                  LASH &GOLDBERG',
                                                                       ATTORNEYS AT Ly, \W
                                                                                                                                  2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                               FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                 wWW.lashgoldberg.com                                       954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1          Entered        on       FLSD Docket 03/08/2010                 Page    33 of 69

                                                                                           CASE NO.


   presentations proposing              low risk and low    volatility investment              programs,    Jaureguizar    and others at

    Santander Miami          attempted to document Plaintiffs' accounts as high risk.

                108.     For      example,   Plaintiffs' counsel sent Patrick                  Villoldo, Santander Miami's Vice

   President and Director of Risk                Management       and      Compliance, who               acted in the    capacity   of in-

   house counsel for Santander Miami from Miami, Florida,                                    a      draft of the First Amendment to

   Terms and Conditions                  (the "First Amendment").                    Plaintiffs' counsel wanted to document

   Plaintiffs' conservative investment mandate, which                         was      consistent with the         previous   Santander

   Miami        presentations.

                109.     Mr. Villoldo      responded   that the conservative mandate could not be included in the

   account       opening     documents and that "These matters                       can   be addressed in the       non-discretionary

   agreement and the investment profile."

                110.     Villoldo       followed-up   with   an    email       stating:          "I also need to discuss with Ana


    [Jaureguizar]       and Manuel         [Sanchez Castillo] the investment profile,                     to ensure it    captures your

   client's investment            objectives,   risk tolerance, and other related factors." Villoda then                       expressly

   acknowledged that Plaintiffs had requested a conservative investment profile as follows:

                         The matter with the investment profile is one that I will leave to
                         your client's assigned officer [Jaureguizar] and our investment
                         manager [Sanchez Castillo]. I, however, will insist that the profile
                         be respected according to this Bank's definitions; i.e., if you [sic]
                         client's investment objectives and risk tolerance falls under a
                         conservative profile as per our definition, the investments
                         recommended will have to follow the diversification requirements
                         established within that profile, etc.

                111.     Villoldo concluded        by stating: "Victor,              at the end of the      day   what   truly matters   is

   the level of service the client is           provided,   and   a   piece     of paper does not          necessarily    measure    such

   service      one    way   or   the other."




    BANK   OFAMERICA TOWER                                            33                                            WESTON CORPORATE CENTER
           SUITE 1200                                                                                                         SUITE 317
   100 SOUTHEAST 2ND STREET                           LASH 6,1GOLDBERG
                                                                  ATTORNEYS AT LAW
                                                                                            I I P                        2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050    FAX
                                                            www.lashgoldberg.com                                   954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                      Document 1           Entered      on     FLSD Docket 03/08/2010                            Page        34 of 69

                                                                                              CASE NO.


                 112.         As Plaintiffs had        clearly      stated    they      wanted     a    "conservative"                portfolio, by
    Villoldo's admission, the investments recommended                                   by   the Santander Entities and Santander

    Individuals had to conform to the conservative                       profile.

                 113.         However, Santander Miami, Sanchez Castillo, Jaureguizar, Echave and other

    officers and         employees         of Santander Miami knew                 or   shown have known that the investment

    program recommended and                    subsequently implemented by                     Santander    Miami, Sanchez Castillo,

    Echave, Jaureguizar,                 Barron and   Reif, consisting primarily of Optimal hedge funds, did not, in

    fact, qualify under the definition of a conservative profile. Santander Miami, Sanchez Castillo,

    Jaureguizar, Echave, Barron and Reif failed to disclose this material fact to Plaintiffs.

                 114.         Rather, Santander Miami, Villoldo, Sanchez Castillo, Echave, Jaureguizar, Barron

    and Reif       aggressively promoted investments that, unknown                                to    Plaintiffs, did          not     qualify         as


    conservative under Santander's                   own    definition, yet they represented these investments                                as     low

    risk, low volatility and fully diversified in order                       to   generate significant fees for themselves in

    reckless     disregard for Plaintiffs'          stated investment         objectives.

              115.            On   February 15, 2005, Jaureguizar finally                    sent Plaintiffs' counsel the               investment

    profile   via fax, which included               a one   page    "Special       Profile" followed        by    a   five page investment

    profile (in Spanish, "Analisis de Cartera").

              116.            The investment     profile incorrectly stated that Plaintiffs                 had       a   high    risk tolerance

    and referred to           a   3 month LIBOR        +    4% benchmark           ("3L4 benchmark"),             which Plaintiffs                 never



    agreed to.       This benchmark           was   selected   by   Santander in direct contravention of Plaintiffs' stated

   risk tolerance.

              117.            Plaintiffs' counsel called       Jaureguizar          and      objected    to the       Special         Account and

   investment           profile    Santander Miami sent            as   not   reflecting       Plaintiffs' stated risk tolerance and



    BANK OF AMERICA TOWER                                                34                WESTON CORPORATE CENTER
          SUITE 1200                                                                               SUITE 317
   100   SOUTHEAST      2ND   STREET                        LASH &GOLDBERG,
                                                                        T(, RNILY`, AT LAW
                                                                                              2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                           ATFT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                               www.lashgoldberg.com                                       954   384   2500   954   384   2.510   FAX
Case 1:10-cv-20695-FAM                   Document 1           Entered          on       FLSD Docket 03/08/2010                  Page      35 of 69

                                                                                           CASE NO.


    informed      Jaureguizar that Plaintiffs would not sign the Special                        Account and       rejected the investment

    profile she     sent.


                 118.      Jaureguizar explained         that Plaintiffs could not buy                Optimal funds and thereby obtain

    the   promised low volatility without signing the Special Account profile.                               At no time did        Jaureguizar,
    Sanchez       Castillo,   or   Echave state that the investment program                     being    recommended did not             comply
    with Plaintiffs' low risk investment               objectives and,       in   fact, it was clear from their statistical analysis

    and written         representations that the investment program they promoted was                            low risk.

                 119.      On March 14, 2005,           Jaureguizar responded              to   Plaintiffs refusal to       sign   the   Special
    Account and the 3L4 benchmark investment                    profile as follows:

                The  profile copies that I faxed to you included the investment program that we
                had  implemented last year. I propose that if you sign the "Special Account"
                Profile, once Elias/you? and Javier agree on the distributions, I will then include
                that approved presentation to the Special Account Investment Profile. This is if
                you accept that the Special Account, just states that it is a special account,
                and the specifics will be agreed upon?


                (Emphasis supplied).

                120.       During March 2005, Plaintiffs worked                          with Echave to finalize the investment


   program and made              adjustments to    it. Plaintiffs    agreed the investment program would track the                          3L3

   Benchmark and not the 3L4 benchmark set forth in the investment                                     profile   sent   by Jaureguizar.      On

   March 11, 2005, Plaintiffs            requested that Santander Miami and Echave prepare a formal investment

   profile corresponding to the 3L3            Benchmark with full statistical                   analysis.
                121.       In sum,     Jaureguizar told Plaintiffs           to    ignore the         contents of the      Special    Account

   document and to            rely instead    on   the    underlying        investment progyam and                 profile    to be sent     by

   Echave, which would reflect the purportedly low risk, low volatility investment program previously

   represented by          Santander Miami        as   having   a   standard deviation of               approximately       3%.     Santander

   Miami        thereby confirmed that the investment profile requested on March 11,                               2005 would be in line


    BANK   OF   AMERICA TOWER                                         35                                                 WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
   100 SOUTHEAST 2ND STREET                              LASH SzGOLDBERG
                                                                    Ara RNFYS AF I AV
                                                                                                II,                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             www.lashgoldberg.com                                       954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                           Document 1            Entered          on       FLSD Docket 03/08/2010                Page      36 of 69

                                                                                                        CASE NO.


    with the      purportedly             low risk, low        volatility, well-diversified               investment    proposals that Santander

    Miami had previously recommended and which Plaintiffs had                                            requested.

                 122.          On   April 15, 2005,           Echave sent Plaintiffs the                proposed    investment program. In the

   transmittal e-mail, Echave                       promised to    send Plaintiffs the statistical              analysis requested by Plaintiffs
    in the next few weeks. Echave                       never    sent it   despite Plaintiffs repeated requests that it be provided.
                 123.          Beginning April 19, 2005,               Plaintiffs authorized commencement of the investment

   program        prepared by              Santander Miami based                 on   the express          understanding      that the investment


   program        was     to    comply          with the     proposed      low   risk, low volatility diversified profile tracking the

    3L3 Benchmark. Plaintiffs                         never   agreed   to any investment                 profile   other than the low        risk, low

   volatility, highly               diversified        profile   which Plaintiffs                consistently   advised      Jaureguizar, Echave,
    Sanchez Castillo, Villoldo and Santander Miami reflected Plaintiffs' risk tolerance and which

   was     reflected in Santander's statistical                    analysis      of its    proposed investment programs.

                 124.         Plaintiffs therefore commenced the investment program based                                        on   the    following
   conditions:           (i)    it would         cover   Plaintiffs' investments at Santander and CIBC                           as one      integrated

   portfolio (investments                  at   a   third bank    initially   monitored            by   Santander     were   eventually transferred
   to    Santander); (ii)           the    hedge funds, predominately held                       at   Santander, and initially comprising         72%

   of the    portfolios (of which                    51.75%    were    Santander         proprietary funds),          would have low          volatility
   that would offset the                higher volatility of the           CIBC     portfolios; (iii) together, the two portfolios would
   track the 3L3          Benchmark; (iv) together, they would have low volatility; (v) together, they would be

   fully diversified; (vi) Santander Miami would periodically rebalance the investments in all                                                accounts


   to    keep the portfolios in line                 with the 3L3     Benchmark; (vii) Santander would be compensated for its

   advisory       services       through the          fees    generated by the Optimal funds and commissions                          on    trades; and

   (vii) the "Special Account" document did not apply.


    BANK    OF   AMERICA TOWER                                                   36                                             WESTON CORPORATE CENTER
             SUITE   1200                                                                                                                 SUITE 317
   100   SOUTHEAST      2ND    STREET                             LASH &GOLDBERG',
                                                                              ATTORNEYS AT LAW
                                                                                                                                     2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                                  FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4050      FAX
                                                                       WWW.lashgoldberg.com                                    954 384 2500 954 384 2510 FAX
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                                                                                             CASE NO.


                          4.            Plaintiffs Agree To Transfer Funds To Santander Bahamas in March
                                        2005 And Accept Defendants' Offers to Sell Them Shares in the
                                        Optimal Funds in April 2005.
                 125.     Based         on   the Santander Entities and their officers and                employees' representations
    and    omissions, Plaintiffs opened accounts with Santander Bahamas                                 on   March 16, 2005.

                 126.     Jaureguizar             offered to sell Plaintiffs the          Optimal   SUS funds       by    email dated March

    14, 2005       sent from      Miami, in which she advised that the Optimal SUS fund was now open for new

    investment and offered Plaintiffs the                    opportunity    to   participate      in the fund.      Jaureguizar attached               a


    one    page fact sheet to the email. The fact                  sheet, prepared by OIS, describes the Optimal SUS fund

    as:



                 The preservation and increase of capital with a minimum ofvolatility through liquid
                 investments in U.S. stocks and options. The fund invests in U.S. large cap stocks
                 that are part of the S&P 500. A permanent characteristic of this fund are puts, as
                 protection against losses. Calls can also be purchased for increased returns. The
                 fund uses leverage. It puts emphasis on investments that are very liquid. To achieve
                 its investment results, the fund invests 100% of its assets in the USD class series of
                 Optimal Strategic U.S. Equity, a subfund of Optimal Multiadvisors, Ltd. In
                 Bahamas.

    See Exhibit 2 attached hereto.                  (Emphasis supplied).

                 127.     Santander           Miami, its officers and employees, and OIS's representations about

   Optimal        SUS   were      false when made, and the             representations           were   known to be false,             reasonably
   should have been known to be false                          or were   made with reckless             disregard        of the truth of the

   representations.

                 128.    In    April 2005,              Plaintiffs transferred      a     substantial amount of funds to the                       new


   accounts at Santander                Bahamas, and Plaintiffs accepted Santander Miami's offers and investment

   recommendations based                     on   the   quantitative analysis and representations              as    to   the low           risk, low

   volatility      and diversification of the investments offered                           by   the Santander      Entities, Jaureguizar,

   Echave, and Sanchez Castillo.


    BANK    OF AMERICA TOWER                                             37                                            WESTON CORPORATE CENTER
             SUITE 1200                                                                                                          SUITE 317
   100    SOUTHEAST 2ND STREET                                LASH &GOLDBERG.,
                                                                       ATTORNE1S AT LAW
                                                                                                                            2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4050   FAX
                                                                  WWW.lashgoldberg.com                                   954   384   2300   954   384 2510   FAX
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                                                                                      CASE NO.


                129.      Plaintiffs     purchased   the Santander     proprietary Optimal Funds, including Optimal

   SUS and       Arbitrage.        Plaintiffs sent their written requests to           purchase these         funds   by facsimile             to


   Santander Miami's office.

                130.      Plaintiffs      followed-up      their written request with formal investment order

   confirmations         prepared by Jaureguizar         in Miami and faxed to Plaintiffs for                 signature (a practice

   that would be followed              throughout the relationship).

                131.      The investment orders asked Plaintiffs to check off                           one   of two boxes either


   confirming          their   receipt   of prospectuses for the funds           being purchased         or   confirming that they

   declined to review the materials.                  Specifically,    the order confirmation form states                      that,     "the


   undersigned MUST initial                 ONE alternative."      (Emphasis          in   original).

                132.      Plaintiffs did not check off either box                on   any order confirmation form because

   they    were    neither offered         nor   delivered prospectuses for the funds              being purchased.                Nor did

   Plaintiffs decline to review the materials. Instead, Plaintiffs relied                         on    the   representations            made


   by the   Santander Entities and their             respective officers, employees            and agents that the investments

   were    low     volatility,    low risk and well diversified in line with Plaintiffs' stated risk tolerance.

   The Santander Entities and their                   respective officers, employees                and agents          simply         never



   provided or offered any additional materials, including prospectuses, to Plaintiffs.

                133.      Plaintiffs sent the     signed   order confirmation forms to Santander Miami's office in

   Miami, Florida, and the Santander Entities purchased the Optimal Funds, including SUS and

   Arbitrage,      on    behalf of Plaintiffs in New York in          April 2005.

                          5.           Plaintiffs Placed Their Trust and Confidence in the Santander
                                       Entities and Their Officers and Employees.

                134.      At all relevant     times, Plaintiffs placed their          trust and confidence in the Santander


   Defendants and their            respective officers, directors      and agents.


    BANK   OFAMERICA TOWER                                        38                                             WESTON CORPORATE CENTER
           SUITE 1200                                                                                                      SUITE 317
   100 SOUTHEAST 2ND STREET                             LAS H          OLDBERGJI
                                                                ATRNEYS AT LAW
                                                                                                                      2500 WESTON ROAD
                                                                                                                FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    305 347 4050   FAX                        WWW.lashgoldberg.com                                954   384   2500   954   384   2510   FAX
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                                                                                          CASE NO.


                135.     From       April 2006 to early March 2008,               Plaintiffs'   assigned investment advisor was

   Miguel       Barron       ("Barron").      Barron     was an   employee              of Santander Miami whose office                  was



   located at Santander Miami's office at 1401 Brickell Avenue.

                136.     On    April 6, 2007,     Plaintiffs' counsel wrote to Barron and               Jaureguizar requesting                 a



   portfolio rebalancing for the Plaintiffs'             accounts.    The letter reads, in part,      as   follows:

                I'm reviewing the portfolio analysis you sent to Elias as of March 2007. We would
                like to have a telephone conference with Miguel anytime between 3 pm and 5 pm of
                next week. We want to discuss the following topics:


                1. Taking into account SPB [Santander Private Bank] and CIBC [other bank where
                Plaintiffs had investments managed by Santander], what recommendations can
                Miguel make in general?

                2.    How much would volatility risk increase if we increased the benchmark                            by    100
                or   200 basis points? Answer both scenarios.

                While the returns are meeting the objectives, we want to consider what adjustments
                can be made going forward on a risk-adjusted basis. We noted Miguel's comments

                about the volatility of the CIBC portfolio. We interpret his comments to mean Elias
                can get the same returns in CIBC with much lower volatility. If this is true, what

                specific recommendations can Miguel make to get these returns so that Elias may
                implement them?



                In the   future, please add section on specific recommendations (i.e., changes) so
                                                  a

                that Elias can have information to act upon. By specific, I mean sell X and buy Y
                and in specific amounts, giving the statistical information to substantiate the
                recommendation. Look at all accounts that you have information for (SPB, CIBC,
                UBS, etc.), but don't [make] recommendations on what is already "tied up" (such as
                UBS note).

                We     see   this   as         tuning of the portfolio, taking into account market
                                         constant fine
                changes sector changes and, in general, making it a better performing portfolio.
                This is the only area where we believe the report can be made better....Remember,
                we're just fine tuning, but we do want to see the statistical analysis to support the
                recommendation.




    BANK   OF AMERICA TOWER                                          39                                        WESTON CORPORATE CENTER
            SUITE 1200                                                                                                   SUITE 317
   100   SOUTHEAST 2ND STREET                            LASH &GOLDBERG,
                                                                  AT1, 7RNEYS AT LAW
                                                                                                                    2500 WESTON ROAD
                                                                                                              FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
  305 347 4040 305 347 4050 FAx                             WWW.lashgoldherg.com                               954   384   2500   954   384   2510   FAX
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                                                                                                  CASE NO.


                137.         Barron had alerted Plaintiffs of the                volatility       of the CIBC       portfolios    and    implied he
   could restructure them to obtain the                    same   returns     with less         volatility.   Plaintiffs   requested that he do

   SO.



                138.         In June    2007, Barron       sent Plaintiffs a rebalance recommendation. Barron states that


   the   objective of the rebalance was to:

                    Reduce exposure to those assets with less                                   gains    and worst      [performance]
                    perspective in the short term; and

                    Increase exposure to emerging market equities, where the actual exposure [in the
                    portfolios] is excessively low and where the long term growth prospects are
                    superior.

                139.         Barron     never    sent Plaintiffs   a   statistical       analysis       of the   impact his   recommendations

   would have          on     the    portfolios. However, given               the     relationship        of trust and confidence between

   Plaintiffs and Santander Miami,                         Jaureguizar          and Barron, Plaintiffs                implemented             Barron's

   recommendations.

                140.         From June 2007             through December 2008, Barron, Sanchez Castillo and Reif

   recommended additional incremental                        changes     to     the Plaintiffs'          portfolios without        first      providing

   Plaintiffs with           a    statistical   analysis   to assure such           changes        would track Plaintiffs' low risk, low


   volatility and well diversified investment profile or track the                               3L3 Benchmark.

                141.         In    carrying     out their    "advisory"         duties to Plaintiffs, Santander                  Miami, Barron,

   Sanchez Castillo, and Reif had                   a   fiduciary duty        to assure their recommendations                    were      consistent

   with Plaintiffs' conservative investment                   objectives and low risk tolerance.

                142.         On    February 22, 2008,       Plaintiffs' counsel asked Barron to                    provide further analysis of

   Plaintiffs'      portfolios.         Barron advised Plaintiffs             on    February 28,          2008 that he had         resigned          from

   Santander Miami and would be                    leaving shortly.



    BANK   OF   AMERICA TOWER                                             40                                                  WESTON CORPORATE CENTER
            SUITE   1200                                                                                                               SUITE 317
   100   SOUTHEAST     2ND   STREET                          LASH &GOLDBERG,
                                                                        ATI   MiNLYS AT LAW
                                                                                                                                  2300 WESTON ROAD
                                                                                                                           FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
  305 347 4040 303 347 4050 FAX                                    WWW.lashgoldberg.com                                    954   384   2500    954   384   2510   FAX
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                                                                                              CASE NO.


                 143.      Barron had          previously   advised Plaintiffs he would make recommendations to

    rebalance the         portfolio     to reflect his view of asset classes that he                   expected       to   perform      well   going
    forward. Plaintiffs wanted to obtain Barron's recommendations                                    prior to   his   departure since he had

    already begun the requested analysis,                and   waiting     for    a new       advisor to take         over   the   portfolios    and

    restart the process would be time              consuming.
                144.       On March        3, 2008, Barron      sent Plaintiffs         a   document entitled              "Proposed     Portfolio

    Rebalancing." The portfolio rebalancing provided recommendations                                        for both the Santander and

    CIBC accounts for which Santander Miami and Barron had                               provided investment advisory services.
                145.       Based     on   Barron's advice and the          relationship         of trust between him, Plaintiffs and

    Santander       Miami, Plaintiffs followed Barron' s advice.                              Jaureguizar prepared              the investment

   orders in Miami and sent them to Plaintiffs.                              Plaintiffs returned the investment orders to

    Santander Miami via facsimile to 305-539-5154. The transactions                                      were    confirmed         as   completed

   by    Santander Miami's office in Miami. Plaintiffs carried out Barron's recommendations with the


   understanding           that their     portfolios   would continue to follow the low risk, low                               volatility,     well

   diversified strategy to track the 3L3 Benchmark.

                           6.           Defendants Abused Plaintiffs' Trust and Confidence

                146.       In     January 2008,        Plaintiffs    contacted Barron to voice                             concern      about the

   concentration of risk in the                Optimal family    of funds. Barron informed Plaintiffs that the                            Optimal
   funds    were        well    diversified,   were   performing     well and          they   should     keep    all of them,        although    he

   agreed to advise as to which Optimal flinds to                   sell if Plaintiffs wanted to do              so.


                147.       On    January 6, 2008, based on Barron's recommendations of which Optimal funds to

   sell, Plaintiffs placed sale orders through Santander Miami's Miami office for those Optimal funds.

   Barron did not recommend the sale of Optimal SUS                          or   Optimal Arbitrage.


    BANK   OF AMERICA TOWER                                           41                                                    WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                SUITE 317
   I00   SOUTHEAST 2ND STREET                            LASH &GOLDBERG
                                                                    ATR,RNLYS AT LAW
                                                                                               LIT                               2500 WESTON ROAD
    MIANII, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
  30$ 347 4040    305 347 4050    FAX
                                                               WWW.lashgoldherg.com                                        954 384 2500 954 384 2510 FAX
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                                                                                            CASE NO.


                 148.    After Barron's       departure, Plaintiffs' relationship                 was   transferred to Sanchez Castillo

    and Sandra Reif.              Sanchez Castillo         was    the head of Santander Private                   Banking's         worldwide

    advisory      services division and        was    based in Miami.                Reif, who also work from Miami, became

    Plaintiffs' investment advisor             replacing     Barron.        Upon information and belief,                   she     reported         to


    Sanchez Castillo.

                149.     In June       2008, Sanchez Castillo and Reif, through Jaureguizar,                           sent Plaintiffs the


    May investment report that included recommendations for purchases and sales, again without                                                  any

    statistical    analysis      of the   impact   the recommendations would have                       on   Plaintiffs'   portfolios.         The

    June 2008 report reflected the increase in                   volatility      in the markets, but failed to recommend any

    action to rebalance the            portfolios   to    keep    them within the           promised low risk,         low       volatility and
   well diversified investment             profile.
                150.     Instead, the      June 2008 reports, unbeknownst to Plaintiffs at the                      time, recommended

    investments that increased the             volatility   and risk of the              portfolios.    Plaintiffs carried out Sanchez

    Castillo and Reif's recommendations based                       on    the    relationship      of trust and confidence between

   Plaintiffs and Santander Miami and based                         on    Plaintiffs' clear instruction that their investment


   profile was to be consistent with a low risk,                  low    volatility and well diversified program tracking the
   3L3 Benchmark.

                151.     In   early August 2008, Plaintiffs              called Sanchez Castillo and              Jaureguizar           and    once



   again expressed their           concern    about   having too         much exposure to the            Optimal family           of funds and

   to   discuss the markets.              Sanchez Castillo and             Jaureguizar,           like Barron before them, advised

   Plaintiffs that the        Optimal funds        were   well diversified and             were   performing well      and that Plaintiffs

   should not sell them.               They   did not inform Plaintiffs that                 Optimal      SUS    was   not, in fact, well

   diversified.




    BANK    AMERICA TOWER
           OF                     42                                                                                 WESTON CORPORATE CENTER
          SUITE 1200                                                                                                           SUITE 317
   MO SOUTHEAST 2ND STREET                                LASH &GOLDBERG                                                  2500 WESTON ROAD
   MIAMI, FI.ORIDA 33131-2158,.1-11, RNEY,                                      AT LAW
                                                                                                                    FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                 WWW.lashgoldberg.com                                954   384   2500   954   384   2510   FAX
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                                                                                                  CASE NO.


                152.      As Plaintiffs later           discovered, Santander Miami, Sanchez Castillo, Reif and

    Jaureguizar's        investment recommendations failed to make                                            adjustments   to     assure           Plaintiffs'

    portfolios     would continue in accordance with Plaintiffs' stated risk                                           profile    or     track the 3L3

    Benchmark. Santander Miami, Sanchez Castillo, Reif and                                       Jaureguizar also failed to provide advice

    and recommendations to                "preserve capital",         even          when Plaintiffs'               portfolios     started to          diverge

    significantly        from the 3L3 Benchmark.                      Instead, Barron, Sanchez, Reif and Jaureguizar's

    recommendations concentrated risk and increased                          volatility in Plaintiffs' portfolios.

                153.      The    August        2008 reports          prepared            and sent             by Santander Miami                showed            a



    significant    fall in value and       a   large   di vergence from the 3L3                    Benchmark, causing great                    concern           for

    Plaintiffs who advised Santander Miami of their                       concern.              In response, Santander             Miami, Santander

    Bahamas, Sanchez Castillo, Reif and Jaureguizar provided                                                      no   analysis,        no      substantial

    recommendations to rebalance, and voiced                     no concern                   about the direction of the               portfolios. They

    took   no    steps   to   "preserve capital"         or   otherwise follow Plaintiffs' low risk, low                                 volatility,        well

    diversified investment profile.

                154.      Instead,   on   September 26, 2008, Reif made                            a   small number of ad hoc investment

    recommendations, which Plaintiffs carried                     out     based          on     the    relationship      of trust and confidence

    between Plaintiffs, Santander Miami,                      Jaureguizar,           Reif and Sanchez Castillo.                         However, Reif

    continued to fail to        provide    Plaintiffs with       a   comprehensive                 review of and investment                   proposal           for

    Plaintiffs'   portfolios as Plaintiffs had been requesting.

                155.      On October 28 and            31, 2008, Plaintiffs              once     again asked to reduce their exposure to

    Optimal Funds due to Plaintiffs'              concern      regarding continued concentration                            in the      Optimal         funds.

    Reif advised Plaintiffs          as   to which       Optimal      funds to sell. Reif did not recommend the sale of

    Optimal      SUS     or   Optimal Arbitrage.


    BANK   OF AMERICA TOWER                                               43                                                  WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                  SUITE 317
   100   SOUTHEAST 2ND STREET                             LASH &GOLDBERG
                                                                      A ITO RIN F 7, AT LAW
                                                                                                       i i,                        2500 WESTON ROAD
                                                                                                                             FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2, 158
  305 347 4040 305 347 4050 FAX                                 www.lashgoldberg.com                                             954   384   2500    954   384   2510 FAX
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                                                                                              CASE NO.


                 156.        Further, Plaintiffs did        not sell   a   larger percentage          of their   Optimal funds       because

    Reif and Sanchez Castillo assured Plaintiffs that the                                 Optimal funds      were   performing      well and

    were    well diversified.             Unbeknownst to Plaintiffs, Reif and Sanchez Castillo's                            representations

    were    false when made, and Santander Miami, Santander Bahamas, OIS, Reif, Sanchez Castillo

    and    Jaureguizar         failed to disclose what             they    knew       or    should have known about the risks of

    holding Optimal            SUS and        Optimal Arbitrage.

                 157.        Barron, Sanchez Castillo and Jaureguizar's representations regarding the Optimal

    funds     were      made to Plaintiffs       by telephone from Miami, Florida.

                 158.        The Santander Entities          were    earning substantial income                from the fees       generated

    by Optimal funds, including Optimal                     SUS and        Arbitrage,        and   they had a strong incentive to keep
    Plaintiffs invested in              Optimal funds,      in reckless         disregard     to   their   fiduciary   duties to Plaintiffs.

    In reliance         on    Barron, Sanchez Castillo and Jaureguizar's representations, Plaintiffs retained

    most of their investments in                 Optimal Funds, including Optimal                    SUS and     Arbitrage, through the
    time the Madoff fraud               was    disclosed.

                 159.        On   or    about October 30, 2008, after              multiple requests by Plaintiffs' counsel,             Reif

    finally     sent Plaintiffs a new investment              proposal. The               32 page investment     proposal      recommended

    that Plaintiffs        buy four Exchange           Traded Funds without statistical                    analysis, without correlation

    analysis, without          an    asset    allocation model, and without any                 meaningful analysis        whatsoever that

    would     quantify the risks in the proposed portfolios.

                160.         After   receiving Reif's report, Plaintiffs' counsel called Jaureguizar to complain.                          At

    a   time when markets              were   falling precipitously,       Santander Miami and Reif were not                   providing the

   analysis      and recommendations               required   to   bring     the    portfolios      back in line with      a   low risk, low




    BANK   OFAMERICA TOWER                                                 44                                           WESTON CORPORATE CENTER
           SUITE 1200                                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                                 LASH                OLDBERGIJ
                                                                       ATTORNEYS AT LAW
                                                                                                                             2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050    FAX
                                                                WWW.lashgoldberg.com                                   954 384 2500 954 384 2510 FAX
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                                                                                             CASE NO.



    volatility,      well-diversified program             tracking the   3L3 Benchmark.                 Jaureguizar promised to help,            but

    failed to do        so.



                 161.         On October 31,            2008, Plaintiffs' counsel called Reif and advised her that                                    a



    comprehensive portfolio                   review and statistical     analysis          were    required. Reif informed Plaintiffs'
    counsel that she              was    working   on   it. Reif further advised for the first time that Plaintiffs'                    portfolios
    were    aggressive            rather than conservative. Reif thus           exposed the true           nature of Plaintiffs'        portfolios
    as   being high risk in violation of Plaintiffs low risk, low volatility conservative profile.

                 162.         In response to the conversation with             Reif, Plaintiffs' counsel           sent Reif an e-mail that


    reads, in part,       as      follows:

                Prepare a proposal that looks at the total portfolio broken down by account and
                custodian and do the statistical analysis per account and custodian and ALSO all
                together to get comprehensive ratios (blended ratios). Develop a 5 year plan where
                the portfolio can be slowly transitioned to a more conservative position. Please note
                that Elias was always informed this was a conservative portfolio since it's [sic]
                benchmark is only Libor plus 300 bps 13%1. Again, this goes to Elias's
                misunderstanding of the risk inherent in the portfolio. That's why it's so
                important for you to spell things out statistically to him. (Emphasis supplied.)

                163.          Santander Miami, Santander Bahamas,                           Jaureguizar         and Reif knew Plaintiffs

   depended on them for investment advice                        and would not take action                 on   the accounts without their

   advice. For          example,           Plaintiffs' counsel told Reif the         following:
                a.     Email dated October 31, 2008 to Reif:

                I need    COMPREHENSIVE REVIEW and STATISTICAL ANALYSIS of the
                              a

                portfolio, what works, what does not work, what adjustments should be made as a
                whole and when and how they should be implemented, and how and when
                everything can be accomplished with you under discretionary management
                authority... Elias needs your help. Fortunately, he has you to help him!"
                (Emphasis           in   original).

                b.     Email dated November 2, 2008 to Reif:

                Please explain how and why the portfolio diverged so much from Libor plus 300
                bps. When the accounts were set up, the target was Libor plus 300 bps with low

    BANK   OFAMERICA TOWER                                               45                                            WESTON CORPORATE CENTER
           SUITE 1200                                                                                                            SUITE 317
   100 SOUTHEAST ZND STREET                                  LASH &GOLDBERG
                                                                      ATT, RNEY, AT LAW
                                                                                                  LLP                       2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040       305 347 4050    FAx
                                                                 www.lashgoldberg.com                                  954   384 2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                         Document 1        Entered            on        FLSD Docket 03/08/2010                 Page     46 of 69

                                                                                                 CASE NO.


                volatility. What               went wrong and what            can        be done in the future to avoid such
                divergence?" (Emphasis               in   original).
                c.     Email dated November 6, 2008,               stating:
                Elias is anxious to make changes since he's afraid the market is going to fall a lot
                more.    He's holding off doing anything until you send the Oct. Performance
                report, the quantitative analysis of the portfolio and your recommendations....
                Please remember to include an analysis of how a portfolio structured as Libor plus
                300 bps could go so off the mark.


                164.        On November 7, 2008, Plaintiffs counsel writes to Reif again:

                Can you please check the account opening documents and advise on the risk profile
                for the accounts? Perhaps you can make a copy of the risk profile and PDF it to
                Elias and I since we may wish to revise it going forward.


                Also, please see if you can find the initial recommendation made
                                                                                 regarding Libor
                plus 300 basis points and how such portfolio was supposed to perform. I want to
                compare what Elias originally agreed to what you now propose    how they are the
                same and how they are different.



                165.        Santander Miami and Santander Bahamas                               acknowledged        their acceptance of this

   trust and confidence as indicated                      by   the fact that           they     coded Plaintiffs' accounts            as    "Active

   Advisory" as opposed to "Non-Managed" prior to                                 2009.

                166.        On November           14, 2008, after repeated requests by Plaintiffs counsel, Reif finally

   sent a "Statistical          Analysis" of the portfolios.             The Statistical           Analysis showed       that the Santander

   portfolios        had   volatility ranging       from 1.12 to 4.36 while the CIBC                      portfolios   had   volatility ranging
   from 14.3 to 17.6.                Combining      the    portfolios, the statistical analysis report showed the                           standard

   deviation         ranged from          8.94% to 11.64%, far in         excess          of the low     volatility promised by            Santander

   and    as    requested by         Plaintiffs. The last chart in the Statistical                      Analysis   shows that the combined

   weighted portfolios had                 a   standard deviation of 8.62% from May 2006 to                         September 2008,               far in

   excess      of the low      volatility promised by Santander and as requested by Plaintiffs.




    BANK   OF AMERICA TOWER                                               46                                             WESTON CORPORATE CENTER
             SUITE 1200                                                                                                            SUITE 317
   100   SOUTHEAST 2ND STREET                                LASH &GOLDBERG,
                                                                       ATI, ^RNI 1, ATI AV(
                                                                                                   I,                         2500 WFSION ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040       305 347 4050   FAX
                                                                 www.lasligoldberg.com                                  934   384   2500    954   384   2310   FAX
Case 1:10-cv-20695-FAM                      Document 1           Entered          on        FLSD Docket 03/08/2010                       Page         47 of 69


                                                                                                   CASE NO.


                 167.         On November 14, 2008, Reif also sent recommendations                                    purportedly              to   reduce

    the risk in the           portfolios,    which included       a   recommendation to                    purchase     more       of the       Optimal
    SUS and       Optimal Arbitrage Funds.

                 168.         Having previously advised Santander Miami, Santander Bahamas, Sanchez

    Castillo, Jaureguizar and Reif that they wanted                         to reduce their             holdings   in   Optimal Funds, they
    knew    or    should have known that Plaintiffs did not want to increase their                                      holdings          in    Optimal
    Funds when Reif made this recommendation.                                 Reif's recommendations thus                         utterly failed            to


    provide Plaintiffs              with   appropriate investment advice,                    once     again violating       her and Santander

    Miami's       fiduciary duty to Plaintiffs.
                 169.         Plaintiffs' counsel   spoke   to   Jaureguizar                once   again   to voice Plaintiffs'          concern        and

    dissatisfaction with Reif s ad hoc recommendations and                                  dismay at how long the           entire process            was



   taking given the rapid downward movement in the markets.                                        Plaintiffs' counsel had voiced               repeated
    concern      to   Jaureguizar about Reif's failure to provide services,                          and   Jaureguizar repeatedly promised
   that Reif would do the work, but it was to               no    avail.

              170.            On November 14, 2008, Plaintiffs' counsel wrote to Reif and                             Jaureguizar to explain
   the   comprehensive portfolio review               and   rebalancing they requested.                      Plaintiffs' counsel           questioned
   the statistical       analysis provided by Reif, stating:
             I still VERY MUCH DOUBT the 4.61 standard deviation numbers given the
             performance of the portfolios something appears VERY WRONG here and, if
             you        are   using the    wrong   numbers, then       we are          not    moving forward       in   a   meaningful
             way." (Emphasis in original).

             171.             Plaintiffs' counsel further stated that proper                       portfolio analysis    must be undertaken


   when    changes are made to a portfolio as follows:

             This         that when there are purchases and sales, it not be done without full
                        means

             analysis    the effect on the overall portfolio and they [sic] [that] says [sic] [stays]
                               on

             within the agreed upon risk parameters."


    BANK OF AMERICA TOWER                                                47                                                 WESTON CORPORATE CENTER
          SUITE 1200                                                                                                                SUITE 317
   100 SOUTHEAST 2ND STRLLI                             LASH(StGOLDBERGii,
                                                                      AFL,,ILNLY, A 1 LAW
                                                                                                                               2500 WESTON ROAD
   MIAMI, FIORIDA 3391-2158                                                                                              FT. LAUDERDALE, FLORIDA                   33331
  305 347 4040    305 347 4050      FAX                      WWW.las 'Igo Idberg. com                                       954   384   2500    954   384   2510    FAX
Case 1:10-cv-20695-FAM                   Document 1        Entered        on        FLSD Docket 03/08/2010                   Page      48 of 69

                                                                                       CASE NO.




                Plaintiffs' further expressed dismay at the portfolios' volatility as follows: "Elias is
                surprised by the high volatility of a portfolio which was originally structured to be
                much more conservative (includes CIBC). I told him that, in my opinion, he has
                wiped away most of the gains made over the last 10 years."

                 172.        On November        15, 2008, Plaintiffs' counsel again                     wrote to Reif and       Jaureguizar

    stating, in part, as follows:
                      I spent time         reviewing the positions        and       looking everything           over.   Here   are

                my conclusions:

                 1.    There is a lack of diversification. You can't say there is diversification at
                Santander, but not in CIBC. These are all part of the same core account and need to
                be taken together. The positions taken at CIBC are ABSOLUTELY CRAZY.

                2.           Way too much reliance on "trends" rather than good,                        solid   long-term money
                management.

                3.           Too much RISK.


                Please,      start from the        Determine a good asset allocation model, compare
                                              beginning.
                it to current accounts, and then recommend adjustments TO BE MADE OVER A
                PERIOD OF YEARS to get the accounts where they need to be for a long-term
                hold. The proposal Ana sent to me in May is a good start, but we CANNOT get
                there tomorrow since it will mean changing the risk profile and losing all the upside
                after almost all the downside risk has been assumed. OF COURSE, if Santander
                believes the market is going to fall further, then do what is required to get it back
                into shape. (Emphasis in original).

                173.         By Reif's   own    admissions, the portfolios            were        not   properly diversified     and    were



   aggressive.          Plaintiffs' November 15, 2008 e-mail to Reif and                          Jaureguizar unequivocally alerted
    Santander Miami,             Jaureguizar,   and Reif that the       portfolios      were        far too     risky for Plaintiffs'   risk

   tolerance, yet they still failed to take any meaningful action to bring the portfolios into compliance.

                174.        By this time, Plaintiffs    had lost   a    substantial percentage of the value of the assets

   they entrusted           to Santander   over a   few short months, all while Santander Miami, Sanchez Castillo,

   Reif, Barron, and Jaureguizar repeatedly failed                 to   provide competent investment advisory service,
   but continued to receive substantial fees.


    BANK    AMERICA TOWER
           OF                                                      48                                                 WESTON CORPORATE CENTER
          SUITE I200                                                                                                           SUITE 317
   mo SOUTHEAST 2ND STREET                             LASH &GOLDBE RG
                                                               ATIORNI YS AI I AW
                                                                                         I I I'                           2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040        303 347 4050 FAX                     www.lashgoldberg.com                                      954 384 2500 954 384 2510 FAX
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                                                                                        CASE NO.


                 175.     Plaintiffs contacted Reif again        on   November 17, 2008 to request                   an   update on when

    they could expect the comprehensive portfolio analysis.

                 176.     On November 17, 2008, Reif replied as follows:

                 Dear Elias and Victor:

                 I have received your email and spoke with Ana. Per our conversation last week, I
                 mentioned that I will be out of the office this week, so I won't be able to have the
                 information you are        requesting by     the end of this week. I will need at least two
                 weeks to prepare it.

                 Sandra

                 177.     Reif's travel     plans put   an   additional two week                delay   in   providing       the     requested

    advisory services so that Plaintiffs could rebalance their portfolios at a time the markets continued to

    fall   quickly,     even   after Plaintiffs had made     multiple oral          and written requests for such services                   over


    several months.

                 178.     Santander      Miami, Santander Bahamas, Jaureguizar, Sanchez Castillo,                               Barron and

    Reif thus      intentionally, recklessly or grossly negligently                 failed to   satisfy their fiduciary obligations
   to Plaintiffs.


                 179.     On December 11, 2008,          Jaureguizar         informed Plaintiffs' counsel it would be yet

    another week to obtain the            comprehensive proposal.

                 180.     That   same    day, the Madoff Ponzi scheme was reported.

                          7.           Defendants' Breaches of Their Fiduciary Duties to Plaintiffs Were
                                       Intentional, Reckless Or, At the Very Least, Grossly Negligent

                 181.     According       to Santander   Spain's       settlement with            Irving     H.     Picard, the Madoff

   Trustee, Optimal withdrew                over   $151 million from Optimal SUS and                         over   $125 million from

   Optimal Arbitrage within the ninety day claw back period.




    BANK     AMERICA TOWER
            OF                                                     49                                                WESTON CORPORATE CENTER
           SUITE 1200                                                                                                          SUITE 317
   100 SOUTHEAST 2ND STREET                           LASH &GOLDBERG,
                                                                 AM, RNEYS AT LAW
                                                                                                                          2500 WESTON ROAD
    MIAMI, FI.ORIDA 33I31-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             www.lasligoldherg.com                                  954   384 2500    954   384   2510   FAX
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                                                                                             CASE NO.


                   182.    Optimal      executives also visited with Madoff in November 2008, at                               approximately
    the   same       time Reif    was   recommending that             Plaintiffs      purchase   more   Optimal    SUS and              Arbitrage
    and that Santander             Spain, OIS,      Santander Miami and Santander Bahamas knew                                 or   reasonably
    should have known that Madoff was                  running a Ponzi scheme.
                   183.    Further, Santander Miami and other Santander affiliates                      were   informing other select
    clients to sell their         Optimal   SUS      holdings     at the same time Santander Miami                 was     recommending
    that Plaintiffs       buy more.      For   example,     in   an   email from Vanessa Redmond at Santander Miami's


    offices,       in Miami,   Florida, dated September 30, 2008, Ms. Redmond told a client that:

                           Banco Santander is recommending liquidating one of your
                           investments. The name is "OPTIMAL SUS EQ IRL A USD."
                           The bank considers that it is highly risky and due to the volatility
                           in the market we prefer to be conservative and liquidate the
                          investment.

                          Please call     me     to discuss this      issue.

    See   September 30,           2008 Email attached hereto             as    Exhibit "3"     (Emphasis    supplied).3
                   184.   In sum, Reif's recommendations to                    buy more Optimal       SUS   were   made at          a   time that

    the Santander Entities knew             or   should have known             or   otherwise   recklessly disregarded the truth that
    Madoff's        hedge fund was a fraud.

                   185.   Just six weeks after Reif recommended that Plaintiffs' increase their                            holdings           in the

    Optimal         SUS and    Arbitrage funds,       the Madoff fraud              was    revealed, the Optimal SUS fund became

    worthless and the         Optimal Arbitrage Fund was devalued due to their investments with Madoff.                                        The

   volatility analysis         which Reif had        just   confirmed for the Santander              portfolios   were     actually           much

   higher than represented by Reif.




   3
        This email has been redacted to protect the                   identity of the recipient.
       BANK   AMERICA TOWER
              OF                                                          50                                       WESTON CORPORATE CENTER
            SUITE 1200                                                                                                       SUITE 317
   TOO   SOUTHEAST 2ND STREET                               LASH &GOLDBERG.
                                                                       ATTORNLYS AT LAW
                                                                                                                        2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                     FT. LAUDERDALE, FLORIDA 33331
  305 347 4040      305 47 4050   FAX
                                                                 www.lashgoldberg.com                              954   384   2500     954   384   2510   FAX
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                                                                                                   CASE NO.


                 186.        Reif was fired         or   voluntarily terminated              her   employment      at Santander in December


    2008. At the        time,    no new        advisor was        assigned to Plaintiffs nor was there any indication                   Santander

    Miami would         provide Plaintiffs with a comprehensive portfolio analysis. Instead, the Madoff losses

    were   reported and Santander,                  in   complete dereliction of its duties             to   Plaintiffs, focused exclusively

    on    determining         the Madoff losses without                  regard        to Plaintiffs'       prior repeated requests          for    a



    portfolio rebalancing.                As   a   result of the Santander Entities and Santander Individuals conduct,

    Plaintiffs suffered          one      financial disaster after another.

                 187.    In sum, Santander Miami and Santander Bahamas increased Plaintiffs'                                         portfolios'

    volatility and risk          at a time when it should have been                           reducing it, ignored       Plaintiffs'    repeated

    requests for investment advice and                      advisory services,               and when the market       collapsed     in the Fall

    of 2008, Plaintiffs'             portfolios     were    ill   prepared    to   weather the storm. Plaintiffs'               portfolios   were



    not   low risk      or   low     volatility,     were not       well diversified, and            were    not   rebalanced to stay within

    the 3L3 Benchmark                as   promised.

                188.     As      a    direct and         proximate     result of the Santander Miami, Santander                      Bahamas,

    Jaureguizar, Barron, Sanchez Castillo                         and Reif's     intentional, reckless and/or negligent failure                    to


   provide adequate             and       appropriate investment            advice pursuant to their               fiduciary    duties owed to

    Plaintiffs, Plaintiffs suffered substantially larger losses due                                 to the market     adjustment beginning
    in the Fall of 2008 than                 they would           have suffered had Santander                Miami, Santander Bahamas,

   Jaureguizar, Barron,               Sanchez Castillo and Reif fulfilled their duties and                           promises     and   properly

   managed Plaintiffs' portfolios. Further,                          as a   result of the forced             liquidation   of   Optimal      funds

   starting      in 2009, Plaintiffs'              Optimal     investments       were        frozen,   and   they   could not    participate       in

   the market upturn             starting      in March 2009,          thereby preventing Plaintiffs                from   carrying     out their


   long-term investment objectives                       and   mitigating their losses.


    BANK   OF   AMERICA TOWER                                               51                                             WESTON CORPORATE CENTER
           SUITE 1200                                                                                                               SUITE 317
   TOO SOUTHEAST 2ND STREET                                     LASH &GOLDBERG',
                                                                          ATTORNEYS AT LAW
                                                                                                                               2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                            FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                     www.lashgoldherg.com                                954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                         Document 1          Entered           on        FLSD Docket 03/08/2010                         Page        52 of 69

                                                                                                     CASE NO.


                 189.         Meanwhile, the Santander Entities earned substantial commissions and fees from

    Plaintiffs' investments in the                Optimal Funds from April 2005 through December 2008.

                 190.         Santander Miami, Santander Bahamas,                               Jaureguizar, Echave, Barron,                        Sanchez

    Castillo and Reif put their desire to generate fees ahead of their                                      fiduciary   duties to the Plaintiffs,

    resulting in significant losses to Plaintiffs.

                B.            THE MADOFF FRAUD

                              1.         Madoff's Ponzi Scheme

                 191.         Madoff founded BMIS in 1959                   as a     New York limited               liability     company and              was



    its chairman and chief executive officer. Madoff ran BMIS                                        mainly through         his    family, including
    his brother Peter, and               sons    Andrew and Marc. BMIS had three business units: market                                             making,

    proprietary trading,           and investment        advisory ("Investment Advisory").
                192.          The Investment          Advisory          business         purportedly            invested    using        a     split strike
    conversion strategy.                 The strategy involved the              purchase          and sale of       equity securities, options,
    and government securities.                    Although investors              in the Investment               Advisory        business received

    monthly          or   quarterly        statements       purportedly showing                      the   equity securities, options,                      and

    government securities that the investor owned,                              as    well      as   the   growth    of and       profit from those
    accounts      over      time, these        statements    were a     complete fabrication. There                    is   no   record of BMIS                 or



   Madoff having cleared                  a   single purchase      or   sale of securities at the                Depository        Trust &          Clearing
    Corporation ("DTC"), the clearing                    house for such transactions,                      or   any other    trading platform                   on


   which BMIS could have                      reasonably traded securities.

                193.          Additionally,       there is   no   evidence that Madoff                     or   BMIS    ever     purchased           or    sold

   any of the         options claimed            to have been      purchased            or     sold and     reported    to BMIS's Investment


   Advisory          investors.        Options related       to   the Standard & Poor's 100                      ("S&P 100") companies                      are




    BANK   OF   AMERICA TOWER                                               52                                                   WESTON CORPORATE CENTER
            SUITE    1200                                                                                                                SUITE 317
   100   SOUTHEAST      2ND   STREET                         LASH &GOLDBERG,
                                                                         ATT IINI-Y, Al I AW
                                                                                                                                   2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                                FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050     FAX
                                                                   wWw.lashgoldherg.com                                          954   384   2500   954   384   2510   FAX
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                                                                                              CASE NO.


    typically traded          on     the    Chicago    Board    Options Exchange ("CBOE").                            There    are no      records of

    Madoff or BMIS             ever    having purchased         or   sold any      options     on          the CBOE.

                 194.    On December 11,               2008, federal authorities arrested Madoff and charged him with

    violations of the securities laws after Madoff admitted that his money management                                                         operation
    was     "a   giant Ponzi scheme." Madoff further admitted that "there [was]                                      no    innocent    explanation"
    and estimated that investors' losses reached $50 billion.                                        That      same    day,    the SEC filed            an



    emergency action to halt all                  ongoing activities by Madoff and                         BMIS. The action is          styled,      SEC

    v.   Bernard L.     Made,          08 Civ. 10791         (S.D.N.Y.     Dec. 11,         2008).

                 195.    On December               15, 2008, the Securities Investor Protection Corporation ("SIPC")

    filed   an    application        in the United S tates District Court for the Southern District of New York


    alleging      that BMIS           was    not able to meet its          obligations         to investors           as    they    came      due    and,

    accordingly,        that the investors needed the                     protection afforded by                      the Securities Investor

    Protection Act       ("SIPA").           The Court       granted the     SIPC         application and appointed Irving                    H. Picard

    as   the Trustee to       liquidate BMIS (the            "SIPC Trustee"          or    "Mr.      Picard").
                 196.    At      a   plea hearing       on    March 12,        2009, in the                 case   captioned       United States         v.



    Made,        Case No. 09-CR-213                (DC), Madoff pled guilty to                an     11 count criminal information filed


    against      him    by    the United States          Attorney      for the Southern District of New York.                                  Madoff

    admitted that he          "operated       a   Ponzi scheme       through the investment advisory side                          of [BMIS], and

    that "I knew what I              was    doing was   wrong, indeed criminal."

                         2.            Substantive Allegations Concerning The Santander Entities With
                                       Respect To The Madoff Fraud

                                       a.         In   2002, Santander Spain And OIS Identified Madoff's
                                                  Substantial     Counterparty And                         Custodial Risk




    BANK     AMERICA TOWER
            OF
                                                                          53                                                  WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                    SUITE 317
   100 SOUTHEAST 2ND STREEI                                  LASH &GOLDB E RG                      LI I'                          2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                          AM, RNEYS AT LAW
                                                                                                                            FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   EAX
                                                                 55/WW.Iashgo1dberg.com                                      954   384 2500   954   384 2510   FAX
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                                                                                       CASE NO.


                 197.     In the Summer and Fall of         2002, Santander Spain and OIS became extremely

    concerned about Madoff s counterparty and custodial risk.                                   In two memoranda         prepared by
    Courvoisier to Echeverria, Courvoisier             explained the concerns and proposed a plan of action (the

    "First Courvoisier Memorandum, and "Second Courvoisier                                Memorandum").4          The memoranda

    were    prepared on OIS and            Santander Central   Hispano letterhead ("SCH").5

                                             i.      The First Courvoisier Memorandum

                 198.     According        to the First Courvoisier            Memorandum, the           concern        over     Madoff

    originated      at Santander        Spain:

                          In   reviewingthe legal documentation related specifically to the
                          management   of Optimal Strategic US Equity Ltd. and Optimal
                          Arbitrage Ltd. (specifically "Infiltrator") (together "the Funds"),
                          the Santander Central Hispano Group (hereafter "SCH") has
                          detected a number of issues that may involve legal risks for the
                          Group. These issues need to be analyzed and resolved.

    (Emphasis supplied).

                 199.     Accordingly,       Courvoisier and Santander              Spain's principal   concern was            the   "legal
    risks for the       Group,     rather than the investors' assets.

                200.      The First Courvoisier Memorandum described the                            legal relationship          between

    Optimal Multiadvisors                and Madoff/BMIS.         It     explained that           BMIS had executed certain

    contracts on        January 31, 1996, with the "Optimal Fund, including:

                          1.           Opening Account Document whereas the Optimal Fund has
                                       established a brokerage account for the Funds at Madoff.

                          2.           Customer Agreement relating to the opening or                 maintaining
                                       of the accounts opened with Madoff. This                      Agreement
                                       should be considered as a Custody Agreement;


    4
      These memoranda were publicly quoted in a Bloomberg article on June 18, 2009,                                       by Warren
    Giles, entitled, "Geneva Probes Santander Madoff Links As Investor Alleges Scam."
    5
         SCH is the     prior name used by the      Santander    Group.
    BANK   OF AMERICA TOWER                                      54                                          WESTON CORPORATE CENTER
             SUITE 1200                                                                                                SUITE 317
   100   SOUTHEAST 2ND STREET                        LASH &GOLDBERG
                                                               TT(IIIIEYI ATI AW
                                                                                        I I P                     2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                               FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                         www.lashgoldberg.com                               954   384   2500    954   384 2510   FAX
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                                                                                               CASE NO.




                         3.            Trading  Authorization Limited to Purchases and Sales of
                                       Securities whereby the Optimal Fund authorizes Madoff as
                                       his agent and attorney in fact to buy, sell and trade in
                                       stocks, bonds and any other securities for its account. This
                                       Agreement should be considered as a general power of
                                       attorney (discretionary);

                         [4.]          Option Agreement which               states the terms and conditions
                                       and risks of transactions in         option contracts."


                201.     Courvoisier raised           a   number of "issues,               many of which focused          squarely     on    the

    concern      that BMIS       was    its   own   custodian:


                         According            to the Customer
                                                       Agreement, we understand that the
                         assets of the Funds    held by Madoff itself. In this regard, when
                                                      are

                         asked why a client could not custody securities elsewhere, i.e.
                         outside the Madoff organisation, Madoff offers two reasons:


                                 A) Unforeseen operational issues such as        trade
                                 settlement could compromise the strategy.         For
                                 example, if the 30 or so stocks that compose the
                                                                                basket
                                 fail to settle at the same time then the basket's
                                 correlation to the S&P 100 may be jeopardized.

                                 B)    If the securities were to be delivered to an external
                                 custodian    a client could conceivably sell out any leg of

                                 a   trade, which would compromise the strategy.

                         In   our      process of improving the contractual relationship with
                         Madoff,         we have achieved part of the disclosure above-

                         mentioned    by the text our auditors of the Optimal Fund
                         (PricewaterhouseCoopers Bahamas) have included in their
                         audit, clearly stating that the assets of the Funds are held by
                         Madoff.


    (emphasis supplied). After having identified                      the critical fact               on   which Madoff s entire Ponzi

    scheme       hinged (self-custody), Courvoisier's               main        concern        had thus turned to     self-preservation
    and attempts to disclaim             liability for the dangers they                  saw    and foresaw       rather than the      safety
    of the investment.




    BANK   OFAMERICA TOWER                                            55                                 WESTON CORPORATE CENTER
           SUITE 1200                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG
                                                                   5-17, 1iNEA, AT LAW
                                                                                                IA   I2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    303 347 4030   FAX
                                                               www.lashgoldherg.com                                 954   384 2500   954   384   2510   FAX
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                                                                                          CASE NO.


                202.         The First Courvoisier Memorandum identified many additional                                 dangers     about

   Madoff and          proposed the following c ourses of action:

                                  To ask for
                                           a legal opinion regarding the legal status of Madoff

                                  as aBroker-Dealer, Custodian and "investment manager" of
                                 the Optimal Fund under the laws of New York.

                                 To disclose in the Prospectus of the Optimal Fund, in particular
                                 under the section related to the Funds that their assets of [sic]
                                 are held by Madoff and not by SCHT



                                               the contractual party of the Agreements and have
                                     [sic] change
                                  separate agreements between Madoff and the Funds.


                                 To prepare a revised text describing the Investment Strategy
                                 applied to the Funds included in the Prospectus of the Optimal
                                 Fund. It is decided to then send it to Madoff for any comments
                                 and/or written approval.

                203.         The First Courvoisier Memorandum                          proposed that the prospectus,              entitled

   Explanatory           Memorandum                ("EM"), include           a   description   of Madoff and his            split strike
   conversion strategy.                    This   description    is   virtually identical      to the    one   set forth in the EMs


   beginning         in June 2004. There              were    only    two   significant differences between the           text   proposed
   in the First Courvoisier Memorandum and the text                                    ultimately included      in the EMs:        (i) the
   substitution of Madoff's                 name     with the   generic form "Broker-Dealer, and (ii) the inclusion                   of a

   sentence      saying that "the            assets of the fund       are   deposited with the Broker-Dealer."

                204.         The First Courvoisier Memorandum further reflected                         concern   that   arose   from the

   fact that Madoff had to                  buy and    sell   options from private counterparties (the so-called                 over-the-

   counter      market)        and not       through   an     exchange.      The risk of    operating    with   counterparties      rather

   than    an   exchange         is that Madoff        (and    therefore     Optimal SUS)       had counterparty risk            i.e., risk

   that the other side would not                         perform       due to      bankruptcy     or    other     liquidity problems.

   Accordingly,              Courvoisier          proposed the following disclaimer for                  the EM:         "The     options

    BANK   OF   AMERICA TOWFR                                               56                                     WESTON CORPORATE CEN1ER
            SUITE    1200                                                                                                    SUITE 317
   100   SOUTHEAS1
   MIAMIFLORIDA
                       2ND   SIRE1   I                        LASH &GOLDBERG,,
                                                                            D,
                                                                        aToRNAT I AW
                                                                                                                        2500 WESTON ROAD
                             131158                                                                               FT. LAUDFRDAIL, FLORIDA 33331
  33-2305
    347 4040      305 347 4050       FAX
                                                                  www.lashgoldberg.com                            954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                      Document 1           Entered         on        FLSD Docket 03/08/2010                    Page        57 of 69

                                                                                                  CASE NO.


    transactions executed              [by Madoff]      for the benefit of Optimal SUS                     are   effected, primarily, in the

    over-the-counter market, not                 on   the   registered options exchange.                    BLM     [i.e., Madoff]          is not      a



    market maker in           options."       The EMs       ultimately     included this identical disclaimer except that the

    reference to Madoff as "BLM"                  was   deleted,    and    only referred to as             "the Broker-Dealer."

                 205.    Courvoisier concluded the memorandum                                     by proposing      a   meeting        with "the

    lawyers       in New York."                The purpose of the               meeting            was    to revise "all the contractual


    documentation with Madoff and redraft its Investment                                   Strategy applied to the Funds."

                                                            The Second Courvoisier Memorandum

                206.     The Second Courvoisier               Memorandum, entitled, "Meetings with Bernard Madoff

    and    lawyers      in New York              September 18-19, 2002,                      is   again   addressed to Echeverrfa.                The

    memorandum          begins as follows:

                         The purpose of the meetings was to discuss the actual contractual
                         arrangements between Bernard L. Madoff Investment Securities
                         ("MIS") and Optimal Strategic US Equities Ltd. and Optimal
                         Arbitrage Ltd         [and] to reduce any potential exposure of
                         Optimal  Investment Management Ltd., Optimal Multiadvisors Ltd,
                         the Funds, [OIS] and the reputation of the Santander Group
                         generally.

    (Emphasis supplied)

                207.     The memorandum described Madoff's                                 compensation: "[Madoff]            is not       paid    any

    kind of      advisory, management             or   performance fee.                The        brokerage charges     appear very          small,

    and   we assume        he makes his income              on   these fees        or a      spread." (Emphasis supplied).                 OIS and

    Santander had failed to             even   confirm how Madoff supposedly earned money.

                208.     The next section addressed the "Contractual                                Agreement with Madoff/MIS" and
    based its conclusions              on   Madoff's recommendations to OIS:

                         In reviewing the Information Memorandum of Fairfield Sentry
                         Ltd, Madoff explains that it is not correct to say that Fairfield has a

    BANK   OFAMERICA TOWER                                              57                                               WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
   100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG.
                                                                     ATT(,I2NEY, AT I AW
                                                                                                                              2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                 WWW.iashgoldberg.com                                   954   384   2500   954   384   2510   FAX
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                                                                                                      CASE NO.


                               "discretionary account" at MIS, as stated under the "Investment
                               Policies" of this document. If this was the case, Madoff/MIS
                               would choose what security to buy (as an investment advisor
                               would do). However, if he only chooses the time when he trades,
                               then he has no "discretion." The only decision/discretion he
                               makes/has is on the timing and the price.      In other words,
                               Madoff/MIS only executes the investment strategy that the
                               investment adviser gives him to implement.

                  209.         Madoff and           OIS        then     executed            an      "additional     letter"      documenting              the


    understanding              that Madoff had discretion with respect to the                             timing   and   price    of the    stocks, but

    was      limited to         purchasing         stocks included in the S&P 100.                             The June 2004 EM issued                     by

    Optimal         SUS stated that Madoff had discretion                           only          with respect to the      timing     and        price.     In


    effect, Madoff was dictating the disclosures for OIS.

                  210.         The Second Courvoisier Memorandum also                                 expressed concerns          about the        custody

    of the assets              the critical      piece    of due      diligence that had              OIS verified with       a   simple telephone
    call would have led to                  a   cessation of the investment of the                     Optimal     Funds' assets with Madoff.

    In   a   section titled       "Custody/Segregation of Assets,                        the memorandum said:

                               When asked why we could not custody the securities with an
                               external custodian, Madoff replies that logistically it would have
                               been impossible for him to ensure errorless delivery ["Delivery
                               Risk"]. In executing sell orders he would need to have physical
                               control of the assets, and if the assets were somewhere else, there
                               could be delays (as he actively trades) and additional costs.

                               Another      reason       for
                                                   being his own custodian is that he does not
                               want anybody    know when he is in the market and to be able to
                                                    to
                               copy his investment strategy ["Copying Risk"]. The fact that
                               people would have this information could jeopardize the strategy.

    (emphasis supplied).

                  211.         OIS      never     pressed      Madoff further and                     accepted     these      explanations              about


    supposed Delivery                 and   Copying        Risk at face value, without any                      confirmation, verification,                 or



    investigation.

    BANK     OF   AMERICA TOWER                                                58                                              WESTON CORPORATE CENTER
              SUITE   1200                                                                                                               SUITE 317
   100   SOUTHEAST       2ND   STREEF                           LASH &GOLDBERG
                                                                           Al ll, RNEYS AI I AW
                                                                                                        i ip                        2500 WESTON ROAD
     MIAMI, FLORIDA 33H1-2158                                                                                                 FT. LAUDERDALE, FLORIDA 33331
  305 347 4040 305 347 4050 FAX                                        wWW.lashgoldherg.com                                   954   384   2500    954   384 2510   FAX
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                                                                                                     CASE NO.


                212.        Madoff's      simplistic explanations, however,                           were    logically      flawed.    Even under

   Madoff's        supposed explanation               of how his      operation worked,                       and OIS's       understanding       of it,

   Madoff had to execute                 large volumes of options with counterparties, which exposed Madoff to

   Delivery       and   Copying Risk.            The fact that Madoff had                      counterparties        to execute   option contracts
   was     the critical component of the                    "split   strike conversion" strategy because it                            provided     the

   downside        protection           which Madoff and OIS touted                            as   the   strategy's centerpiece.         If Madoff

   traded the      options        with   counterparties,      he would face                "Delivery         Risk" and       "Copying Risk"       with

   them.

                213.        Moreover, the settlement and delivery                              processes      are   fairly standardized     and any

   failures      are   typically rectified        with      counterparties            on a          timely   basis.    Otherwise,       every    single
   trader in the financial markets would have                             a    strong interest in self-custody.                        Self-custody,

   however, is          an    extremely      rare     exception.       The fact that                  delivery       and settlement risks         were



   purportedly         an    issue raised    by   Madoff should have                      heightened         OIS's due      diligence   of Madoff's

   internal systems to understand                 why those systems              carried risks             generally not seen in the industry.
                214.        Yet, neither OIS,         nor   any of the    Defendants, who                     were    all   sophisticated   financial

   market        participants,           ever    investigated        this         inconsistency.                    The      Second     Courvoisier

   Memorandum, thus, demonstrates that OIS had more interest in "papering" the file with                                                    a   routine

   memorandum that                 parroted       Madoff's        incongruous statements,                           rather than in       conducting

   meaningful          due    diligence.        OIS   saw   the   dangers and,                 rather than      properly investigate them,           as



   due   diligence requires, ignored them.

                215.        OIS failed to confirm additional                      representations made by Madoff concerning

   custody.       "Madoff confirmed that there is                    no   margin arrangement                        with the Funds and that the

   assets of these funds under the control of MIS                         are       segregated            and held in the DTC           CDepository


    BANK   OFAMERICA TOWER                                                59                                                    WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                     SUITE 3[7
   I00 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG,,, NIA S AlL   AW
                                                                                                                                     2500 WESTON ROAD
                                                                                                                               FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FIDRIDA 33131-2158
  305 347 4040    305 34 7 4050   FAX
                                                                  WWW.lashgoldherg.com                                         954 384 2500 954 384 2510 FAX
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                                                                                          CASE NO.


    Trust     Co.')    in the    name    of the Funds." A       single phone               call to the DTC to                inquire     about the

    existence of the assets,           or even more     simply to inquire whether Madoff, indeed,                             had   a   segregated
    account in the       Optimal       Funds' names, would have led to the                  recognition that the Optimal                   Funds'

    assets    (and thus, Plaintiffs' investments) were more than simply                                 at risk.


                216.     The fact that neither Courvoisier,             nor       OIS, had          a   genuine interest in ensuring           that

    Madoff had actual            custody     of the assets, and had not stolen             them, is clear from the conclusion of

    the   custody      section of the Second Courvoisier Memorandum. The memorandum concluded that

    the   liability was the custodian's,          not the "Santander's entities:"


                         It has to be noted that the custody of Optimal Multiadvisors Ltd
                         (including the Funds) is in the process of being changed to
                         Bermuda Trust (Dublin) Ltd (from the Bank of Bermuda Group).
                         This entity had agreed to appear in the Prospectus as the official
                         custodian of the fund above mentioned. This entity will then
                         delegate its duties to MIS and appoint it as sub-custodian. The
                         new custodian will keep all the exposure/responsibility in case

                         of liquidation of the fund as neither Madoff nor any of the
                         Santander entities will be disclosed in the Prospectus as
                         custodian.


    (Emphasis supplied).

                217.     Courvoisier's         only   concern   was       clearly        for the "Santander entities,                     not for


    Plaintiffs.

                218.     The Second Courvoisier Memorandum also shows that OIS                                             sought legal    advice

    from law firms in New York. These law firms                     provided certain recommendations concerning the

    red   flags identified above, including            very   simple procedures designed                           to   verify that Madoff was
    not   a   Ponzi scheme and           was    actually conducting          real       operations,         and that the        Optimal     Funds

    assets      still existed.         For   example,    the law firm of KMZ Rosenman made two critical

    recommendations:




    BANK   OFAMERICA TOWER                                          60                                                      WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                 SUITE 317
   100 SOUTHEAST 2N1) STREET                            LAS H &GOL DBE RG,
                                                                 ATT,,RNLYS ATI   AW
                                                                                             i.i,                                2500 WESTON ROAD
    MIAMI, FLORIDA 331-31-2I58                                                                                             FT. LAUDERDALE, FI.ORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                           WWW.lashgoldberg.com                                            954 384 2500 954 384 2510 FAX
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                                                                                                          CASE NO.


                                    Clarify if the Funds are held in a segregated omnibus account
                                    and if they are commingled with securities held for others;

                                   Review a transaction confirmation (ticket) for option
                                   transactions regarding the counterparty risk issue (see
                                   attachment B).6

                   219.         Both recommendations                     sought      confirmation of               a    critical issue: did Madoff

   actually         interact with the outside world? The confirmation ticket for                                         option    transactions with               a



   counterparty sought                       to       ensure      that      counterparties          existed and that              they     were        reliable

   counterparties that would                               not   default.       Confirmation tickets would have identified the

   counterparty. Again,                      a   simple phone         call to the    supposed counterparty seeking confirmation that

   the trade        purportedly          documented              by   the   phony Madoff ticket had actually been executed                              would

   have undermined Madoff's                            representations         to   Defendants upon which                  they   had     unquestionably
   relied.         Similarly,      a    call to DTC where Madoff said the assets                                 were   held in   segregated          accounts


   would have led to               a   similar        discovery.
                   220.         Other law firms further identified the counterparty risk                                          as    important.           For


   example,          Shearman &                  Sterling    recommended that OIS "review                         [over-the-counter] option status,

   counterparty risk would be eliminated if option transactions                                           are    'crossed'   through the exchange."

   Accordingly,             two different law firms had raised                        a   red      flag   with respect to counterparty risk, yet

   OIS either          never      contacted            a   single counterparty           in   over a      decade of      investing       with Madoff or,

   worse, did contact a                      counterparty and discovered that Madoff did                                  not trade with them and


   ignored the red flag.

                   221.         The final section of the Second Courvoisier Memorandum sets forth                                                a    series of

   "Conclusions, including the following:




   6
        Plaintiffs do not have                   a   copy of attachment B.

       BANK   OFAMERICA TOWER                                                       61                                                 WESTON CORPORATE CENTER
               SUITE 1200                                                                                                                      SUITE 317
   100   SOUTHEAST        2ND   STREET                                LASH &GOLDBERG,
                                                                                ATTORNIB, AT LAW
                                                                                                            iy                            2500 WESTON ROAD
                                                                                                                                   FT. LAUDERDALE, FLORIDA
    MIAMI, FLORIDA 33131-2158                                                                                                                                            33331
  305 347 4040       305 347 4050      FAX                                  wwW.lashgoldherg.com                                   954   384   2500   954   384   2510   FAX
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                                                                                                 CASE NO.


                         We have chosen KMZ Rosenman as the law firm to work with.
                         We will work with them on the following issues:


                                 1) Legal opinion       the precise regulatory status of
                                                             on

                                       MIS/Madoff under US State and federal laws;


                             2) Legal opinion on the compatibility of such
                                regulatory status with the existing contractual
                                       arrangements between the Funds and MIS;

                             3) Clarify the segregation of assets;

                             4) Legal assistance on some of the lawyers'
                                suggestions mentioned above such as reviewing
                                the [Broker-Dealer] form from NASD, the Focus
                                Reports from the SEC, the [over the counter]
                                options status and transaction confirmation;

                             5) Legal assistance on some general issues such as
                                redrafting the Offering Memorandum of Optimal
                                Multiadvisors Ltd and,


                             6) Any future issue related to                     our new         business in New
                                       York.

                           We have decided to appoint Bermuda Trust (Dublin) Ltd (Bank
                         of Bermuda Group) as custodian of Optimal Multiadvisors Ltd...
                          the name of the custodian will be disclosed in the Offering
                         Memorandum and Madoff/MIS will be appointed as sub-custodian.


   (Emphasis supplied).

                222.     The      Second           Courvoisier       Memorandum, thus, indicated that OIS would

   supposedly          follow up        on   the critical red      flags.       The list of "conclusions"         even   provided   a   due


   diligence      road map,            including obtaining          confirmation from external              counterparties. Yet,        OIS

   never    conducted the         requisite due diligence.

                                       b.          OIS Violated Its Own Internal Due Diligence Procedures And
                                                   Ignored Numerous Red Flags In Favor Of Promoting Its Own
                                                   Profitability
                223.     In addition to           selling   the   Optimal      Funds from the United States, the due            diligence

   and   oversight of Madoff,               or   lack thereof,    was   conducted in the United States. Santander              Spain    and

    BANK   OF   AMERICA TOWER                                              62                                       WESTON CORPORATE CENTER
           SUITE 1200                                                                                                         SUITE 317
   100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG.
                                                                        ATI, /RNLI'S AT LAW
                                                                                                                         2500 WESTON ROAD
                                                                                                                   FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    305 347 4050   FAX
                                                                   www.lashgoldberg.com                             954 384 2500 954 384 2510 FAX
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                                                                                             CASE NO.


    OIS had, and continue to have, offices in New York                          City,      at 45 East 53rd Street. Madoff s offices


    were    located at 885 Third Avenue               (at 53rd Street),         New York             City,   less than three blocks away

    from OIS' s offices.

             224.        Upon information          and   belief,      at these           offices,   OIS had      a   team of at least four


    investment and due           diligence officers    for   a   substantial        period of time after 2001.

              225.       Upon information and belief,               as   part of their alleged due diligence of Madoff,                         some


    or   all of these due       diligence officers     would receive trade confirmations from Madoff                              by     facsimile.

    These paper      copies of trade confirmations, however,                   did not include time stamps               nor    prices for each
    individual trade.          Instead, the   paper confirmations listed average                     prices    for   purchases     and sales of

    stocks   on a   daily basis.      OIS' s reliance    on      paper confirmations             was      entirely inconsistent with OIS's
    internal documents and             presentations     to investors.          These documents and                  presentations        said that

    Madoff was       one   of the most        technologically       advanced broker-dealers. Madoff had                         even     told OIS

    that 99% of his trades             were     electronic. If so,         why           couldn't Madoff        provide electronic              trade

    confirmations with precise time stamps and prices? The confirmations also did not include the                                               name



    of the counterparty with whom Madoff had                        supposedly traded.               In   effect, OIS accepted Madoff s

    pieces   of paper that said that Madoff had executed certain transactions without any                                          verification,

    validation,     or   independent     review.       OIS       accepted these representations from                    Madoff for          over a



    decade without        ever   checking that a single transaction had actually occurred.
             226.        Defendant Manuel Echeverria                 (OIS' s        chief executive officer and chief investment


    officer) regularly         visited New York to meet with Madoff                           on    behalf of the      Optimal       Funds.           It

   appears that Echeverria met Madoff in New York                                   as    many      as   four times each year.             This is

   consistent with the           importance      of   Optimal       SUS for the OIS                 family   of funds, and the fact that

   Optimal       SUS     was   OIS's   flagship fund,     out     of fourteen other funds.



    BANK OF AMERICA TOWER                                                63                                             WESTON CORPORATE CENTER
           SUITE 1200                                                                                                             SUITE 317
   100 SOUTHEAST 2ND STREET                              LASH &GOLDBERGI,
                                                                     AIMRNEYS ATI   AW
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    MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 3333!
  305 347 4040   305 347 4050   FAX
                                                                 WWW.lashgoldberg.com                                   954   384 2300    954   384   2510   FAX
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                                                                                                    CASE NO.


                   227.         By   December 2008,               Optimal    SUS         supposedly        had $3.1 billion in assets with

   Madoff, which represented approximately 30% of all of OIS's                                            assets under   management         about

   $10 billion.

                   228.         Upon information and belief, Echeverria's close oversight of Madoff and frequent

   meetings with him is also consistent with their long history. Optimal                                      SUS had begun        investing with
   Madoff very             early     on, in     February 1997, before           OIS had           even   been established   as an   independent
   unit within Santander.                       From its        inception, Optimal          SUS      was a   Madoff dedicated fund which

   invested one-hundred percent of its assets with him. In                                      fact, Echeverria received directly,    as   salary,
   an    amount of 0.15%                  of    Optimal       SUS's assets under management, which                   was    part of the annual

   commissions             paid by investors.

                                                    i.            The OIS 2005 Due                 Diligence Questionnaire

                   229.         On June 6, 2005, OIS submitted                       a   28-page         form entitled AIMA's Illustrative


   Questionnaire                For Due          Diligence ("DDQ") of Multimanagers                           Fund   Managers (the          "2005


   DDQ").7           The 2005         DDQ        was     prepared    and reviewed          by Amélie Fontvieille         at OIS.


                   230.         In response to the many              questions       in the       DDQ,    OIS showed that it knew how to

   conduct thorough due                    diligence:

                                Q: What is the company's competitive edge in the strategy and
                                   style allocation process?

                                A: We          stress     the   importance of performing thorough due
                                     diligence           on   an ongoing basis on the managers with whom

                                     we invest. We want to know how the manager makes money
                                     and how he or she is able to protect capital in difficult times.
                                     We want to               the manager in face-to-face meetings,
                                                          challenge
                                     to   see   how he would react in a given situation. Our careful
                                     attention in this            area has allowed                 us    to avoid the well-
                                     publicized          cases   of manager fraud.




   7
         AIMA is the acronym for the Alternative Investment                                      Management Association.
       BANK   OF   AMERICA TOWER                                               64                                           WESTON CORPORATE CENTER
               SUITE   1200                                                                                                         SUITE 317
   100   SOUTHEAST        2ND   STREET                             LASH &GOLDBERG,,,,,
                                                                            ATTORNEYS Al I AW
                                                                                                                                2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
  303 347 4040       305 347 4050    FAX                               www.lashgoldberg.com                                954 384 2500 954 384 2510 FAX
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                                                                                     CASE NO.


   (Emphasis supplied).

                           Q:   Please describe, in detail, the company's due diligence process
                                including the investment, legal and compliance and operational
                                due diligence procedures. Provide examples of reports and
                                working papers, where available.

                           A:   [OIS] uses an intensive and thorough due diligence process
                                that has been dev eloped and "fine tuned" through our many
                                years of experience over the last decade.... Our risk manager
                                and in-house legal counsel will ensure all non-investment due
                                diligence (operational and legal) and risk control for all
                                new/existing investments. They will provide an opinion on all
                                managers from an operational risk perspective to the
                                Investment Committee prior to investment decisions are made.


   (Emphasis supplied).

                           Q:   How much time is spent with each manager [e.g., Madoff]
                                during the due diligence process? Before initial investment?
                                After initial investment?

                           A: The due       diligence process before initial investment takes
                                approximately 2 months. After initial investment, we have
                                three to five meetings on-site, and regular phone calls and other
                                means    of communication.

                231.       Additional     answers    provided by    OIS further evidence             that,   as   part of its regular

   due   diligence         process, OIS contacted        counterparties and third-party              vendors of the       underlying
   funds in which it invested.


                           Q:   Do you perform operational due              diligence        on   the middle and
                                back office operations?

                           A:   Yes, both    on   middle and back office.


                           Q:   Do you perform due diligence checks on the administrator or
                                any other service provided to the targeted funds? If so, please
                                describe:

                           A:   Yes,    we do carry due diligence on the fund's administrator to
                                see    how they price the portfolio and where they obtain their
                                prices   from.  We also talk to the prime brokers the fund
                                uses as   any other third party providers.


    BANK   OE   AMERICA TOWER                                    65                                               WESTON CORPORATE CENTER
            SUITE   1200                                                                                                 SUITE 317
   100 SOUTHEAST 2ND STREET                            LASH &GOLDBERG
                                                               ATTORNEYS Al IAW
                                                                                       LIT                          2500 WESTON ROAD
                                                                                                              FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    305 347 4050   FAx
                                                           www.lashgoldberg.com                               954 384 2500 954 384 2510 FAX
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                                                                                         CASE NO.




                        Q:   Do you contact the outside audit company                      prior to approval?

                        A: The             of audit reports is integrated in the due diligence
                                      analysis
                             process. We may contact the outside audit company, but it is
                             not a condition sine qua non for approval.


   (Emphasis supplied).

             232.       The critical        importance      of contacting the           underlying     fund's   third-party providers

   (such   as    counterparties, prime brokers, and auditors), and                        of   being   comfortable with who                they

   were,   was    obvious to OIS because it had               already    suffered serious losses in the past. As set forth

   in the 2005      DDQ, during the Russian debt default in August 1998,                             one   of the funds in which OIS

   had invested        collapsed because         of a    counterparty's failure to honor its obligations:

                        In August 1998, we [OIS] were invested in the III High Risk
                        Opportunities Fund. This fund was partly invested in Russian
                        debt.   They had contracted a "Non Deliverable Forward"
                        (Dollar/Ruble) as their hedge with two reputable financial
                        institutions.   As the Russian crisis unfolded, the two
                        institutions refused to honour the NDFs and the fund
                        collapsed. This issue is still in litigation today[, seven years later].

   (Emphasis supplied).

                                                          The OIS 2008 Due              Diligence Questionnaire

             233.       OIS also        prepared     a   similar Due      Diligence Questionnaire               in 2008.        It is dated


   April 30, 2008,           and      was    completed by       Amélie Fontvieille and reviewed                   by Toby            Gauvain


   ("Gauvain").         Gauvain        was   Head of Global Business              Development          for OIS. The 2008             DDQ       is


   virtually identical          in format to the 2005             DDQ and presents               an    update    of the information


   previously provided.

             234.       Once      again,     the 2008     DDQ shows that              OIS knew how to conduct             thorough          due


   diligence     but   utterly failed       to do   so   with Madoff. The             answers   to   the   questions    are    very similar

   to the ones     provided in 2005.

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                                                                   ATEM2NLYS AI LAW
                                                                                                                         2500 WESTON ROAD
                                                                                                                  FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040   305 347 4050   FAX
                                                               www.lashgoldberg.com                               954   384   2500   954   384 2510   FAX
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                                                                                     CASE NO.



                       Q: What is the company's competitive edge in the strategy and
                          style allocation process?

                       A: We have the resources, processes and experience to conduct
                          thorough due diligence on target funds.

   (Emphasis supplied).

                       Q: Summarise your manager selection process:

                       A: The typical criteria a manager should meet to                         qualify    for
                          selection [includes].... risk controls....




                       Q: Please describe, in detail, the company's due diligence process
                          including the investment, legal and compliance and operational
                          due diligence procedures. Provide examples of reports and
                          working papers, where available.

                       A: The due diligence process is               split        into investment and   non-

                          investment processes.

                            Investment processes include...
                              Due diligence is performed on both middle and back office
                            operations

                            Non-investment processes include...
                              Review of business structures and terms
                              Evaluation of manager's business plans and                        operational
                            infrastructure




                       Q: Where does        your due   diligence            process differ from that of
                            others in the   marketplace?

                       A:          We have a defined investment and risk control process
                            that can be replicated for any review done on a manager.

                            We have the resources, market intelligence and procedures and
                            controls of a world class financial institution/recognised bank
                            which is in the global top 10.


                       Q:   Do you have     a   dedicated   operational due diligence team?


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                                                                                                                2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                             FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050   FAX                    WWW.lashgoldberg.com                               954 384 2500 954 384 2510 FAX
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                                                                                           CASE NO.


                          A: Yes.     Optimal is committed to building a dedicated independent
                                 operational risk management team which will deal with
                                 operational risk and due diligence. It is one of a handful of
                                 asset managers in the alternative asset space with dedicated
                                 resources   in this   area.



                 235.     Additional responses in the 2008 DDQ showed that OIS understood the critical

    importance          of checking with outside vendors and service                      providers   when   conducting operational
    due    diligence:

                          Q:     Do you perform reference checks                   on    the   manager?   If so, how
                                 arethese done?

                          A:     Yes, reference checks are performed through contact with
                                 related people in the industry, such as other hedge funds, or
                                 service providers as prime brokers. Where we cannot gather
                                 enough information on the manager, we use specialised
                                 companies such as Back Track.



                          Q: Explain both the         ODD [operational due diligence]                        prior to
                                 investment and the ongoing ODD after investment                             (if any).
                                 Are all visits written up in structured reports?


                          A: Prior to    investment, control reviews of the managers operations
                                 are performed.    On an ongoing basis, manager visits are
                                 performed.    The frequency of the visits is based on an
                                 assessment of the risks presented by the Managers' operations.
                                 Reports are prepared on these visits.

                          Q:     Do you perform due diligence checks on the administrator or
                                 any other service provider to the targeted funds? If so, please
                                 describe:

                          A: Yes,      wehave a programme of reviews for service providers
                                 totargeted funds such as the funds administrators, lawyers
                                 and auditors.


                          Q:     Do you contact the outside audit company                      prior to approval?

                          A: An attempt to make contact with the auditors to the fund will
                             always be made.


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                                                                                               LII                     2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                    FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                               www.lashgo Idberg. co m                           954   384   2500   954   384   2.510   FAX
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                                                                                         CASE NO.



    (Emphasis supplied).

                 236.    The 2008        DDQ further showed that OIS understood that operational due diligence

    was     an    important       risk   mitigation    task.      In   describing        its risk management       approach,          OIS

    explained that operational risks required                      that OIS            fully analyze   Madoff s    counterparties,

    although it failed to         do   so   with respect to the    Optimal Funds' investments with Madoff:

                         Q: Describe how risk management is structured within                               your
                            organisation?

                         A: We have          a distinctive approach to Risk Management as we

                                 organize  these functions along two dimensions. First, risks are
                                 mapped by category such as investment, non-investment,
                                 operations and compliance, legal & regulatory risks. Second,
                                 risks are identified for hedge funds, portfolios of hedge funds,
                                 legal structures and operations. Clear parameters are set for
                                 each of the elements in the form of exposure reports,
                                 automatised controls and risk limits.

                                 Risks are dealt across various departments as it lies at the heart
                                 of our investment process.      Our thorough due diligence
                                 process ensures that     the highest standards of quality are
                                 met when selecting hedge funds.          The application of our
                                 investment process is controlled by our legal & compliance
                                 unit. This unit is also responsible for checking the compliance
                                 of Optimal funds 'with their prospectus, investment philosophy
                                 and regulators. Investment risks are dealt by our dedicated
                                 quantitative analysis & investment risk management team.
                                 They focus their analysis on market risk, control of risk limits
                                 and analysis of the underlying hedge fund risk management
                                 organization. The third category or risk is operational risks at
                                 the level of hedge funds. As this is not a rewarding risk for our
                                 investors,    our   operational       risk
                                                                analysis analyze in detail the
                                 business structure of each hedge fund in the portfolio, their
                                 legal setup, documentation, or counterparties....

                                 Optimal Risk Con-imittee is central in our risk management
                                 organization as it represents all the points mentioned in the
                                 above paragraph. Members are senior key and experienced
                                 professionals heading and representing Quantitative Research
                                 & Investment Risk, Operational Risk, Legal & Compliance and
                                 Operations teams. It is Chaired by Gilles Prince, our Chief
                                 Risk Officer.


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                                                                   ATTORNEYS AT LAW
                                                                                                                  2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                               FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                               Www.lashgoldberg.com                         954   384   2500   954   384   2510   FAX
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                                                                                   CASE NO.




                        Q: What risk management concepts does the                    company   apply to its
                           underlying managers/funds?

                                      Qualitative risk analysis:
                                Three     main areas are being analyzed: investment risk
                                management and operational risk at the level of hedge funds.
                                Operational risk covers, among others, the constituent
                                documents of the fund, the prospectus, contracts, agreements,
                                counterparties, business organisation, reference checks,
                                corporate actions, regulatory filings, NAV calculation process,
                                pricing policies. The objective is to understand which
                                liabilities may the fund have and may imply risks.... These
                                risk analyses are performed with detailed desk analysis,
                                conference calls with managers, CFOs, CO0s, CROs and
                                on-site visits.


                                Quantitative risk analysis:

                                Hedge funds are analysed quantitatively by our dedicated team.
                             State of the art statistics are calculated so that we can assess if
                             the hedge fund possesses the desired characteristics that we
                             seek, like for example capital protection, participation in the
                             upside performance of markets, low correlation, liquidity.
                             This analysis is completed by a complex statistical non-
                             linear style analysis with our FOFIX tool. Risk profiles are
                             calculated for each hedge fund in order to estimate the
                             systematic factors influencing the returns of the fund.
                             These are then compared with the qualitative analysis of
                             our research analyst and deviation from
                                                                                 expected risk
                             profiles need to be explained....

                             Potential breaches of the risk parameters would be immediately
                             notified to the Chief Operating Officer and if appropriate to the
                             Chief Executive Officer. Breaches would be reported and
                             presented at the Investment Committee Meeting and reported
                             to the Group's Risk Monitoring Division in Madrid.


    (Emphasis supplied).

                237.    The involvement of        Group's     Risk        Monitoring Division    in Madrid          was   further

   detailed in additional responses included in the 2008                    DDQ, especially in terms of risk controls:

                        Q:   Does the company use any formal risk limits? Or informal risk
                             guidelines? If so, please describe how they are used.

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                                                              ATTORNEYS   TI AW
                                                                              W
                                                                                                            2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050   FAX
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                                                                                      CASE NO.




                          A: The Company agrees risk control criteria on the portfolio with
                             Santander Asset Management Central Risk Control unit based
                             in Madrid.




                          Q:     What on going assurance does the firm provide to clients over
                                 the effectiveness of its operational risk framework? If a SAS70
                                 or FRAG 21... has been completed please list the
                                                                                             key
                                 weaknesses identified in the last 5 years.

                          A: The Company does not prepare SAS 70 or FRAG 21 reports,
                             but it is subject to regular review by the Santander Group
                             Internal Audit and is also subject to the Group's Compliance
                             policies and procedures and Risk Framework.

    (emphasis supplied).

                                                       OIS'   Quantitative Analytics Tools Raised Red Flags

             238.         The 2008       DDQ admitted that        OIS relied         on a   quantitative analytics       tool called

    FOFIX. FOFIX is              a   statistical model that seeks to       identify    hidden risks in     a   portfolio.   In   effect,

    FOFIX        serves   to confirm that the       supposed investing strategy             of   a   portfolio is being executed,

    otherwise the results of the FOFIX                  analysis would             show deviations from the           expected     risk

    profiles.

             239.         On     February 9, 2009, shortly        after Madoff's Ponzi scheme unraveled, Riskdata

    published the results of its analysis of Madoff s supposed split strike conversion strategy using

    FOFIX.         The     February       2009   analysis   was   entitled "The Madoff Case:                   Quantitative      Beats


    Qualitative!"         The    subheading said,   "Two Red      Flags:      Bias Ratio and Risk Profile          Clearly Pointed
    to Problems With Madoff."                    The   introductory        section summarized Riskdata's                findings     as


    follows:

                          Numbers tell a story and clearly have an order that should be
                          hard to fake. What appears to be too good to be true can be
                          measured.... [A]nyone paying attention to quantitative


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    MIAMI, FLORIDA 33131-2158                                                                                  FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
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                                                                                                  CASE NO.


                           advances in hedge fund risk management suspected that
                           Madoff was a scam to be avoided. Amongst the quant techniques
                           useful in detecting fraud, the most efficient is the Bias Ratio,
                           invented by Adil Abdulali of Protégé Partners and available in
                           Riskdata's suite of analytics. In Madoff's case, a calculation of
                           the Bias Ratio   points to the fallacy of Madoff s returns. In
                           addition, an accurate analysis of Madoff investment Risk
                           Profile is inconsistent with its style and peer group.


    (Emphasis supplied).

                 240.      OIS, admittedly, had FOFIX and purportedly relied                                  on    it when    conducting    due


    diligence. Indeed,               OIS's 2008          DDQ specifically noted that when quantitative                          measurements


    flashed red and showed that                          a   manager          was     not      executing    the advertised strategy, this

    information         was     sent to Madrid:


                           Potential breaches of the risk parameters would be immediately
                           notified to the Chief Operating Officer and if appropriate to the
                           Chief Executive Officer.      Breaches would be reported and
                           presented at the Investment Committee Meeting and reported to
                           the Group's Risk Monitoring Division in Madrid.

                 241.      Yet, either OIS failed to              use    FOFIX when             conducting    due   diligence    on   Madoff,   or



    ignored the         FOFIX        results,   to   the detriment of Plaintiffs.

                                        c.           A   January 2008 Internal Presentation By OIS To Santander
                                                     Asset  Management Highlighted The Profitability Of Optimal
                                                     SUS To Santander

                 242.      In   January 2008,            OIS made        a    detailed internal          presentation   about    Optimal     SUS

    (the "January          2008      Presentation").         In   a   slide   featuring key        statistics about   Optimal SUS,        one   of

    the bullet      points    read:     "Very profitable business for the Group,                          average management fee above

    2%."     (Emphasis          in   original). OIS, thus, sought                to    highlight the profitability        of Optimal SUS to

    incentivize its sales force to sell                  more.



                 243.      The       January     2008 Presentation also touted Madoff                        as   being    at the forefront of


    financial     technology:

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    MIAMI, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
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                                                                                            CASE NO.


                          [BMIS's] position at    the forefront of computerized trading is
                          widely acknowledged    in the US financial community and it is very
                          well known for its fine pricing as well as its ability to execute most
                          orders in seconds with sophisticated proprietary automation and
                          enhanced execution.


    (Emphasis in original).

                 244.     Despite Madoff s supposed technological                           prowess, Madoff did not send OIS

    trading confirmations electronically,              or   in real time. In             addition, the   paper confirmations mailed

    by   Madoff did not include            specific trading prices. Instead,                Madoff only     provided average prices
    for entire          trading days.        These facts          are    completely          at   odds with Madoff's          supposed

    "computerized trading" prowess and was                    a   massive red           flag that OIS completely ignored.
                 245.     The    January   2008 Presentation            provided         further details about Madoff's       supposed

    trading operation that OIS          failed to confirm. The               "Trading operational procedure"             section stated:

                            The fund diversifies risk with              over   twelve      trading counterparties.
                            Client assets     are   held at the
                                                     [Depositary Trust Company] DTC                                 in
                          segregated accounts designated as Madoff Client Accounts                                  in
                          accordance with SEC Rule 15(c)(3)(3).

                            This  segregation effectively eliminates the ability to use client
                          assets to finance proprietary activities, such as market making.


    (Emphasis in original).

                 246.     OIS failed to contact any of the                counterparties          with whom Madoff         purportedly
    invested and failed to confirm with DTC that Madoff had                                  segregated    Madoff Client Accounts.


    Indeed, had OIS          or    any of the Defendants called to confirm the                      segregation     of accounts, and

    found that that        was    not the case,     they    would have avoided               investing   the   Optimal   Funds' assets

    with Madoff            at a    minimum to avoid the stated                 concern       that Madoff could be         "using   client

    assets to finance       proprietary activities,        such   as    market         making." (January 2008 Presentation).



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   100   SOUTHEAST 2ND STREET                          LASH &GOLDBERG LI2500
                                                                   ATTORNEY', AT LAW
                                                                                             I                             WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                    FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             www.lashgoldberg.com                                954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                       Document 1-1               Entered          on     FLSD Docket 03/08/2010                       Page    5 of 70

                                                                                                    CASE NO.


                 247.         Further, according           to the   January      2008         Presentation, "legal ownership [sic] US                 T-

    Bills and Interest          on     Cash Balances must vest in the                    Optimal          funds." This suggests that Madoff

    invested in U.S. T-Bills (as Madoff and the                                  Optimal           SUS funds'       Explanatory          Memoranda

    asserted that Madoff did when not                          using the split strike conversion strategy),                     but that the U.S. T-

    Bills    were       registered in Optimal               SUS 's    or   Optimal Arbitrage's                  name.    As      a   practical matter,

    however, this         was    impossible.             The   legal ownership          of the U.S. T-Bills could not have vested in

    the    Optimal       Funds because the investments in                          Treasury         securities    never     existed.         OIS   never


    confirmed that the billions of dollars it had invested with Madoff were, in fact, in                                              Optimal      SUS 's

    name.        Indeed, OIS did             not    even    confirm the existence of the T-Bills which                            were   reflected    on



    Optimal       SUS     s   financial statements.

                                        d.              Conduct By The Santander                     Group       In 2008 Indicates           Growing
                                                        Concerns About Madoff

                                                   i.            Santander Miami And Santander Bahamas Asked
                                                                 Investors In Optimal SUS To Sign Waivers Purporting
                                                                 To Ratify Madoff As The Sole Manager

                 248.      In the      course       of 2008, Santander affiliates                   implemented         certain      procedures that
    indicated      growing       concerns          about Madoff. One of those                      procedures consisted of having private

    banking       clients who had invested in                    Optimal    SUS       sign     a   waiver if they wished to remain in the

    fund    ("Waiver"). Nothing                had       changed    with respect to the              supposed risk parameters of Madoff
    to warrant the            execution of this                   waiver.       Madoff                   supposedly     still                 his
                                                           new                                 was                               executing          split
    strike conversion strategy.                         And, Madoff        was       still the           only   manager for           Optimal       SUS.

    Nevertheless, the Santander affiliates sought                            to obtain additional waivers.                      Plaintiffs   were    not

    sent the     waiver form, but rather,                 they were    advised to         buy more Optimal              SUS.

                 249.     The Waiver said, in relevant part:




    BANK     AMERICA TOWER
            OF                                                                74                                                 WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                      SUITE 317
   TOO SOUTHEAST 2ND STREET                                      LASH &GOLDBERG fJ2500 WESTON
                                                                           ATTORNEYS AT LAW
                                                                                                     I                                              ROAD
    MIAMI, FLORIDA 33131-2158                                                                                                   FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                                     WWW.lashgoldberg.com                                       954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                  Document 1-1               Entered         on    FLSD Docket 03/08/2010                  Page       6 of 70

                                                                                           CASE NO.


                         With respect to your investment in                      Optimal SUS,        you understand
                         and accept the following:

                         Santander Bank & Trust Ltd. (the "Bank") [i.e., Santander
                         (Bahamas)] has informed you that your investment in Optimal
                         SUS may exceed the concentration limits recommended by the
                         Bank, based specifically in the investment profile you have
                         selected for your account with the Bank, for investments in
                         Hedge Funds managed by one manager.

     (Emphasis supplied).

                 250.    The Waiver further           explained that          Santander      (Bahamas) (i)        had advised the client

    to redistribute the          portfolio by investing in investments                  other than   Optimal SUS; (ii) provided the
    client the      opportunity        to review the clients' investments and reduce the exposure to
                                                                                                                                    Optimal
    SUS; (iii) provided various opportunities                       to    ask     questions       and receive      answers      concerning

    Optimal SUS;         and      (iv) explained that the investment                in   Optimal   SUS      was   not   guaranteed by the

    Bank,   any of its     affiliates,    or   any   private or governmental entity,               and could result in the total loss

    of investment.

                 251.    The Waiver       was    therefore       quite   clear: invest in     Optimal       SUS at your       own   risk.

                 252.    While the Waiver exhibited the                       dry terminology         of    legal forms,       emails from

    Santander Miami bank               representatives       to their clients translate Santander Miami's concerns into


    plain language,       as     indicated   by the September 30,             2008 email from Vanessa Redmond to                    a   client.

    See Exhibit "3" attached hereto.


             253.        The claim that the            volatility      in the market          was     the   reason      Santander Miami

    recommended          exiting Optimal         SUS       was    flatly contradicted by             OIS's   own     report for Optimal

    SUS for the quarter            ending September 30,            2008       ("Optimal      SUS     3Q'08 Report").          OIS   actually
    touted the volatile environment                  as    providing opportunities for Madoff.                       In   a   slide entitled

    "Summary of Fund Achievements,                        OIS stated:




    BANK OF AMERICA TOWER                                                75                                          WESTON CORPORATE CENTER
           SUITE 1200                                                                                                        SUITE 317
   100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG
                                                                      ATTORNYS AT LAW
                                                                                             UP                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                       FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx                           WWW.   lash goldberg. com                            954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1              Entered         on    FLSD Docket 03/08/2010                     Page        7 of 70


                                                                                             CASE NO.


                           Review and outlook:

                                 The  manager's market timing [i.e., Madoff's] was impeccable
                                 during the recent period, as he was able to find great entry
                                 points and exit points to benefit investors.

                                 The current volatile environment continues to provide
                                 opportunities for the strategy to outperform its equity
                                 index benchmark.


                                 [Optimal SUS] navigated one of the most difficult periods in
                                 recent market history successfully, managing to produce a gain
                                 in the face of high market volatility.


    (Emphasis supplied).

                 254.      Additional slides in the report                provided additional           statistics to make the                 same



    point that volatility in the market did not affect Optimal                           SUS   as   follows:

                           a.           One slide    on     "Current Performance" showed that                          Optimal           SUS had

    supposedly obtained             a   2.39% return in the third quarter of 2008 while the S&P 500 had                                   dropped
    8.88%.

                           b.           Another slide       on    "Statistics Relative to Various Markets" listed the

    correlation between             Optimal      SUS and the S&P500 at               a   "very low"    0.26.    Indeed, the whole point

    of the statistics           presented   was     that   "Optimal Strategic               U.S.    Equity's    Performance Is             Highly
    Uncorrelated With the U.S.               Equity Market As Well As Hedge Fund Returns                             In General."

                           c.           Yet another slide showed that                       "[Optimal SUS] Ha[d] Outperformed

    During       Crisis Periods."          The chart       on   the slide then showed how                Optimal       SUS had obtained

    positive      returns       compared    to   negative       returns   by   the S&P 500           during    the   (i)   1998     Long       Term


    Capital Management collapse; (ii) 2000 Tech Bubble Burst; (iii) 9/11 attack; (iv)                                                          2002

    WorldCom         bankruptcy: (v) 2002-2003 Iraq War;                     and     (vi)   2008 credit bubble burst.




    BANK   OF   AMERICA TOWER                                             76                                           WESTON CORPORATE CENTER
            SUITE   1200                                                                                                         SUITE 317
   100   SOUTHEAST   2ND   STREET                          LASH &GOLDBERG,
                                                                      ATTORNEYS AT LAW
                                                                                               i,                           2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                                 WWW.lashgoldberg.com                                 954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                 Document 1-1             Entered        on       FLSD Docket 03/08/2010                   Page        8 of 70

                                                                                          CASE NO.


                 255.      Despite     these clear     warning signs,               the    Santander Entities            and Santander

    Individuals failed to advise Plaintiffs of their                      concerns         about       Optimal    SUS and failed to

    recommend to Plaintiffs that            they immediately sell all               of their   holdings    in    Optimal SUS,          as    had

    been done for other Santander Entities' clients and after Plaintiffs had stated their desire to sell


    Optimal       funds.

                 256.      In    fact, contrary    to the    warnings given               to other Santander Entities'                 clients,

    Santander       Miami, by and through its employee and agent Sandra Reif, recommended in October

    2008 that Plaintiffs          purchase more     of the   Optimal      SUS and         Optimal Arbitrage Funds.

                                                      Echeverria Left OIS In June 2008 And Santander Sent
                                                      A Director To Meet With Madoff On Thanksgiving Day
                                                      2008

                 257.      On June      30, 2008, Echeverria left OIS after nearly                          a    20-year       career       with

    Santander and its affiliated entities. Echeverria had been OIS's CEO and CIO                                        during       its entire

    existence. He had built the            hedge fund        group in Geneva that              ultimately became              OIS. And,          as



    described in the EMs, "he built               Grupo Santander's expertise               in the     major alternative         investment

    styles...           and several other     sub-strategies, building              a   US and     European       presence for          Grupo
    Santander."           (October     2006   EM).      A criminal indictment has since been issued                                    against
    Echeverria in Geneva, Switzerland.

                 258.      With Echeverria gone, Santander              Spain dispatched           a    senior member of its Board

    of Directors,        Rodrigo Echenique,        to meet with Madoff                  face-to-face in New York in November

    2008.        Echenique is widely known              to be one of Santander                   Spain's    most trusted advisors.


    Echenique       had served under Emilio Botin              (Santander Spain's Chairman and CEO),                           as    President

    of Santander          Spain    between 1988 and 1994, and has remained                         a   Director   on     the Board          ever


    since.




    BANK OF AMERICA TOWER                                           77                                             WESTON CORPORATE CENTER
          SUITE 1200                                                                                                         SUITE 317
   100 SOUTHEAST 2ND STREET                           LASH &GOLDBERG,,,
                                                                 ATTORNEYS AT LAW
                                                                                                                        2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             WWW.lashgoldberg.com                                 954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                      Document 1-1              Entered           on   FLSD Docket 03/08/2010                         Page       9 of 70

                                                                                               CASE NO.


                 259.      Echenique        and his team met with Madoff on                        Thanksgiving Day 2008. According
     to   a   Financial Times article dated               January 23, 2009,                  and        entitled, "Santander Fund Praised

     Impeccable Madoff, what happened during the meeting is "disputed." However,                                                   a    banker "with

     knowledge          of the   meeting" described            it   as    "a 'routine'        inspection"          that resulted in Santander

     Spain remaining           satisfied with BMIS. The               Spanish newspaper El Mundo reported                              on     December

     18, 2008, meanwhile, that Echenique's visit                               was       prompted by            "rumors about the              possible

    problems"           at BMIS which had been                "going         around for        a   few months in           a     small number of

     Santander's        offices, and noted the abrupt departures of several high level executives of OIS                                                    in

    June      2008, including Defendant Echeverria.

                                       e.           Santander Spain And Its Affiliates Were Deeply Involved In
                                                    OIS And Profited In The Form Of Commissions

                                               i.         Santander                   And    Its              Affiliates       Oversaw                Risk
                                                          Management                  At OIS

                 260.     Santander          Spain     and its affiliates in Madrid                       were      deeply involved              in risk

    management           at   OIS, especially with respect                to   Optimal       SUS.        In   an   October 2008         presentation
    about      Optimal        SUS   entitled, "Optimal Investment Services: Optimal Strategic US Equity, OIS

    emphasized repeatedly               the   pervasive role        of its corporate parent.                  ("Optimal     SUS October 2008

    Presentation").

                 261.     The first section of the            presentation asked, "Why Optimal?"                            The        answer        relied

    heavily      on   Grupo Santander, with             one   slide      immediately afterwards listing the advantages                               of the

    "Presence of Grupo Santander" in Ol S. These                             advantages       included the fact that Santander                       Spain
    was       the seventh      largest      bank in the world in terms of market                              capitalization,      the fifth most

    profitable bank,          had   more      than 132, 000     employees,              and earned record           profits    in 2007 of about

    $10 billion. (Id.).



    BANK OF AMERICA TOWER                                                   78                                              WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                 SUITE 317
   100 SOUTHEAST 2ND STREET                               LASH &GOLDBERG,ATTORNF VS AT LAW
                                                                                                   I,                            2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                              FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                www.lashgoldberg.com                                       954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                  Document 1-1             Entered          on    FLSD Docket 03/08/2010                       Page        10 of 70

                                                                                           CASE NO.


                 262.     Santander         Spain's   role    was    described in         even more           detail with respect to risk

     control.      One of the critical risk-controls included "Internal Audit" at                                Grupo      Santander.           (Id.).
     Internal Audit        was     an    additional control           layer      on     top of all the risk control procedures

     supposedly carried          out   by   OIS. As set forth in the            presentation, risk control procedures included

     supervision by (i)       the risk control committee at OIS; which included OIS' s CEO and CIO, and

     the head of        operational risk,      among      others; (ii) the non-investment, operational due diligence,

     and    quantitative research teams;          and   (iii) Optimal         SUS' s outside auditors.

                 263.     Grupo Santander's            Internal Audit functions                    were   further    specified           in another

     slide, entitled "Operational Control: 6 Levels of Control and Audit, which stated, "The Risk

     Control Division at Santander Asset                     Management           controls all risk controls and                  procedures           at


     OIS." This "control"          was      carried out   on a   "continuous" and "annual" basis.

                                                          Santander Miami Profited From the Sale of the                                   Optimal
                                                          Funds

                 264.     Santander Miami         was   the   logical central point for selling the Optimal Funds to Latin
     America for many         reasons.       It is the functional        headquarters        for Latin American              operations,          with

    hundreds of employees at its Miami office                   on   Brickell Avenue,              compared with significantly smaller
     offices in Latin America. Also, accounts at Santander Miami, and thus based in the United States,

    had     already invested hundreds of millions of dollars in Madoff through Optimal Multiadvisors.

                 265.     Importantly,       Santander Miami did not limit its activities and services to                                only those
    investors that had accounts in Miami. Santander Miami also conducted the                                        operations and         sales of

    the many smaller        and, essentially, mere outposts in Latin America. For example, Plaintiffs accounts

    were     at Santander's affiliate in the Bahamas. But the Bahamas affiliate                               was   principally an offshore

    corporate vehicle with very limited operations and served only                                 as   the   custodian, with all advisory

    services     provided by Santander Miami.

    BANK    OF AMERICA TOWER                                             79                                            WESTON CORPORATE CENTER
             SUITE 1200                                                                                                          SUITE 317
    TOO   SOUTHEAST 2ND STREET                          LASH &GOLDBERG
                                                                     ATTORNEYS AT LAW
                                                                                            I LP                            2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040 305 347 4050 FAX                                www.lashgoldberg.com                                   954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                       Document 1-1         Entered        on     FLSD Docket 03/08/2010                 Page    11 of 70

                                                                                             CASE NO.


                  266.     Santander Miami's              employees,    who      were        located in Miami,    were       also the most

     important      sellers of Optimal Multiadvisors. These Santander Miami                              employees      would    regularly

     travel to Latin America from Miami and sell investments in Madoff                                                 through Optimal
     Multiadvisors to Latin American investors.                      For     example,         Santander Miami         employee    Patricio

     Waterhouse          was   rewarded with         a   meeting with Madoff for being the top Madoff salesman.

                  267.     Santander Miami benefited              economically           from the sale of the         Optimal Funds      to


     Plaintiffs. Santander Miami                charged Plaintiffs      a   sales      charge     at the time of the investment in the


     funds that      was a     percentage of the           amount invested.            This sales      charge   was    in addition to the

     annual management fee                   charged by     OIS based       on   the market value of the         Optimal       Funds each


     year.    Santander Miami also benefited                   economically because it shared                the annual management

     fee with OIS         as   compensation          for Santander Miami's sales efforts.                 Santander Miami has          kept
     these sales     charges, fees,          and commissions, and has not returned the monies to Plaintiffs.

                                        f.       The Santander Entities Settled The Claw Back Suit Filed By
                                                 The RFC Trustee Prematurely To Prevent The Release Of
                                                 Incriminating Information

                  268.    In   early May 2009,             the SIPC Trustee filed             a   number of lawsuits in        bankruptcy
     court    against    several Madoff feeder funds. The suits                   sought to        claw back hundreds of millions of

     dollars that the feeder funds had withdrawn from their Madoff accounts                                           (the   "Claw Back


     Lawsuits").         The SIPC-Trustee            alleged   that these monies             belonged   to other victims of Madoff's


     Ponzi scheme.

                  269.    The Claw Back Lawsuits further                    alleged     that the feeder funds     ignored      critical red


     flags.

                  270.    The evidence of indicia of                irregularity alleged by              the SIPC Trustee        was   that

     Madoff       repeatedly reported           to   the feeder funds, such             as   the   Optimal Funds,       trades that    were




     BANK OF AMERICA TOWER                                             80                                             WESTON CORPORATE CENTER
           SUITE 1200                                                                                                        SUITE 317
    MO SOUTHEAST 2ND STREET                                 LASH &GOLDBERG,
                                                                    ATTORNEYS AT LAW
                                                                                                                        2500 WESTON ROAD
                                                                                                                  FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAX
                                                                www.lashgoldberg.com                              954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1           Entered          on     FLSD Docket 03/08/2010                          Page    12 of 70

                                                                                               CASE NO.


     outside of the          daily trading       range.       By May 2009,                Mr. Picard had combed and examined

     BMIS's internal records for almost six months. This examination culminated in the                                                finding that
     Madoff had           reported      hundreds of trades that could                never     have been executed and that should

     have alerted the individuals            controlling the feeder funds that something was terribly wrong.
                  271.      In the face of the        allegations, the Santander Entities decided                       to settle with the


     SIPC Trustee          on   May 26, 2009,     before   a   complaint had even                been filed    against them (the                "SIPC

     Trustee-Optimal Agreement").                 The settlement had been the result of months of                                    negotiations
     after    Optimal Multiadvisors           had been served with               a      subpoena     on   February 27,       2009.           Optimal
     Multiadvisors         agreed to return over $235 million. This amount represented                            85% of the claim.

                  272.      The SIPC Trustee touted the settlement                      as a   resounding victory.          In   a   press release

     issued       on   May 26, 2009,         he stated, "I      am     very      pleased        that   we   reached such             a   favorable

     settlement with            Optimal    and that   Optimal will       pay     more      than $235 million to resolve the claims


     against       it."   (emphasis supplied).         The press release also                   emphasized      the   high percentage                of

    recovery,          "Optimal    will pay the Trustee       more     than $235 million,              an   amount    equal      to 85% of the


    amount of the Trustee's claims              against Optimal."

                  273.      The investors in     Optimal Multiadvisors were                     not consulted in connection with the


    agreement with the SIPC Trustee,                    nor    did    they      approve the agreement.                 In    fact, the entire

    settlement         negotiations were conducted         in secret and the investors in                   Optimal Multiadvisors were
    not even notified of the             negotiations   until the agreement had been executed and                           publicly         filed in

    court     on   May 26, 2009.

                  274.      The settlement with the Trustee also                          directly     contravened Santander's                  prior

    promise         to the shareholders of        Optimal       SUS that,            "Optimal      will undertake the                legal   actions




    BANK      AMERICA TOWER
             OF                                                          81                                            WESTON CORPORATE CENTER
            SUITE 1200                                                                                                           SUITE 317
    I00 SOUTHEAST 2ND STREET                            LASH &GOLDBERG,,,,
                                                                     ATTORNEYS AT LAW
                                                                                                                            2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4050   FAX                          Vs7WW.1ashgo1dberg.com                                 954   384 2500      954   384 2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1           Entered         on      FLSD Docket 03/08/2010                    Page         13 of 70

                                                                                           CASE NO.


     which may be needed to defend the interests of shareholders in the subfund."                                                  (Emphasis

     supplied).

                  275.      But the settlement itself          was      not the         only   revelation contained in the SIPC

     Trustee-Optimal Agreement. The agreement further revealed                                   two critical   pieces of information

     which had not been disclosed to investors. First, there had been                                no   disclosure that the           Optimal

     Arbitrage      Fund had invested with Madoff until then.                      Indeed, in a January 27, 2009                press    release,

     OIS had announced that               Arbitrage    would be      liquidated citing "adverse             market conditions." But

     there   was no       mention that      Arbitrage      had invested in Madoff and had withdrawn                         approximately

     $125 million in the fall of 2008. There also                   was no        mention that       Arbitrage had        lost about $14.5

     million with Madoff, which                was   the amount that remained at BMIS                 as   of November 30, 2008.

                  276.      Second, there had been            no    disclosure that            Optimal     SUS had        more     than $150

     million in cash in its bank account based                     on   withdrawals from its BMIS's account                        prior      to its


     collapse.      In all    public    disclosures    concerning Optimal               SUS's losses due to      Madoff, the             crux     of

     the disclosures          was     that all monies had been lost.                   Indeed, the Santander Entities negotiated

     releases with hundreds of investors that failed to disclose that                           Optimal     SUS had       more         than $150

     million. There also              was no   consultation with the investors of Optimal SUS,                   including Plaintiffs,
     with respect to whether the settlement agreement with the SIPC Trustee                                   was   in the best interest

     of the investors.

                  277.      The Santander Entities thus carried out the                   negotiations      of the agreement with the

     SIPC    Trustee, and reached           an   agreement,    to   the detriment of, and contrary to, the best interests of


     investors, including Plaintiffs. The Santander Entities forced Optimal Multiadvisors                                               to settle


     with the SIPC Trustee to preempt                  a   public lawsuit which,            in all   likelihood, would          have     alleged

     essentially the        same      wrongdoings asserted      in this lawsuit.




     BANK   OFAMERICA TOWER                                             82                                          WESTON CORPORATE CENTER
             SUITE 1200                                                                                                     SUITE 317
    100   SOUTHEAST   2ND   STREET                         LASH &GOLDBERG
                                                                    ATTORNHS AT I AW
                                                                                                                           2500 WESTON ROAD
                                                                                                                 FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA      33131-2158
   305 347 4040    305 347 4050   FAX                         www.lashgoldberg.com                                  954   384   2500    954   384 2510   FAX
Case 1:10-cv-20695-FAM                         Document 1-1               Entered        on    FLSD Docket 03/08/2010              Page    14 of 70

                                                                                                  CASE NO.


                   278.        Most     importantly, by settling             with the SIPC Trustee, the Santander Entities                  kept
     secret the information about the trades                          reported by          Madoff outside of the       daily trading      range.

     Simply put,            the Santander Entities             paid   the SIPC Trustee, with monies                 belonging     to   Plaintiffs

     here,    to   protect against their              own   liability.

                               3.            The Santander Defendants'                         Wrongful      Conduct As Directed To
                                             Plaintiffs


                   279.        With respect to          Plaintiffs, the Santander Defendants did not provide Plaintiffs with a

     prospectus           or   Explanatory            Memorandum for any               Optimal Funds, including Optimal                SUS and

     Arbitrage,          either     prior to     or   at the time Plaintiffs      purchased these funds.

                   280.        Instead, Santander Miami, Santander Bahamas and its agents and employees

     represented to Plaintiffs that the Optimal Funds were fully diversified, had less volatility and greater

     returns, all with greater transparency, than other investments, without any discussions about the

     risks of such          an   investment and without            raising any        of the red      flags the Defendants' knew or should
     have known.

                   281.        As     one    example,       in the first    presentation         to   Plaintiffs, Santander Miami         states:


     "In alternative investments                      [i.e., hedge funds],       we can        provide   you not   only better    returns with


     less   volatility compared                  to   prior positions [i.e., Orbita], but              we can   also offer greater     liquidity

     (monthly)           and   more     transparency in the securities held in the Optimal funds recommended."

                  282.         While Plaintiffs asked Santander Miami and its officers,                            employees   and agents to

     review        a   host of non-Optimal              hedge funds, Santander Miami, Jaureguizar, Echave, and                         Sanchez

     Castillo       represented         to Plaintiffs in       writing     that the      Optimal Funds       were more    conservative and

     better   performers              than   a   host of other     hedge funds,            in total   disregard   for the truth   or   for basic

     principles          of diversification           required   of   a   financial advisor. Santander Miami discarded almost

     all other investment alternatives.


     BANK OF AMERICA TOWER                                                      83                                      WESTON CORPORATE CENTER
             SUITE      1200                                                                                                     SUITE 317
    MO   SOUTHEAST       2ND   STREET                            LASH &GOLDBERG.,
                                                                            ATTORNEYS AT LAW
                                                                                                                            2500 WESTON ROAD
                                                                                                                       FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040        305 347 4050   FAx
                                                                      WWW.lashgoldberg.com                             954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1-1              Entered       on     FLSD Docket 03/08/2010                 Page    15 of 70

                                                                                             CASE NO.


                  283.        Plaintiffs followed Santander Miami's advice because                           they believed,        based   on


     Santander's         representations, they        were    reducing      the risks in the       portfolios.     In   reality,   Santander

     Miami's advice             was     entirely self-serving       and intended to generate                 significant    fees from its


     proprietary Optimal             funds in    complete disregard to fundamental principles of diversification                           and

     carrying      out    a   low risk investment program. The Santander Entities and Santander Individuals

     put their economic interests before Plaintiffs' interest and, by doing                                so, breached their      fiduciary
     duties to Plaintiffs.

                  284.        Santander Miami's officers and              employees          told Plaintiffs that the     Optimal Funds,
     and in particular the           Optimal   SUS Fund and        Optimal Arbitrage, which comprised almost 20% of the
     initial     portfolio allocation,       were     the   core   positions      in the     portfolio     recommended       by    Santander

     Miami and would              provide stability and offset the volatility of the Plaintiffs'                   other investments in


     portfolios, including those at CIBC, because of their supposed low volatility.

                  285.        OIS also    represented that         it conducted         thorough      due    diligence.      OIS website

     stated, "intensive due diligence is vital                      to   ensuring       the    integrity    and   sustainability      of the

     investment process.... Each investment                        undergoes lengthy            and detailed      scrutiny according        to


     clearly defined manager selection criteria" (emphasis supplied).

                  286.        OIS received        a   handsome       compensation for               this    supposed "intensive due

     diligence,          "careful    analysis,    and "detailed      scrutiny"           a   weighted      average annual commission

     of between 1.90% and 2.15% of assets under management.                                        Based     on   the   reported loss by
     Santander       Spain      in   Optimal     SUS suffered       by   its clients of        approximately        2.33 billion      ($3.17

     billion),     OIS     was    paid   almost       44 million         ($59.91 million) annually. Despite                 this lucrative

     remuneration, OIS and Santander Spain failed                        to conduct reasonable and             adequate     due    diligence
     and lost all of the Plaintiffs' monies in               Optimal      SUS and part of its monies in             Arbitrage.


     BANK   OFAMERICA TOWER                                               84                                        WESTON CORPORATE CENTER
            SUITE 1200                                                                                                         SUITE 317
    100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG!,
                                                                     ATTORNEYS AT LAW
                                                                                                                         2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                     FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAx
                                                               www.1ashgoIdberg.com                                 954 384 2500 954 384 2510 FAX
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                                                                                               CASE NO.


                  287.       Plaintiffs invested in          Optimal SUS, which invested all of its                       assets with Madoff.


     Plaintiffs also invested in               Optimal Arbitrage,             which had,        according        to Sanchez       Castillo,        up to

      10% of its assets invested with Madoff and,                           according         to an October           31, 2008 Arbitrage Fact

     Sheet, had 9.41% in Madoff's Infiltrator Fund.

                  288.       Plaintiffs    purchased         Class A shares and              paid   a    two   percent (2%) front-end load

     for the benefit of the             promised       low   volatility    of SUS. Plaintiffs also              paid,   on   both     Optimal       SUS

     and    Arbitrage,       2.15% Investment            Management Fee,                 2.5% in Administration Fee                   (maximum            of

     $200, 000         per   account),     1%    Custody       Fee to Santander                Optimal         and other fees and expenses

     from    April      2005   through December 11,              2008. Plaintiffs            were       paying high fees for promised                low

     volatility.

                  289.       Based      solely and exclusively        on      the strong recommendations and advice                          provided

     by   Santander Miami              through    its officers and        employees, including Jaureguizar,                   Sanchez        Castillo,

     and    Echave, and based             on    OIS'    representations           as   stated in the Fact Sheet sent to Plaintiffs                       on



     April 14,         2005 for    Optimal SUS,          Plaintiffs   signed           the order confirmations for the                Optimal       SUS

     and    Arbitrage Funds            and faxed the order confirmation to Santander Miami's office in Miami.

                  290.       Santander confirmed that the trades                    were     completed in New York in April 2005.
                  291.       At   no    time   prior   to the disclosure of the Madoff fraud in December 2008 did any


     of the Defendants advise Plaintiffs of any of the                                  risks, red flags, and/or warnings that                     were



     known        or   reasonably       should have been known to the Defendants;                          nor   did the Santander Entities,

     Jaureguizar, Sanchez Castillo, Miguel                      Barron       or    Sandra Reif recommend to Plaintiffs that                         they
     sell their    positions      in the   Optimal       SUS funds and/or               Arbitrage Funds          as   had been done for other

     Santander clients. Instead,               they told     Plaintiffs to       buy more.




     BANK   OF AMERICA TOWER                                                  85                                             WESTON CORPORATE CENTER
             SUITE 1200                                                                                                               SUITE 317
    100   SOUTHEAST 2ND STREET                                LASH &GOLDBERG
                                                                          ATTORNEYS AT LAW
                                                                                                 I LP                            2500 WESTON ROAD
                                                                                                                          FT. LAUDERDALE, FLORIDA
     MIAMI, FLORIDA 33131-2158                                                                                                                                  33331
   305 347 4040    305 347 4050   FAX                             WWW.
                                                                          lashgoldberg. c om                              954   384   2500   954   384   2510   FAX
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                                                                                                CASE NO.


                              4.          The Santander Entities             Ignored         Obvious Red          Flags Concerning                   the
                                          Madoff Fraud

                                          a.       Madoff's     Custody        of Equity Securities

                 292.         Madoff failed to trade        through an independent                  broker and,   instead, self-cleared all

     trading      activities       through his wholly owned            company, BMIS. In                addition, Madoff served                 as   his

     own    custodian for the Funds' assets,                   even   though     this      greatly    increased the risk of        self-dealing
     and of Madoff             perpetrating        a   Ponzi scheme.         At    a      minimum, this arrangement should have

     alerted Defendants to the need for                          heightened scrutiny, monitoring,                      and verification of

     transactions, yet Defendants ignored this risk.

                                          b.       Madoff's Non-Existent                  Counterparties

                 293.         Madoff refused to           identify     the     counterparties with whom he                      traded      equity
     securities and           options      when    executing     the   split    strike conversion strategy.                   Alternatively,          if

     Madoff did         identify them,          Defendants failed to learn that Madoff had                      never    traded with any of

     them.

                                          c.       Defendants Failed To Confirm The Existence Of Government
                                                   Securities At The End Of Each Year

                 294.         Another      warning sign        was   the fact that Madoff             supposedly       held all assets,          one-



     hundred         percent, in government securities                       at the end of every year.                    While       a   possible

     coincidence, it is extremely suspicious. Not                       one,      single year-end coincided with                 an   opportune

     time to be invested in the                 split-strike   conversion strategy. In               light   of this   recurring pattern             the

     obvious       concern         should have been that Madoff was                 hiding      from the auditors        so   that at     year-end
     the auditors would              only      audit government securities.                At   a   minimum, this should have caused

     Defendants to confirm the existence of the government securities.




     BANK   OF   AMERICA TOWER                                            86                                             WESTON CORPORATE CENTER
             SUITE   1200                                                                                                          SUITE 317
    100   SOUTHEAST     2ND   STREET                           LASH6zGOLDBERG,,,,
                                                                       ATTORNFYS AT LAW
                                                                                                                              2500 WESTON ROAD
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050     FAX                          wWW.lashgoldberg.com                                   954   384 2500    954   384 2510   FAX
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                                                                                               CASE NO.


                 295.      Madoff claimed that government securities                                were     cleared     through     Government

     Securities     Clearing Corp. ("GSCC")                    and held     by Bank of New               York   ("BONY"),         but Defendants

     never    confirmed this assertion with GSCC                            or   BONY.         Had Defendants contacted GSCC                            or



     BONY         they   would have learned that Madoff had not conducted                                   a   single   trade in any of these


     years.

                                        d.          Madoff's Unknown                  Auditing Firm

                 296.      Madoff         supposedly         used F&H,           an   unknown           accounting     firm that      was    plainly

     unequipped          to audit a company of BMIS's                  purported           size. F&H had          only   three    employees              a



     retired partner       living       in   Florida,   a    secretary, and       one      active certified      public    accountant.        While

     F&H      was a     member of the American Institute of Certified Public Accountants                                    ("AICPA"),            it had

     not been the        subject   of a peer review since 1993                    which is      a       membership requirement               because

     F&II     represented to the AICPA,                 in   writing, that it did not conduct any audits.

                                        e.          Madoff's Secretive            Operation

                 297.      Madoff refused to             answer even         basic      questions         about BMIS,      leading     OIS's       own



     internal memoranda to describe Madoff                             as    secretive.        Madoff thus refused to                 provide the

     minimum level of transparency necessary to conduct reasonable due                                              diligence.        The lack of


     transparency         was even more             suspicious    in   light     of the fact that the Santander Defendants knew

     that   Optimal      SUS   was one            of Madoff's    largest investors.

                 298.      Madoff s secrecy              was     exacerbated           by    the fact that Madoff            family         members

     controlled     key positions            at   BMIS, thus limiting third party involvement. Defendants knew about

     this arrangement, yet              ignored the risk it clearly represented.




     BANK   OFAMERICA TOWER                                                  87                              WESTON CORPORATE CENTER
            SUITE 1200                                                                                                SUITE 317
    100 SOUTHEAST 2ND STREET                                   LASH &GOLDBERG
                                                                        ArroRNpp, AT LAW
                                                                                                    i   LI2500 WESTON ROAD
                                                                                                            FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAX                              WWW.lashgoldberg.com                                    954   384 2500   954   384   2510   FAX
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                                         f.           Madoffs     Paper Trading Records

               299.        Madoff claimed that BMIS                   was      technologically advanced. Yet,                       Madoff        reported

     his trades to Defendants                  using only     paper confirmation forms which did not include the exact

     time of the trade             nor    the exact        price of each           trade.         Instead, the paper confirmations only

     provided      average        prices      for the transactions that had               supposedly been executed              each        day. Based

     on   standard     industry practice,              the lack of    access to             real-time electronic           reporting       should have

     raised   significant         concerns       about Madoff.            The     use      of    delayed       paper   confirmations, which               are



     patently susceptible to manipulation, was yet another red flag ignored by Defendants.

                                         g.           Madoffs Consistent Returns

               300.        The        impossible consistency              of Madoff's              reported      results   using     the    split       strike

     conversion strategy and the                 resulting investment returns was another warning sign. Among other

     things: (1)     Madoff           generally reported         that he      bought            near   daily   lows and sold        near     highs       with


     uncanny       consistency; (2)            Madoff reported trades at                prices that were outside of the                   stocks' actual


     trading      ranges     or   took        place   on   weekends, both of which                      are    impossible; (3)       Madoff        always

     claimed to be         fully       invested in U.S.          Treasury bills                 at the end of each year; and                (4)    Madoff


     reported      results   were        inconsistent with the            split   strike conversion strategy, which                       might reduce

     volatility    but could not              produce gains      in   a    declining            stock market.          Madoff's     reported        results

     were     unattainable and not                repeatable by others, yet the                        Santander Defendants                ignored        this


     warning sign.

                                         h.           Madoffs Fee Structure

               301.        Equally suspicious              was   Madoff s fee structure, which                       was   extremely unusual              and


     perhaps unique.              A   typical investment         firm like BMIS                   charged      two   percent of     assets       annually,

     plus twenty percent of profits. "Two-twenty,                            as    this arrangement is               commonly referred to               in the



     BANK OF AMERICA TOWER                                                    88                                              WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                  SUITE 317
    100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG,
                                                                           ATTORNEY', AT I AW
                                                                                                        i,                         2500 WESTON ROAD
                                                                                                                             FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050    FAX
                                                                   WWW.lashgoldberg.com                                       954   384   2500    954   384   2510   FAX
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                                                                                              CASE NO.


     hedge fund world is the industry standard.                  On     Optimal           SUS's $3 billion investment with Madoff

     in 2008,      a    "two-twenty"           fee arrangement would have entitled Madoff to                              a   $90 million fee,

     assuming       a   low five percent annual return. Madoff did not                          charge       any such fees and      effectively

     relinquished        tens of millions of dollars every year.                     There      was no       explanation      for this apparent

     generosity.

                 302.      Instead, Madoff supposedly charged                     a      commission per trade. The fund auditors

     reported that Madoff supposedly charged four cents                          a    share     on       each trade. But if Madoff was not


     charging      for results,      as a   "two-twenty" fee        structure        does, and charged only for trading, Madoff

     had   an    incentive to churn the account. This perverse incentive structure                                was a   serious red   flag.
                           5.            Other Financial Institutions Did Not                              Ignore   The Red        Flags    And
                                         Refused To Deal With Madoff

                 303.     Multiple         other financial market          participants reviewed                 Madoff s       operations and
     refused to invest in         light of the high number of red flags.                   In   2007, hedge fund investment adviser

     Aksia LLC          ("Aksia") urged its         clients not to invest in Madoff feeder funds after                         performing    due

     diligence on Madoff.                Aksia identified the   following concerns:

                          a.             Madoff's   auditor, F&H,        was a           three-person accounting              firm located in   a



     13-by-18 foot office               in New    City,   New York.          A financial institution of the size of BMIS is


     typically     audited      by   a   big-four accounting firm,          or    other     larger and         more   reputable    auditor. In

     addition, while F&H purportedly audited BMIS, F&H filed annual forms with the AICPA

     attesting that it had not performed audits for the past fifteen years;
                          b.             The   comptroller of BMIS was based                  in Bermuda. Most mainstream                  hedge
     fund investment advisers have their                  comptroller in-house;             and

                          c.             BMIS had    no   outside   clearing agent that could confirm its trading activity.



     BANK   OF AMERICA TOWER                                            89                                                WESTON CORPORATE CENTER
             SUITE 1200                                                                                                            SUITE 317
    100   SOUTHEAST 2ND STREET                             LASH &GOLDBERG
                                                                     ATTORNEYS AT I AW
                                                                                                 LI l'                        2500 WESTON ROAD
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAX
                                                               www.lashgoldberg.com                                     954 384 2.500 954 384 2510 FAX
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                  304.          Société Générale       ("SocGen") also concluded that Madoff                            was      not   legitimate
     after   sending      its   own     due   diligence   team to New York in 2003.                      As     reported by The        New York

     Times        on   December 17, 2008, in             an   article entitled,            European Banks Tally          Losses Linked To


     Fraud, SocGen's due diligence                    "was conducted                by     three   people     who visited Mr. Madoff s


     headquarters         in the        red-granite skyscraper          on      Third Avenue in Manhattan."                       The bankers

     concluded that         "something         wasn't     right              It's    a     strategy that    can   lose sometimes, but the

     monthly returns were               almost all   positive."

                  305.     Acorn Partners         ("Acorn"),       an    investment           advisory firm,       also concluded that the

     steadiness of the returns that Madoff reported did not make sense, and that the size of Madoff s

     auditor raised serious             concerns.     According         to Robert          Rosenkranz,      a   principal   at   Acorn, "[o]ur

     due     diligence, which got              into both account statements of his customers and the audited

     statements of Madoff Securities which he filed with the                                SEC, made it        seem   highly likely that the

     account statements themselves were                    just pieces       of paper that         were    generated     in connection with

     some     sort of fraudulent           activity." (The     New York           Times, December 12, 2008, Look                       at   Wall St.

     Wizard Finds         Magic Had Skeptics).

                  306.     Jeffrey       S. Thomas, chief investment officer at Atlantic Trust, which manages

     $13.5 billion, said that             on   several occasions          over      the years it had "reviewed and declined to

     invest with Madoff."                In   studying    where to       place      its clients'       funds, the firm said it spotted             a



     number of "red         flags" in Madoff s operation.                Chief among those              was a     lack of an outside firm to

     handle trades and            accounting      for the funds, and the                   inability   to document how Madoff made


     profits.




     BANK     AMERICA TOWER
             OF                                                            90                                            WESTON CORPORATE CENTER
            SUITE 1200                                                                                                             SUITE 317
    100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG.,
                                                                        ATTORNEYS AT LAW
                                                                                                                              2500 WESTON ROAD
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAx
                                                                  www.lashgoldberg.com                                  954 384 2500 954 384 2510 FAX
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                                                                                         CASE NO.


                        6.            Plaintiffs Lost Their Entire Investment In                    Optimal      SUS And Part Of
                                      Their Investment In Optimal Arbitrage

              307.      On December          12, 2008, Jaureguizar informed Plaintiffs' counsel that Santander had

    exposure to the Madoff fraud.

              308.      On December 14, 2008, Santander                    Spain,      S.A. issued     a   press release   disclosing   it

    had €2.33 billion Euros exposure to the Madoff fraud in its                        Optimal Funds.

              309.      On December         17, 2008, Plaintiffs and Santander agreed to meet                    on   January 5   and 6,

    2009 at Santander Miami's office             on   Brickell Avenue. Plaintiffs' counsel and                   Jaureguizar worked
    on an   Excel    spreadsheet to define the amount of the Madoff losses in Plaintiffs'                        accounts.


              310.      On      January 5, 2009, Plaintiffs        and their          legal counsel    met with Sanchez        Castillo,

    Jaureguizar,     and Faraco at Santander Miami's offices.                         Sanchez Castillo,      Jaureguizar and      Faraco

    confirmed at that time that Plaintiffs' investment in                    Optimal      SUS    was   fully invested    with Madoff.

    Sanchez Castillo further informed Plaintiffs' counsel that                           Optimal Arbitrage        had had up to ten

    percent (10%) invested with Madoff, but that Santander had reduced its exposure                                   to Madoff in the


    Arbitrage fund to        1.3%     prior to the fraud being revealed.

              311.      As   a   direct and   proximate result of Defendants intentional, reckless and/or negligent

    conduct, Plaintiffs suffered substantial losses.

              312.      Plaintiffs have been       required      to retain        litigation    counsel to represent them in this

    matter and have incurred and will incur            attorneys' fees and costs as a result thereof.

              313.      All conditions        precedent   to   filing   this action have occurred, been satisfied              or were



    waived.




     BANK OF AMERICA TOWER                                           91                                           WESTON CORPORATE CENTER
            SUITE 1200                                                                                                    SUITE 317
    100 SOUTHEAST 2ND STREET                          LASH &GOLDBERG
                                                                  ATI-ORNFYS AT LAW
                                                                                           Ur                        2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                   FT. LAUDERDALE, FLORIDA 33331
  305 347 4040   305 347 4050   FAX                        www.lash go ldherg.c om                               954 384 2500 954 384 2510 FAX
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                                                                                                CASE NO.


                                                                    COUNT I

                         BREACH OF FIDUCIARY DUTY
        AGAINST SANTANDER SPAIN, SANTANDER MIAMI, SANTANDER BAHAMAS,
                     SANCHEZ CASTILLO, AND JAUREGUIZAR

               314.      Plaintiffs repeat and           reallege       all the     allegations            in   paragraphs   1    through        313    as    if


     fully   set forth in this Count.             This Count is asserted               against      Santander           Spain, Santander Miami,

     Santander Bahamas, Sanchez Castillo and                       Jaureguizar for breach of fiduciary duty.

               315.      Plaintiffs entrusted their assets to the defendants named in this count                                           by investing

     in Santander's      proprietary Optimal             Funds and other investments recommended and                                      promoted by

     the defendants,          as   well    as   other officers and         employees           of the           defendants, including Echave,

     Barron, Sanchez Castillo, and Reif, and reposed confidence in these entities and individuals with

     respect to the management of those                  assets.


               316.      These entities and individuals                 were      in   a    superior position as           to the   management of

     the assets and investments                  they recommended,                in their      capacities          as   the Plaintiffs' account


     custodian, its parent, the selling agents for the recommended investments, Plaintiffs'                                                      account


     manager(s),      and investment            advisor(s).    As   a   result, Plaintiffs placed their                   trust and confidence in


     these entities and individuals.

               317.      Santander Miami, Santander Bahamas,                                    Santander           Spain, Echave,               Sanchez

     Castillo, Jaureguizar, Barron, and Reif accepted that repose of                                            trust and confidence and held


     themselves out           as    providing superior          client investment services and                            knowledge, including,
     without limitation,           by:

                         a.              having policies        and      procedures            in          place   to    ensure      that sufficient


     operational      controls       were   in   place   to   safeguard       Plaintiffs' assets and that transactions would be


     properly conducted and oversight provided;


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                                                                                                    I I,                             2500 WESTON ROAD
                                                                                                                             FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040   305 347 4050     FAX                           www.    lash goldberg. co m                                 954    384   2500   954   384   2510   FAX
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                                                                                            CASE NO.


                         b.            promoting their recommended                 investment       plan and portfolio     as   being well

     diversified, having low volatility, and transparency in accordance with Plaintiffs' stated

     investment      objectives and low risk tolerance;

                         c.            accepting Plaintiffs requests for                 and   providing   investment      proposals for

     Plaintiffs' accounts at Santander Bahamas and other financial institutions,                                     including CIBC,

     knowing      that Plaintiffs would not take any action without first                                receiving    the advice and

     recommendations of these                 defendants; and

                         d.            representing    that the Santander Entities and individuals                        provided     "first

     class" investment         advisory services.

              318.       Plaintiffs       reasonably        and   foreseeably             trusted Santander      Miami, Santander

     Bahamas, Santander Spain, Sanchez Castillo, Jaureguizar, Echave, Barron, and Reif's purported

     expertise and skill.

              319.       These entities and individuals therefore owed                          a   fiduciary duty   to   Plaintiffs with

     respect to the management, oversight, and protection of Plaintiffs'                             assets.


              320.       In accordance with their                 fiduciary             duties to Plaintiffs, these entities and

     individuals     were     obligated to:

                         a.            deal   fairly and honestly with the Plaintiffs;

                         b.            act with   loyalty and good faith towards Plaintiffs;

                         c.            manage and operate Plaintiffs' investments                          exclusively     for the best

     interest of the    Plaintiffs;

                         d.            make recommendations and execute transactions in accordance with the

     Plaintiffs' stated investment             objectives   and   permissible degree            of risk; and




     BANK OF AMERICA TOWER                                             93                                         WESTON CORPORATE CENTER
            SUITE 1200                                                                                                    SUITE 317
    100 SOUTHEAST 2ND STREET                             LASH &              OLDBERGL
                                                                    ATTORNEY', AT LA%
                                                                                                                       2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                   FT. LAUDERDALE, FLORIDA 33331
   305 347 4040   305 347 4050   FAX                          www.lashgoldberg.com                               954 384 2500 954 384 2510 FAX
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                                                                                                 CASE NO.


                            e.           oversee     the investment of Plaintiffs' assets to confirm                                  they    were



    maintained in           a   prudent and professional manner.

                 321.       These entities and individuals breached their                              fiduciary      duties to Plaintiffs          as



    alleged herein, including,              but not limited       by,    among other            things:

                            a.           failing    to   act    with reasonable                 care   to    ensure      that the investment


    opportunities presented               to Plaintiffs were suitable and in accordance with Plaintiffs' investment


    objectives and risk tolerance;

                            b.           failing   to make recommendations and to invest Plaintiffs' assets with


    adequate diligence or monitoring;

                            c.           failing   to exercise the       degree       of prudence,          diligence,   and   care   expected      of

    financial     professionals managing client funds and providing investment advice;

                            d.           profiting   and   allowing their affiliates to unlawfully profit at the expense                            of

    Plaintiffs;

                            e.           engaging     in transactions that            were      designed     to   and did result in    a   profit   to


    these entities at the expense of Plaintiffs;

                            f.           failing to respond to       Plaintiffs           repeated requests for assistance            in   ensuring

    that their investment                 portfolios     conformed to Plaintiffs' stated investment                             objectives      and


     permissible degree of risk;

                            g.           failing    to disclose the true risks involved in the investment program


     recommended and               implemented by             these defendants            on   behalf of Plaintiffs,      including by failing
    to    provide Plaintiffs with prospectuses;

                            h.           continuing      to    promote and recommend that Plaintiffs invest additional

     funds in      Optimal         SUS and         Arbitrage     after   they      knew        or   reasonably      should have known that




     BANK   OF   AMERICA TOWER                                              94                                             WESTON CORPORATE CENTER
             SUITE   1200                                                                                                            SUITE 317
    100 SOUTHEAST 2ND STREET                                   LASH &GOLDBERGii,
                                                                         All ORNEYS ATI   AW
                                                                                                                                2500 WESTON ROAD
                                                                                                                          FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050    FAX
                                                                   WWW.lashgoldherg.com                                    954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1-1            Entered         on      FLSD Docket 03/08/2010                         Page       26 of 70

                                                                                                CASE NO.


     Madoff       was    engaged        in fraudulent conduct such that any additional investments                                  placed        with

     Madoff through            Optimal    SUS and       Arbitrage would further expose Plaintiffs to the fraud;                             and

                          i.           failing   to    provide competent          and      timely        investment advice to Plaintiffs


     despite their repeated requests for such advice.

                 322.     As     a     direct and      proximate   result of Santander Miami, Santander Bahamas,

     Santander      Spain,      Sanchez     Castillo, Jaureguizar, Echave, Barron, and Reif s breaches of their

     fiduciary duties,         the Plaintiffs have suffered losses in the value of their investment                                portfolios           far

     in   excess    of any losses          they       would have suffered had these defendants not breached their


     fiduciary duties to Plaintiffs          in the     performance    of their           responsibilities     and have been              precluded

     from    participating       in the post March 2009 market                          rally   because of Santander's decision to


     liquidate its Optimal funds due to the mass exodus of clients from these funds.

                 323.     As     a     direct and      proximate   result of Santander Miami, Santander Bahamas,

     Sanchez      Castillo, Jaureguizar, Echave, Barron and Reif's breaches of their fiduciary duties, the

     Plaintiffs    were        forced to pay excessive investment,                        performance,        and management fees in


     exchange      for investment services that             were never     provided             or   which   were   provided       in   a   reckless,

     grossly negligent and/or negligent manner.

                 324.      Santander      Spain is also liable for the breach of fiduciary duty by Santander                                  Miami

     and Santander Bahamas pursuant to the doctrine of                                  respondeat superior based                  on     Santander


     Spain's ability       and   authority (as         the parent of these       wholly-owned entities)              to control and direct


     Santander Miami and Santander Bahamas and                        by      virtue of having controlled and directed them

     and    having      benefitted from their conduct and             by having             used its subsidiaries for the                   improper

     purpose of         funneling      Plaintiffs and other investors' assets into the Madoff Ponzi scheme from

     which Santander received substantial fees.




     BANK   OFAMERICA TOWER                                           95                                               WESTON CORPORATE CENTER
            SUITE 1200                                                                                                           SUITE 317
    100 SOUTHEAST 2ND STREET                               LASH &GOLDBERG
                                                                   A1TORNE7   AT LA\C
                                                                                                 i, l'                      2500 WESTON ROAD
                                                                                                                      FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040   305 347 4050   FAX
                                                               WWW.lashgoldberg.com                                    954   384   2500     954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1           Entered          on      FLSD Docket 03/08/2010                   Page      27 of 70

                                                                                             CASE NO.


                  325.     Santander Miami is also liable for the breach of                                fiduciary duty by           Sanchez

     Castillo, Jaureguizar, Javier Echave, Miguel Barron and Sandra Reif pursuant                                          to the doctrine of


     respondeat superior             based   on   these individuals         positions        as   officers, employees and agents of

     Santander Miami whose actions                   were   done in furtherance and for the benefit of the interests of

     Santander Miami.

                  326.     Plaintiffs suffered       damages    in   an    amount to be determined at trial as a direct and


     foreseeable result,            proximately      caused   by     these entities and individuals' breaches of their


     fiduciary duties to Plaintiffs in an amount to be determined at trial.

                  327.     By      reason   of the   foregoing,      Santander Miami, Santander Bahamas, Santander


     Spain,       Sanchez Castillo, and       Jaureguizar are jointly and severally                     liable to Plaintiffs.

                                                               COUNT II

                             GROSS NEGLIGENCE
        AGAINST SANTANDER SPAIN, SANTANDER MIAMI, SANTANDER                                                                  BAHAMAS,
                     SANCHEZ CASTILLO, AND JAUREGUIZAR

                  328.     Plaintiffs repeat and       reallege    all the      allegations        in   paragraphs     1    through   313   as   if


     fully   set    forth in this Count. This Count is asserted                    against        Santander    Spain,      Santander Miami,

     Santander Bahamas, Sanchez Castillo and                   Jaureguizar for gross negligence.

                  329.     Santander Miami, Santander Bahamas, Santander                                     Spain,        Sanchez     Castillo,

     Jaureguizar, Echave,            Barron and Reif had       a   special relationship             with Plaintiffs that gave rise to            a



     duty    to exercise due care in the               management of Plaintiffs'                    assets as Plaintiffs' investment


     managers, advisors and custodian.

                  330.     This      special relationship      arose       from,        among other          things,       Santander    Miami,

     Santander        Bahamas, Sanchez Castillo, Jaureguizar, Echave, Barron and Reif's agreement that

     they     would exercise the             requisite      level of       care         in   selecting     and    monitoring         Plaintiffs'



     RANK     AMERICA TOWER
             OF                                                         96                                              WESTON CORPORATE CENTER
            SUITE 1200                                                                                                            SUITE 317
    100 SOUTHEAST 2ND STREET                             LASH &GOLDBERG.
                                                                     ATTORNEYS AT LAW
                                                                                                                             2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                         FT. LAUDERDALE, FLORIDA 3B3I
   305 347 4040     305 347 4050   FAX
                                                              www.lashgoldberg.com                                     954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1-1            Entered       on     FLSD Docket 03/08/2010                     Page     28 of 70

                                                                                           CASE NO.


     investments, and recommending and implementing investments                                             on   Plaintiffs'      behalf in

     accordance with Plaintiffs' stated                objectives and risk tolerance.

                 331.    Santander Miami, Santander Bahamas, Sanchez Castillo,                                      Jaureguizar, Echave,

     Barron and Reif          grossly     failed to exercise due care, and acted in                     disregard    of their duties, and


     thereby injured Plaintiffs.

                 332.    Santander         Miami, Santander Bahamas, Sanchez Castillo, Jaureguizar, Echave,

     Barron and Reif          grossly     failed to exercise the       degree         of   prudence, caution, and good business

     practice that would be expected of any reasonable investment professional.

                 333.    Santander Miami, Santander Bahamas, Sanchez Castillo,                                      Jaureguizar, Echave,

     Barron and Reif were              grossly negligent by,     among other          things:

                         a.            failing    to   act   with reasonable           care       to    ensure      that the investment


     opportunities presented             to Plaintiffs    were   suitable and in accordance with Plaintiffs' investment

     objectives     and risk tolerance;

                         b.            failing   to make recommendations and to invest Plaintiffs' assets with


     adequate diligence or monitoring;

                         c.            failing   to exercise the   degree      of prudence,            diligence,   and   care   expected      of

     financial    professionals managing client funds               and    providing investment advice;

                         d.            profiting and allowing their affiliates to unlawfully profit at the expense                             of


     Plaintiffs;

                         e.            engaging    in transactions that       were     designed to         and did result in      a   profit   to


     these entities at the expense of Plaintiffs;




     BANK    AMERICA TOWER
            OF                                                        97                                              WESTON CORPORATE CENTER
           SUITE 1200                                                                                                            SUITE 317
    100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG
                                                                   ATTORNEYS AT LAW
                                                                                             a,                            2500 WESTON ROAD
                                                                                                                     FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
   305 347 4040   303 347 4050   FAX                           WWW.lashgoldherg.com                                   954 384 2.500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                     Document 1-1             Entered         on      FLSD Docket 03/08/2010                Page    29 of 70

                                                                                               CASE NO.


                         f.              failing   to   respond to Plaintiffs repeated requests for                 assistance in     ensuring

    that their investment                 portfolios      conformed to Plaintiffs' stated investment                        objectives     and


    permissible degree of risk;

                         g.              failing    to disclose the true risks involved in the investment program


    recommended and              implemented by these              defendants         on     behalf of Plaintiffs,     including by failing

    to   provide Plaintiffs with prospectuses;

                         h.              continuing       to   promote and recommend that Plaintiffs invest additional

    funds in       Optimal       SUS and           Arbitrage after they         knew         or   reasonably should       have known that

    Madoff        was   engaged          in fraudulent conduct such that any additional investments                             placed    with

    Madoff through            Optimal       SUS and       Arbitrage would further expose                   Plaintiffs to the fraud;

                         i.              and   failing to provide competent and timely investment advice                         to Plaintiffs


    despite their repeated requests for such advice.

                 334.    As      a       direct and      proximate     result of Santander Miami, Santander Bahamas,

     Sanchez Castillo,             Jaureguizar, Echave,            Barron and Reif's gross                   negligence,     Plaintiffs have

     suffered losses in the value of their investment                      portfolios          far in   excess   of any losses    they would

     have suffered had these defendants not acted with gross                                  negligence      in the   performance     of their


     responsibilities.        In   addition, Plaintiffs have been precluded from participating in the post March

     2009 market        rally because          of Santander's decision to               liquidate    its   Optimal funds due to the       mass



     exodus of clients from these funds.

                 335.    As        a     direct and      proximate     result of Santander Miami, Santander Bahamas,

     Sanchez Castillo,             Jaureguizar, Echave,            Barron and Reif's gross                   negligence,     Plaintiffs   were



     forced to pay excessive investment,                          performance,              and management fees in             exchange     for




     BANK   OFAMERICA TOWER                                               98                                             WESTON CORPORATE CENTER
            SUITE 1200                                                                                                             SUITE 317
    100 SOUTHEAST 2ND STREET                                   LASH &GOLDBERG,
                                                                       ATI, giNEYS AT LAW
                                                                                                                              2500 WESTON ROAD
                                                                                                                        Fr. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040   305 347 4050     FAX                             www.lashgoldherg.com                                 954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1        Entered          on    FLSD Docket 03/08/2010                          Page       30 of 70

                                                                                       CASE NO.


    investment services that               were never    provided       or    which    were      provided        in    a    reckless, grossly

    negligent and/or negligent manner.

                 336.     Santander        Spain   is also liable for the gross           negligence       of Santander Miami and

    Santander Bahamas pursuant to the doctrine of respondeat superior based                                      on       Santander       Spain's

    ability      and    authority (as       the parent of these          wholly-owned entities)              to control and direct


    Santander Miami and Santander Bahamas and                         by     virtue of having controlled and directed them

    and    by having      used its subsidiaries for the          improper        purpose of          funneling   Plaintiffs' assets into

    the Madoff Ponzi scheme from which Santander received substantial fees.

                 337.     Santander Miami is also liable for the gross                          negligence of              Sanchez       Castillo,

    Jaureguizar, Echave,               Barron and Reif pursuant to the doctrine of                    respondeat superior                based       on



    these individuals        positions      as   officers, employees and agents of Santander Miami whose actions

    were    done in furtherance and for benefit of the interests of Santander Miami.

                 338.     By     reason    of the   foregoing,    Santander          Miami, Santander Bahamas, Santander

    Spain, Sanchez Castillo and Jaureguizar are jointly and severally liable to Plaintiffs in an amount

    to be   determined at trial.

                                                             COUNT III

                 NEGLIGENCE AGAINST SANTANDER SPAIN, SANTANDER MIAMI,
                 SANTANDER BAHAMAS, SANCHEZ CASTILLO, AND JAUREGUIZAR

                 339.    Plaintiffs repeat and        reallege   all the     allegations        in   paragraphs       1     through      313    as    if

    fully   set   forth in this Count. This Count is asserted                   against   Santander        Spain, Santander Miami,
    Santander Bahamas, Sanchez Castillo and                  Jaureguizar for gross negligence.
                 340.     Santander Miami,            Santander      Bahamas, Santander Spain, Sanchez Castillo,

    Jaureguizar, Echave,           Barron and Reif had       a   special relationship with Plaintiffs                      that gave rise to          a




    BANK     AMERICA TOWER
            OF                                                       99                                                WESTON CORPORATE CENTER
           SUITE 1200                                                                                                          SUITE 317
   100 SOUTHEAST 2ND STREET                            LASH &GOLDBERG
                                                                  ATTORNEYS AT LAW
                                                                                          LII                                 2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                         FT.   LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                            WWW.lashgoldberg.com                                      954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1              Entered        on     FLSD Docket 03/08/2010                       Page   31 of 70

                                                                                              CASE NO.


    duty     to exercise due care in the                   management of Plaintiffs'                  assets as Plaintiffs'           investment

    managers, advisors and custodian.

                 341.     This     special relationship            arose    from,       among other            things, Santander Miami,

     Santander Bahamas, Sanchez Castillo,                      Jaureguizar, Echave,                  Barron and Reif's agreement that


    they     would exercise the                 requisite     level of      care        in   selecting and monitoring Plaintiffs'

    investments, and recommending and implementing investments                                                  on      Plaintiffs'    behalf in

    accordance with Plaintiffs' stated                 objectives and risk tolerance.

                 342.     Santander           Miami, Santander Bahamas, Sanchez Castillo, Jaureguizar, Echave,

    Barron and Reif failed to exercise due care, and acted in                                 disregard       of their duties, and       thereby

    injured Plaintiffs.

                 343.     Santander Miami, Santander Bahamas, Sanchez                                      Castillo, Jaureguizar, Echave,

    Barron and Reif failed to exercise the                    degree     of   prudence, caution,               and   good business practice

    that would be       expected of any reasonable investment professional.

                 344.     Santander           Miami, Santander Bahamas, Sanchez Castillo, Jaureguizar, Echave,

    Barron and Reif were               negligent by:

                          a.           failing    to    act   with reasonable                care     to    ensure      that the investment

    opportunities presented              to   Plaintiffs    were   suitable and in accordance with Plaintiffs' investment


    objectives and risk tolerance;
                         b.            failing   to    make recommendations and to invest Plaintiffs' assets with


    adequate diligence or monitoring;

                         c.            failing   to exercise the     degree       of prudence,             diligence,   and   care    expected   of

    financial     professionals managing client funds and providing investment advice;




    BANK   OF AMERICA TOWER                                             100                                               WESTON CORPORATE CENTER
            SUITE 1200                                                                                                              SUITE 317
   100   SOUTHEAST 2ND STREET                               LASH &GOLDBERG,
                                                                     ATTORNFYS AT LAW
                                                                                                iP                             2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                            FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                               www.lashgoldberg.com                                      954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1-1            Entered           on      FLSD Docket 03/08/2010                  Page       32 of 70

                                                                                                 CASE NO.


                         d.            profiting and allowing their affiliates to unlawfully profit at the expense of

    Plaintiffs;

                         e.            engaging       in transactions that        were      designed    to and did result in a         profit       to


    these entities at the expense of Plaintiffs;

                         f.            failing to respond      to Plaintiffs         repeated requests        for assistance in        ensuring
    that their investment               portfolios      conformed to Plaintiffs' stated investment                         objectives          and


    permissible degree             of risk;


                         g.            failing    to disclose the true risks involved in the investment program


    recommended and                implemented by these         defendants           on    behalf of Plaintiffs,    including by failing
    to   provide Plaintiffs with prospectuses;
                         h.            continuing      to   promote and recommend that Plaintiffs invest additional

    funds in       Optimal       SUS and         Arbitrage    after   they      knew        or   reasonably     should have known that

    Madoff       was    engaged         in fraudulent conduct such that any additional investments                               placed with

    Madoff through            Optimal     SUS and       Arbitrage would further expose                  Plaintiffs to the fraud; and

                         i.            failing   to   provide competent             and     timely     investment advice to Plaintiffs


    despite their repeated requests for such advice.

                 345.    As        a   direct and      proximate      result of Santander               Miami, Santander Bahamas,

    Sanchez Castillo,            Jaureguizar, Echave,          Barron and Reif' s                 negligence,   Plaintiffs have suffered

    losses in the value of their investment                    portfolios        far in     excess     of any losses   they       would have

    suffered had these defendants not acted with gross                                    negligence     in the   performance           of their


    responsibilities.         In   addition, Plaintiffs have been precluded from participating in the post March

    2009 market         rally because         of Santander's decision to                 liquidate its Optimal funds       due to the         mass



    exodus of clients from these funds.




    BANK   OFAMERICA TOWER                                               101                                         WESTON CORPORATE CENTER
           SUITE 1200                                                                                                          SUITE 317
   100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG'
                                                                      ATFORNEYS AT LAW
                                                                                                  LI                      2500 WESTON ROAD
                                                                                                                    FT. LAUDERDALE, FLORIDA 33331
    MIAMI, FLORIDA 33131-2158
  305 347 4040    305 347 4050   FAX
                                                               www.lashgoldberg.com                                 954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1          Entered         on    FLSD Docket 03/08/2010                      Page   33 of 70

                                                                                       CASE NO.


                 346.     As     a     direct and    proximate result of Santander Miami, Santander Bahamas,

    Sanchez        Castillo, Jaureguizar, Echave,           Barron and Reif's          negligence,          Plaintiffs    were    forced to


    pay excessive          investment, performance, and management fees                                in   exchange for         investment

    services that       were never        provided or which were provided              in   a   reckless, grossly negligent and/or

    negligent manner.

                 347.     Santander        Spain is     also liable for the           negligence of           Santander Miami and

    Santander Bahamas pursuant to the doctrine of respondeat superior based                                      on    Santander      Spain's

    ability      and    authority (as       the parent of these          wholly-owned entities)                to control and direct


    Santander Miami and Santander Bahamas and                         by    virtue of having controlled and directed them

    and    by having      used its subsidiaries for the           improper       purpose of          funneling   Plaintiffs' assets into

    the Madoff Ponzi scheme from which Santander received substantial fees.

                 348.     Santander Miami is also liable for the                            negligence         of Sanchez Castillo,

    Jaureguizar, Echave,               Barron and Reif pursuant to the doctrine of respondeat                          superior based        on



    these individuals          positions    as   officers, employees and agents of Santander Miami whose actions

    were    done in furtherance and for benefit of the interests of Santander Miami.

                 349.     By     reason    of the    foregoing,    Santander         Miami, Santander Bahamas, Santander

    Spain,       Sanchez Castillo and           Jaureguizar are jointly and severally liable to Plaintiffs                  in   an   amount


    to be determined at trial.


                                                              COUNT IV

                        BREACH OF FIDUCIARY DUTY AGAINST OIS,                                         ECHEVERRIA,
                                      AND SANTANDER SPAIN

                 350.     Plaintiffs repeat and        reallege   all the     allegations       in   paragraphs    1   through    313   as   if


    fully   set forth in this Count. This Count is asserted                    against OIS,          Echeverria and Santander          Spain
    for breach of fiduciary             duty.

    BANK    AMERICA TOWER
            OF                                                       102                                           WESTON CORPORATE CENTER
          SUITE 1200                                                                                                       SUITE 317
   mo SOUTHEAST 2ND STREET                               LASH &           OLDBERGIII
                                                                  ATTORNEYS AT LAW
                                                                                                                        2500 WESTON ROAD
   MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                             www.lashgoldberg.com                                 954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                     Document 1-1                    Entered       on     FLSD Docket 03/08/2010                Page    34 of 70

                                                                                                     CASE NO.


                 351.      Plaintiffs entrusted their assets to OIS, Echeverria, and Santander                                         Spain, by

    investing        in the     Optimal     Funds and             reposed confidence            in OIS,      Echeverria, and Santander Spain

    with respect to the management of those assets.

                 352.      OIS      was   in   a   superior position as           to the       management and control of the           assets and


    investments         they recommended,                   in its   capacity     as   the Investment          Manager     and   selling agent   of

    the   Optimal        Funds and         was     in   a    superior position         to manage,           control, and   oversee   Madoff and

    BMIS.


                 353.      Echeverria          was      in    a    superior position            as   to the    management and control of

    Plaintiffs' assets, in his            capacity as a director and/or officer of the Optimal Funds and/or                              OIS and

    was    in   a   superior position to manage, control, and oversee Madoff and BMIS.

                 354.       OIS, Echeverria, and Santander Spain accepted that repose of trust and confidence

    and held themselves out                 as     providing superior           client investment services and              as   having policies
    and   procedures          in   place to ensure that:

                           a.            the Broker-Dealer for              Optimal            SUS   (i.e., Madoff)   would follow       Optimal
    SUS' s      policies    and investment              guidelines;

                           b.            sufficient      operational       controls      were    in   place to safeguard Plaintiffs' assets;
                           c.            transactions would be              properly           conducted in accordance with           applicable
    federal and state laws and                 regulations;          and

                           d.            OIS would follow its                own       policies       and investment       guidelines    and due

    diligence requirements.

                 355.      OIS, Echeverria, and Santander Spain further accepted that                                      repose of trust and

    confidence and held themselves out and                            represented their          services in the    following manner:




    BANK   OFAMERICA TOWER                                                    103                                           WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                 SUITE 317
   100 SOUTHEAST 2ND STREET                                       LASH &GOLDBERG
                                                                            ATTORNEYS AT LAW
                                                                                                      LII                        2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                              FT. LAUDERDALE, FLORIDA 33331
  305 347 4040      305 347 4050   FAx
                                                                       WWw.lashgoldberg.com                                954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1             Entered        on    FLSD Docket 03/08/2010             Page       35 of 70

                                                                                          CASE NO.


                          a.           OIS    was   the Investment       Manager of the Optimal Funds,              which      provided

    "management and investment advisory"                           services to the         Optimal    Funds   as    required by          an



    "investment management                    agreement"     with the       Optimal Funds (the        "Investment       Management

    Agreement");

                         b.            OIS,    as   the Investment         Manager,        made all investment decisions for


    Optimal       SUS    as    follows:

                         All decisions with respect to the general management of the fund
                         [Optimal SUS] are made by the Investment Manager [Optimal
                         Investment] who has complete authority and discretion in the
                         management and control of the business of the fund, including the
                         authority to delegate all investment management activities to any
                         selected investment advisor and/or Broker Dealer.... As a result,
                         the success of the fund for the foreseeable future will depend
                         largely upon the ability of the Investment Manager, and no
                         person should invest in the fund unless willing to entrust all
                         aspects of the management of the fund to the Investment Manager,
                         having evaluated their capability to perform such functions.
                          (Emphasis supplied.)



                         Although the  Broker-Dealer has limited investment discretion as to
                         the selection of securities or other property purchased or sold by or
                         for the fund's [Optimal SUS' s] account, the Broker-Dealer has
                         discretion with respect to the timing and size of transactions....

                 356.    OIS, Echeverria, and Santander Spain accepted that repose of trust and confidence

    by holding themselves              out    experienced    and   professional         asset and fund managers and       agreeing       to


    exercise the        requisite level of care         in   selecting     and      monitoring    investment managers to whom

    they    entrusted the investment assets of                 Optimal         SUS and       Optimal Arbitrage, stating,         among

    other   things:




    BANK   OFAMERICA TOWER                                             104                                     WESTON CORPORATE CENTER
           SUITE 1200                                                                                                     SUITE 317
    mo SOUTHEAST 2ND STREET                             LASH &GOLDBERG
                                                                    ATTOR NEYS AT LAW
                                                                                           LI P                     2.500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                 FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX                          WWW.lashgoldberg.com                            954   384 2500   954   384 2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1                Entered        on     FLSD Docket 03/08/2010                     Page       36 of 70

                                                                                              CASE NO.


                           a.          "It is the       [Optimal] Fund's task                 to select and         diversify        among the

    distinctive investment             techniques      and    strategies     of each       portfolio     manager to achieve the Fund's

    investment          objectives;"

                           b.          "[Optimal Investment] specialises                     in    advising multi-manager             and multi-


    strategy portfolios;"

                           c.          "The Investment          Manager [Optimal Investment] shall                           select managers

    with varied investment               styles     who have established records of                      success or   who the Investment


    Manager believes demonstrate the potential to                        become           outstanding investment managers;"
                           d.          "The Investment             Manager [Optimal Investment] bases                          its investment

    decisions      on a    careful     analysis     of many investment            managers;" and

                           e.          "The    [Optimal]      Fund must        satisfy itself to         ensure   that such third party has

    and maintains the necessary competence,                          standing       and    expertise appropriate        to hold the assets


    concerned."

                 357.      Plaintiffs        reasonably      and    foreseeably           trusted OIS, Echeverria, and Santander


    Spain's purported expertise                and skill.

                 358.      OIS, Echeverria, and Santander Spain therefore owed                              a   fiduciary duty       to   Plaintiffs

    with respect to the management,                     oversight,      and    protection of Plaintiffs'            assets invested in the


    Optimal       Funds.

                 359.      In accordance with their                   fiduciary           duties to      Plaintiffs, these entities and

    individuals         were    obligated to:

                           a.          deal   fairly   and   honestly with the Plaintiffs;
                           b.          act   with   loyalty   and   good faith towards Plaintiffs;




     BANK   OFAMERICA TOWER                                               105                                          WESTON CORPORATE CENTER
            SUITE 1200                                                                                                           SUITE 317
    100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG
                                                                       ATTORNEYS AT LAW
                                                                                                  LI I                      2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                                   www.lashgoldberg.com                                954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                     Document 1-1              Entered          on    FLSD Docket 03/08/2010                   Page       37 of 70

                                                                                              CASE NO.


                           c.           manage and operate Plaintiffs' investments                           exclusively          for the best

    interest of the       Plaintiffs;

                           d.           make recommendations and execute transactions in accordance with the

    Plaintiffs' stated investment                objectives and permissible degree of risk;                  and

                           e.           oversee        the investment of Plaintiffs'                assets     to    confirm        they       were


    maintained in         a   prudent and professional manner.

                 360.      OIS, Echeverria, and Santander Spain breached their fiduciary duties                                    to Plaintiffs


    by,   among other           things:
                           a.           failing    to    ensure     that      adequate       due   diligence       had been          conducted,

    including following OIS's                   own    internal due     diligence protocols, before allowing Madoff to                         serve


    as   the Broker-Dealer for             Optimal SUS;

                           b.           failing   to ensure that the investment of Plaintiffs' assets was done with


    adequate diligence or monitoring;

                           c.           failing   to    ensure    the   monitoring of         Madoff      on an     ongoing basis          to any


    reasonable          degree,    or     the   compliance        with OIS'           own    internal    protocols    for    monitoring              the

    Optimal Funds'             assets   entrusted to Madoff;

                          d.            failing   to ensure that         adequate steps        had been taken to confirm BMIS's

    purported account statements, transactions,                         and   holdings of the Optimal Funds'            assets;

                          e.            failing   to exercise the        degree      of prudence,       diligence,   and    care   expected of
    financial     professionals managing                client funds;

                          f.            profiting at the    expense of Plaintiffs; and


                          g.            engaging       in transactions that         were    designed     to and did result in        a   profit       to


    OIS, Echeverria, and Santander Spain                     at   Plaintiffs' expense.




    BANK   OF AMERICA TOWER                                                106                                         WESTON CORPORATE CENTER
            SUITE 1200                                                                                                           SUITE 317
    100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG,
                                                                         ATTORNEYS AT LAW
                                                                                                                            2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050    FAX
                                                                   www.lashgoldberg.com                               954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                    Document 1-1           Entered         on     FLSD Docket 03/08/2010                  Page      38 of 70

                                                                                           CASE NO.


                 361.    As      a     direct and   proximate      result of OIS,              Echeverria, and Santander Spain's

    breaches of their       fiduciary duties,           Plaintiffs have lost all,         or   substantially all,   of their investments

    in the      Optimal    SUS Fund and             a    portion of   the     principal        amount of their investments in the


    Optimal Arbitrage Fund.

                 362.    As      a     direct and   proximate result of OIS, Echeverria,                      and Santander         Spain's
    breaches of their            fiduciary duties, Plaintiffs,          have been forced to pay excessive                       investment,

    performance         and management fees in               exchange      for investment services that             were     promised      but

    never    provided.

                 363.    OIS is also liable for its            officers, directors, employees and agents' misconduct,

    including that of Echeverria, Wilkinson                   and Inder      Rieden, pursuant to the doctrine of respondeat

    superior based        on     these individuals'        positions    as   officers, employees and agents of OIS whose

    actions      were   done in furtherance and for the benefit of the interests of OIS.

                 364.    Santander        Spain is      also liable for the breach of fiduciary              duty by OIS, pursuant to

    the doctrine of        respondeat superior based               on    Santander         Spain's ability      and     authority (as      the

    parent of these wholly-owned entities)                      to control and direct OIS and                    by   virtue of     having
    controlled and directed it and             by having used its subsidiary for the improper purpose                         of funneling

    Plaintiffs and other investors' assets into the Madoff Ponzi scheme from which Santander

    received substantial fees.

                365.     Plaintiffs suffered         damages     as a   direct and foreseeable result,              proximately     caused

    by OIS, Echeverria,              and Santander       Spain's breaches         of their      fiduciary   duties in   an   amount to be


    determined at trial.

                366.     By      reason    of the   foregoing,    Santander            Spain, OIS,    and Echeverria      are   jointly   and

    severally     liable to Plaintiffs.




    BANK   OF   AMERICA TOWER                                         107                                            WESTON CORPORATE CENTER
            SUITE 1200                                                                                                         SUITE 317
    100 SOUTHEAST 2ND STREET                               LASH &            OLDBERGII
                                                                    ATTORNEYS AT LAW
                                                                                                                          2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                               WWW.lashgoldberg.com                                 954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                     Document 1-1           Entered      on    FLSD Docket 03/08/2010                        Page        39 of 70

                                                                                          CASE NO.


                                                                  COUNT V

                                  GROSS NEGLIGENCE AGAINST OIS, ECHEVERRiA
                                            AND SANTANDER SPAIN

                 367.       Plaintiffs repeat and       reallege all the allegations              in   paragraphs    1     through      313    as    if

    fully   set forth in this Count. This Count is asserted                    against OIS, Echeverria,            and Santander              Spain
    for gross     negligence.

                 368.       OIS, Echeverria, and Santander Spain had                  a   special relationship with Plaintiffs that

    gave rise to        a   duty    to exercise due care in the          management of Plaintiffs'                assets invested in the


    Optimal Funds and in the selection and monitoring                         of the Broker-Dealer for            Optimal         SUS.

                 369.       This    special relationship arose from,           among other         things, the following:
                            a.            The Broker-Dealer       was    responsible for executing trading activities                               on



    behalf of Optimal SUS under the direction of OIS                          as   indicated      by the following statements made

    by or on behalf of OIS:

                                     i.         "The    [Optimal]        Fund and          Optimal         SUS have           delegated         the

    execution of all investment management decisions with                              regard      to   Optimal      SUS to the Broker-

    Dealer;" and

                                                "The Irwestment         Manager [OIS] has delegated the                     execution of the


    trading strategy             of the fund to the Broker-Dealer and the overall                       success   of the fund           depends

    upon the      ability of the Broker-Dealer to be              successful in the fund's              strategy;"

                 370.       OIS, Echeverria, and Santander Spain agreed that they would exercise the requisite

    level of      care      in   selecting and monitoring investment                  managers to whom               they        entrusted the

    investment assets of Optimal SUS,                  stating,   for   example:




    BANK     AMERICA TOWER
            OF                108                                                                                     WESTON CORPORATE CENTER
           SUITE 1200                                                                                                         SUITE 317
    ioo SOUTHEAST 2ND STREET
           FLORIDA
     MIAMI0111,              ATI-F, AT LAW
                                                         LASH &GOLDBERG                     lAt                              2500 WESTON ROAD
                      131158                                                                                         FT.
                                                                          J
                                                                                                                           LAUDERDALE, FLORIDA 33331
   33-2305
     347 4040     305 347 4050     FAX
                                                             WwW.lashgoldberg.com                                    954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                     Document 1-1           Entered            on      FLSD Docket 03/08/2010                    Page        40 of 70

                                                                                                CASE NO.


                           a.            "It is the   [Optimal]      Fund's task to select and                       diversify        among the

    distinctive investment               techniques   and   strategies      of each           portfolio   manager to achieve the Fund's

    investment          objectives;"

                           b.            "[OIS]     specialises     in       advising multi-manager                    and          multi-strategy
    portfolios;"

                           c.            "The Investment       Manager [OIS] shall select                          managers with varied

    investment          styles     who have established records of                          success or    who the Investment                Manager
    believes demonstrate the               potential to become outstanding investment managers;"

                           d.            "The Investment      Manager [OIS] bases its investment decisions                                        on      a


    careful     analysis of many investment managers;"                     and

                           e.            "The   [Optimal]   Fund must          satisfy itself to          ensure   that such third party has

    and maintains the necessary competence,                       standing           and      expertise appropriate      to hold the assets


    concerned."

                371.       OIS, Echeverria, and Santander Spain grossly failed                                to exercise due care, and


    acted in    disregard of their duties, and thereby injured Plaintiffs.

                372.       OIS, Echeverria, and Santander Spain grossly failed                                to   exercise the            degree       of

    prudence, caution,               and   good business practice                that would be             expected     of any reasonable

    investment          professional.

                373.       OIS, Echeverria, and Santander Spain grossly failed to:

                           a.            perform   necessary and     adequate due diligence, before allowing                           Madoff to

    serve as    the Broker-Dealer for              Optimal;

                           b.            monitor Madoff on     an   ongoing basis to any reasonable degree;




    BANK   OFAMERICA TOWER                                               109                                            WESTON CORPORATE CENTER
            SUITE 1200                                                                                                          SUITE 317
    100 SOUTHEAST 2ND STREET

     MIAMIFLORIDA 33131158
                                                         LASH (StGOLDBERG
                                                                    41-1,)1.NFY, Al I Mlz
                                                                                                                           2500 WESTON ROAD
                                                                                                                       FT.   LAUDERDALE, FLORIDA 33331-
  -2305
     347 4040    30 5   347 4050   FAX
                                                              www.lashgoldherg.com                                      954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                      Document 1-1               Entered        on   FLSD Docket 03/08/2010                   Page        41 of 70

                                                                                              CASE NO.


                            c.            take   adequate steps        to confirm Madoff's            purported      account        statements,

     transactions and            holdings    of the    Optimal   Funds' assets;

                            d.            take reasonable steps to             ensure       that the investment of the assets of

     Plaintiffs       were   made and maintained in              a   prudent and professional          manner;

                            e.            take reasonable steps to preserve the value of Plaintiffs'                     investments;

                            f.            and exercise    generally the degree             of prudence,     caution, and good business

     practices that would be expected of any reasonable investment professional.

               374.         If OIS,        Echeverria,     and Santander         Spain       had not been         grossly negligent             with

     respect      to Plaintiffs' assets invested in the                    Optimal Funds, they              would not have entrusted

     Plaintiffs' assets invested in the                Optimal   Funds to Madoff.

               375.         OIS is also liable for its                   officers, directors, employees and agents'                            gross

     negligence, including that of Echeverria, Wilkinson and Inder Rieden, pursuant to the doctrine of

     respondeat superior based                   on   these individuals'       positions      as   officers, employees and agents of

     OIS whose actions             were     done in furtherance and for the benefit of the interests of OIS.

               376.         Santander        Spain     is also liable for the gross             negligence        of OIS pursuant to the

     doctrine of respondeat superior based                      on    Santander       Spain's ability       and   authority (as      the parent

     of this   wholly-owned subsidiary)                  to control and direct OIS and                by virtue     of   having      controlled

     and directed it and           by having      used its     subsidiary      for the     improper purpose        of funneling Plaintiffs

     and other investors' assets into the Madoff Ponzi scheme from which Santander received

     substantial fees.

               377.         As    a     direct and    proximate result of OIS, Echeverria, and Santander Spain's                               gross

    negligence,        Plaintiffs have lost all,          or   substantially all,          of their investments in the            Optimal      SUS

    fund and      a   portion of the principal amount of their investments                         in the   Optimal Arbitrage            fund.



     BANK OF AMERICA TOWER                                                 110                                         WESTON CORPORATE CENTER
           SUITE 1200                                                                                                            SUITE 317
    TOO   SOUTHEAST   2ND   &FREE. I,                        LASH &GOLDBERG,
                                                                          TT     TI   AW
                                                                                                                            2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050    FAX
                                                                     www.lashgoldherg.com                             954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                        Document 1-1           Entered       on      FLSD Docket 03/08/2010                           Page        42 of 70

                                                                                                CASE NO.


                  378.       As   a   direct and    proximate result of OIS, Echeverria,                            and Santander         Spain's      gross

     negligence,         Plaintiffs have been forced to pay excessive                                         investment, performance and

     management fees in exchange for investment services that were promised, but never provided.

                  379.       Plaintiffs suffered        damages      as a   direct and foreseeable result,                    proximately          caused

     by OIS, Echeverria,               and Santander       Spain's    gross      negligence              in   an   amount to be           determined at

     trial.

                  380.       By   reason       of the   foregoing,    Santander           Spain,    OIS and Echeverria               are    jointly      and

     severally liable to Plaintiffs.

                                                                   COUNT VI

                                            NEGLIGENCE AGAINST OIS, ECHEVERRiA
                                                   AND SANTANDER SPAIN


                  381.       Plaintiffs repeat and         reallege   all the     allegations            in    paragraphs     1   through        313    as   if

     fully set forth in this           Count. This Count is asserted              against OIS, Echeverria, and Santander Spain
     for   negligence.

                  382.       OIS, Echeverria, and Santander Spain had                       a   special relationship with Plaintiffs                     that

     gave rise to        a   duty     to    exercise due   care   in the management of Plaintiffs' assets invested in the


     Optimal Funds and in the selection and monitoring                           of the Broker-Dealer for                    Optimal       SUS.

              383.           This     special relationship arose from,            among other                 things, the following:
                             a.             the Broker-Dealer      was      responsible for executing trading activities                                  on


     behalf of Optimal SUS under the direction of OIS                             as      indicated       by the following           as    indicated      by
     the   following statements made by or on behalf of OIS:
                                       i.         "The     [Optimal]        Fund and             Optimal            SUS have          delegated the
     execution of all investment management decisions with                                   regard           to   Optimal   SUS to the Broker-

     Dealer;" and

     BANK OF AMERICA TOWER                                               111                                                   WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                   SUITE 317
    100 SOUTHEAST 2ND STREET                                LASH &GOLDBERG
                                                                       ATiORNIA, AT LAW
                                                                                                   LLP                              2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                                FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAx
                                                                  WWW.lashgoldherg.com                                        954   384   2500   954   384 2510   FAX
Case 1:10-cv-20695-FAM                     Document 1-1          Entered           on     FLSD Docket 03/08/2010                   Page       43 of 70

                                                                                             CASE NO.


                                                "The Investment         Manager [OIS] has delegated the execution of the

     trading strategy           of the fund to the Broker-Dealer and the overall                        success   of the fund            depends

     upon the      ability   of the Broker-Dealer to be successful in the fund's                        strategy."

                           b.            OIS, Echeverria, and Santander Spain agreed that they would exercise the

     requisite     level of care in        selecting   and   monitoring investment               managers to whom            they       entrusted

     the investment assets of Optimal SUS,                   stating,   for   example:
                                    i.          "It is the   [Optimal]        Fund's task to select and           diversify         among the

     distinctive investment              techniques   and   strategies    of each          portfolio   manager to achieve the Fund's

     investment         objectives;"

                                                "[OIS] specialises            in   advising multi-manager            and     multi-strategy

     portfolios;"

                                                "The Investment         Manager [OIS] shall select              managers with varied

     investment         styles    who have established records of                        success or    who the Investment               Manager
     believes demonstrate the              potential to become outstanding investment managers;"

                                  iv.           "The Investment         Manager [OIS] bases its investment decisions                                on


     a   careful   analysis of many investment managers;" and

                                   v.           "The   [Optimal]        Fund must           satisfy itself to   ensure      that such third

    party has and maintains the necessary competence, standing and expertise appropriate                                           to hold the


     assets concerned."


                 384.      OIS, Echeverria, and Santander Spain failed                            to exercise due care,                 acted in

     disregard     of their duties, and        thereby injured Plaintiffs.




     BANK   OFAMERICA TOWER                                             112                                           WESTON CORPORATE CENTER
            SUITE 1200                                                                                                        SUITE 317
    100 SOUTHEAST 2ND STREET                             LASH &GOLDBERGI,
                                                                    AFIVI2NI,1, AT LAW
                                                                                                                         2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                       FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAX
                                                               www.lashgoldberg.com                                  954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                    Document 1-1              Entered         on      FLSD Docket 03/08/2010                 Page    44 of 70

                                                                                                  CASE NO.


                  385.    OIS, Echeverria, and Santander Spain failed                              to exercise the      degree   of   prudence,

     caution, and good business practice that would be expected of                                           any reasonable investment

     professional.

                  386.    OIS, Echeverria, and Santander Spain failed to:

                          a.            perform      necessary and       adequate           due   diligence,   before   allowing      Madoff to

     serve as     the Broker-Dealer for            Optimal;

                          b.            monitor Madoff on          an   ongoing basis to            any reasonable      degree;
                          c.            take    adequate steps       to confirm Madoff's                 purported      account   statements,

     transactions and          holdings of the Optimal           Funds' assets;

                          d.            take reasonable steps to                ensure          that the investment of the assets of

     Plaintiffs     were   made and maintained in             a   prudent and professional                manner;

                          e.            take reasonable steps to preserve the value of Plaintiffs'                       investments; and

                          f.            exercise     generally    the    degree            of   prudence, caution,      and   good business

     practices that would be expected of any reasonable investment professional.

                 387.     If OIS, Echeverria, and Santander                      Spain had          not been    negligent     with respect to

     Plaintiffs' assets invested in the               Optimal Funds, they would                    not have entrusted Plaintiffs' assets


     invested in the       Optimal Funds to Madoff.

                 388.     OIS is also liable for its              officers, directors, employees and agents' negligence,

     including that of Echeverria,               Wilkinson and Inder             Rieden, pursuant          to the doctrine of respondeat


     superior based        on   these individuals'        positions as officers, directors, employees                     and agents of OIS

     whose actions       were      done in furtherance and for the benefit of the interests of OIS.

                 389.     Santander        Spain is    also liable for the         negligence of OIS pursuant to the doctrine                of

     respondeat superior                based   on    Santander     Spain's ability               and   authority (as    the parent of this



     BANK   OF AMERICA TOWER                                              113                                            WESTON CORPORATE CENTER
             SUITE 1200                                                                                                          SUITE 317
    100   SOUTHEAST 2ND STREET                            LASH &GOLDBERG.,
                                                                        ATTORNEY; AT LAW
                                                                                                                              2500 WESTON ROAD
     MIAMI, FI, ORIDA 3313i-2158                                                                                        Pr. LAUDERDALE, FLORIDA 33331
   303 347 4040    305 347 4050   FAX                             wWW.I ashgoldberg.conn                                954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                   Document 1-1           Entered        on     FLSD Docket 03/08/2010                             Page       45 of 70

                                                                                               CASE NO.


    wholly-owned subsidiary)                to control and direct OIS and                       by virtue of having                controlled and

    directed it and        by having used its subsidiary          for the     improper purpose                  of funneling Plaintiffs and

    other investors' assets into the Madoff Ponzi scheme from which Santander received substantial

    fees.

                 390.     As     a   result of OIS, Echeverria, and Santander                      Spain's negligence, Plaintiffs have
    lost all,     or   substantially all,    of their investments in the                  Optimal           SUS fund and       a   portion of the

    principal      amount of their investments in the            Optimal Arbitrage fund.

                 391.     As     a   result of OIS, Echeverria, and Santander                     Spain's negligence, Plaintiffs,                  have

    been forced to pay excessive                 investment, performance and management fees in exchange for

    investment services that             were   promised but never provided.

                 392.     Plaintiffs suffered      damages      as a   direct and foreseeable result,                    proximately           caused


    by OIS, Echeverria,              and Santander   Spain's negligence              in   an   amount to        be determined at trial.

                 393.     By     reason   of the   foregoing,    Santander           Spain,       OIS and Echeverria               are   jointly and

    severally liable to        Plaintiffs.

                                             COUNT VII
                                          (In the Alternative)
                         UNJUST ENRICHMENT AGAINST OIS, SANTANDER MIAMI
                                     AND SANTANDER BAHAMAS

                 394.     Plaintiffs repeat and       reallege   all the     allegations               in   paragraphs   1   through         313    as    if

    fully   set    forth in this Count.             This Count is asserted                     against OIS,        Santander          Miami, and

    Santander Bahamas for               unjust enrichment.

                 395.     Plaintiffs base their      unjust enrichment claim on the receipt or retention of fees                                     and

    other monies that these defendants obtained at the expense of                                           Plaintiffs, and     to    which these

    entities     were    not   entitled, including, but     not limited        to,    as   specified          in the EMs, which              provided
    as   follows with respect to          Optimal    SUS:


     BANK OF AMERICA TOWER                                          114                                                   WESTON CORPORATE CENTER
            SUITE 1200                                                                                                              SUITE 317
    100 SOUTHEAST 2ND S'EREEF                          LASH &GOLDBERG
                                                                  ATTORNEYS AT LAW
                                                                                                iI P                           2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAX
                                                            www.lashgoldherg.com                                         954   384   2.500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1          Entered            on      FLSD Docket 03/08/2010                    Page       46 of 70

                                                                                             CASE NO.


                          Optimal   SUS shall pay the Investment Manager an investment
                          management fee calculated monthly and payable quarterly in
                          arrears on the last Business Day of each quarter with respect to

                          each Class, equal to (in respect of each month) a maximum of one-
                          twelfth of 2.15% of the net asset value of the shares for the month
                          for the Class A USD Shares A EUR Shares and (in respect of each
                          month) one-twelfth of 1.65% of the net asset value of the shares
                          for the month for the Class B USD Shares B EUR and (in respect
                          of each month) one-twelfth of 1.15% of the net asset value of the
                          shares for the month for the Class C USD Shares.

                 396.     Plaintiffs also base their          unjust      enrichment claim           on   the      receipt   or    retention of

    fees and other monies that these defendants obtained at the expense of                                    Plaintiffs, and            to which


    these defendants         were       not   entitled, including,   as    specified in the EMs, which provided as                        follows

    with respect to       Optimal Arbitrage:

                          Optimal Arbitrage  shall pay the Investment Manager an investment
                          management fee calculated monthly and payable quarterly in
                          arrears on the last Business Day of each quarter with respect to

                          each Class, equal to (in respect of each month) a maximum of one-
                          twelfth of 2.15% of the net asset value of the shares for the month
                          for the Class A USD Shares A EUR Shares, the Class A CHF
                          Shares A JPY Shares and (in respect of each month) one-twelfth
                          of 1.65% of the net asset value of the shares for the month for the
                          Class B USD Shares B EUR Shares.

                 397.     Plaintiffs further base their        unjust enrichment                claim   on   the   receipt    or   retention of

    commissions and other monies that Santander Miami and/or Santander Bahamas                                                           charged
    Plaintiffs at the time of investment in                    Optimal          SUS and         Optimal Arbitrage,               and to which

    Santander Miami and Santander Bahamas                         were        not        entitled, including, but      not limited to the


    commissions authorized in the October 2006 EM and                                           subsequent EMs,             as    follows: "A

    Subscription fee (sales charge)                     and   redemption                 fee of up to 5% of the                    subscription

    price/redemption price                may be        charged   to      shareholders who subscribe for/redeem their


    shareholdings         in the Funds           (for   the benefit of the Investment                   Manager        or    any distributor

    appointed to the Company)."

     BANK   OF   AMERICA TOWER                                         115                                             WESTON CORPORATE CENTER
             SUITE 1200                                                                                                        SUITE 317
    too   SOUTHEAST 2ND STREET
    MIAMIFLORIDA
                                                          LAS H &GOLDBERG,,,
                                                                     ATTOINEY, AT I AW
                                                                                                                             2500 WESTON ROAD
                             158                                                                                      FT. LAUDERDALE, FLORIDA 33331
   3313i-2305
     347 4040      305 347 4050   FAX
                                                              www.lashgoldberg.com                                    954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                      Document 1-1        Entered          on     FLSD Docket 03/08/2010                    Page         47 of 70

                                                                                           CASE NO.


                  398.         OIS, Santander Miami, and Santander Bahamas                            were   enriched at the expense of

     Plaintiffs, including by taking Plaintiffs' monies in the form of commissions and other fees for

     their   purported management of Plaintiffs' investment,                           and the   purported, but     in fact     non-existent,

     capital appreciation of such assets.

                  399.         Plaintiffs   involuntarily    conferred       a    benefit upon OIS, Santander Miami, and

     Santander Bahamas without Plaintiffs                     receiving       a    benefit       or    compensation       in return.           OIS,

     Santander Miami, and Santander Bahamas                          knowingly accepted                 this benefit and retained the

     benefit under        inequitable circumstances.
                  400.     Equity       and   good      conscience      require OIS,             Santander Miami, and Santander

     Bahamas to refund all fees and other monies                     they        received at Plaintiffs' expense in connection

     with Plaintiffs' investments in             Optimal    SUS and      Arbitrage.
                  401.     Plaintiffs have      no   adequate remedy at law to address their losses as alleged herein.

                                        COUNT VIII
                   PURSUANT TO FLORIDA STATUTE SECTIONS 517.301 AND 517.211
                     AGAINST SANTANDER MIAMI, SANTANDER BAHAMAS, OIS,
                            SANCHEZ CASTILLO, AND JAUREGUIZAR
                              RELATED TO MADOFF INVESTMENTS

                  402.     Plaintiffs repeat and         reallege all   the      allegations      in   paragraphs   1   through        313     as    if

     fully    set forth in this Count.               This Count is asserted                against      Santander       Miami,         Santander

     Bahamas, OIS, Sanchez Castillo and Jaureguizar.

                  403.     Defendants         subject    to this Count           negligently, recklessly          or    knowingly             made

     various      deceptive        and untrue statements of material facts and omitted to state material facts


     necessary in order to make the statements                  made, in light of the circumstances under which they

     were    made,       not   misleading to the Plaintiffs.




     BANK     AMERICA TOWER
             OF                                                      116                                             WESTON CORPORATE CENTER
            SUITE 1200                                                                                                         SUITE 317
    100 SOI.Mi EAST 2ND STREET                            LASH &            OLDBERGLLI
                                                                   ATTO!LNElS AT LAW
                                                                                                                          2500 WESTON ROAD
     MIAMI, F1DRIDA 33131-2158                                                                                      FT. LAUDERDAIT, FLORIDA 33331
   305 347 4040    305 347 4050 FAX                           www.lashgoldberg.com                                  954   324   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                   Document 1-1         Entered            on      FLSD Docket 03/08/2010                     Page    48 of 70

                                                                                              CASE NO.


                404.       The purpose and effect of said false and                           misleading        statements and omissions


    was, among other             things,   to induce the Plaintiffs to              purchase shares             in   Optimal Arbitrage       and

    Optimal      SUS.

                405.       Defendants       subject   to   this count either                   directly        or    through     their officers,

    employees         or   agents, offered     to sell and sold       Optimal             SUS and          Optimal Arbitration funds           to


    Plaintiffs from Santander Miami's office in Miami, Florida, and Plaintiffs                                         accepted    the offer   by

    delivering        their order confirmations for the                   purchase            of the        Optimal      SUS and        Optimal
    Arbitration funds to Santander Miami's office in Miami, Florida. Defendants then directed the


    completion or completed the transactions from Santander Miami's                                        offices in   Miami, Florida.

               406.        Plaintiffs    purchased these investments                    based   on    false and       misleading      statements


    and omissions made             by these defendants, including, but not limited to, the                            follows:

                           a.          Santander Miami and Santander Bahamas                              by   and    through    their officers,

    employees      and agents,          including Jaureguizar, Echave,                  Barron and Sanchez Castillo                 represented
    that the    Optimal         SUS and    Optimal Arbitrage funds              were      well diversified, had low               volatility and
    had achieved consistent returns and should constitute                          a core      investment for Plaintiffs'           portfolios.
                           b.          Santander Miami and Santander Bahamas                              by and through their officers,

    employees      and agents,          including Jaureguizar, Echave,                  Barron and Sanchez Castillo                 represented
    that the     Optimal SUS and Arbitrage Funds achieved specific quantified                                           statistical    analyses,

    including, by          way of      example, Sharpe     Ratios    (a   measure             of   risk-adjusted return)          and Standard

    Deviations, all of which were false as the funds                 were, in whole                  or   in part, frauds.

                           c.          OIS, Santander Miami and Santander Bahamas by and through their

    officers, employees and agents, including Echeverria, Inder Reiden, Wilkinson, Jaureguizar,

    Echave, Barron, and Sanchez Castillo failed                 to   provide             or   offer to     provide Plaintiffs      with   copies


     BANK OF AMERICA TOWER                                          117                                                   WESTON CORPORATE CENTER
            SUITE 1200                                                                                                              SUITE 317
    100 SOUTHEAST 2N1) STREET'                        LASH &GOLDBERG
                                                                ATI-0 :N.F.Y, AT I AW
                                                                                                HP                             2500 WESTON ROAD
     MIAMIFLORIDA      3131158                                                                                           FT. LAUDERDALE, FLORIDA 33331
   3-2305
     347 4040    305 347 4050    FAX
                                                            www.lashgoldberg.com                                          954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                      Document 1-1          Entered        on      FLSD Docket 03/08/2010                    Page   49 of 70

                                                                                              CASE NO.


    of any       Prospectuses, called "Explanatory Memoranda"                            or   "EMs" for any of the          Optimal Funds,

    including      SUS and          Arbitrage, they recommended to Plaintiffs.

                          d.              Santander Miami, Santander Bahamas and OIS                         thereby omitted to disclose
    to Plaintiffs the risks otherwise stated in the EMs and failed to                                    provide      Plaintiffs with the


    requisite subscription forms for these funds.

                          e.              OIS, Santander Miami and Santander Bahamas by and through their

    officers, employees and agents, including Jaureguizar, Barron, and Sanchez Castillo omitted

    from their disclosures to Plaintiffs any of the red                           flags regarding Madoff              as    set forth in this


    complaint.

                          f.              OIS, Santander Miami and Santander Bahamas by and through their

    officers, employees and agents, including Jaureguizar, Echave, Barron, and Sanchez Castillo

    omitted from their disclosures that Santander Miami and its                                officers, employees and agents             were



    prohibited       from      offering       and/or   selling Optimal        SUS and          Arbitrage      funds from Miami while


    simultaneously doing just that.

                 407.     The Defendants               subject   to this Count             negligently, recklessly            or   knowingly

    misrepresented             to   that Plaintiffs' assets       were    being          invested    using    a   split   strike conversion


     strategy. In reality,            no    such strategy   was    being    executed because Plaintiffs' assets                    were   being
    funneled into Madoff s Ponzi scheme in which                            no     legitimate       securities transactions         were ever



    conducted. Further, Defendants failed to disclose the material fact that                                   they had      no   independent

    factual basis for their               representations about the Optimal               SUS's investment strategy because                they
    had   never     undertaken any             meaningful steps      to confirm that the             split    strike conversion strategy

    was   actually being implemented by Madoff.




     BANK    AMERICA TOWER
            OF                                                         11 8                                               WESTON CORPORATE CENTER
           SUITE 1200                                                                                                            SUITE 317
    MO SOUTIIEAST 2ND STREET                                I—ASH &GOLDBERG'',
                                                                     AFWIINFYS AT I AW
                                                                                                                            2500 WESTON ROAD
                                                                                                                      FT. LAUDERDAI.E, FLORIDA 33331
    MIAMI, Fl ORIDA 33I3I-2158
   305 347 4040    305 34 7 4050    FAX                          wWW.lashgoldberg.com                                  954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1                    Entered    on      FLSD Docket 03/08/2010                      Page        50 of 70

                                                                                                  CASE NO.


                  408.     Defendants              subject       to   this Count further           misrepresented         that   they and their

     financial services               providers          and     auditors    were      conducting         extensive due            diligence           and


     monitoring of Madoff's operations,                          which served     as   the    Optimal     Funds' investment             advisors,        as



     well    as   broker, execution agent, and custodian, and that they had full transparency with respect to

     all Madoff's         operations.         The Defendants            subject   to this Count failed to disclose to the Plaintiffs


     the material facts that in               reality     no one      had conducted any            meaningful       due   diligence      on    Madoff

     prior   to    establishing         the   Optimal          Funds' investments with              Madoff;     no one was             meaningfully

     monitoring, verifying,                   or    confirming          Madoff's trade            activity; effectively           there        was      no



     transparency into Madoff's operations; and                            no one    had     an    independent, factual basis                for   stating

     that Madoff          was    executing          a    split    strike conversion strategy            or   any other      legitimate trading

     strategy.

                  409.      On March 14, 2005, Santander                        Miami, through its officer and employee Ana

     Maria    Jaureguizar         sent Plaintiffs          a   fact sheet    prepared by          OIS   describing    the investment               profile

     and strategy of the              Optimal       SUS Fund. The fact sheet                represented      that   Optimal      SUS invested in

     "U.S.    large      cap stocks that           are   part of the S&P 500." The fact sheet further represented that the

     Optimal       SUS Fund's strategy                  was    for "the   preservation        and increase of capital with               a    minimum

     of volatility       through liquid            investments in U.S. stocks and                options."    These statements               were    false

     and    misleading.          In   reality,     no    such strategy      was   being executed because Plaintiffs'                     assets were


     being funneled into Madoff's Ponzi scheme                              in which        no   legitimate    securities transactions               were



     ever    conducted. Further, the Defendants                         subject to   this Count failed to disclose the material fact

     that   they    had    no    independent             factual basis for their            representations     about the        Optimal           SUS's

     investment strategy because                    they had never undertaken                any   meaningful steps        to confirm that the


     Optimal Fund,          in   fact,   had invested in any             stocks, options or other "liquid investments."


     BANK     AMERICA TOWER
             OF                   119                                                                                       WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                SUITE 317
    100 SOUTHEAST 2ND STREET
                               AT11111NLY,
                                                                  LASH &GOLDBERGILPAT LAW
                                                                                                                                 2500 WESTON ROAD
                                                                                                                           FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158,
   305 347 4040    305 347 4050   FAX
                                                                        WWW.lashgoldberg.com                               954   384   2500    954   384 2510   FAX
Case 1:10-cv-20695-FAM                     Document 1-1              Entered            on       FLSD Docket 03/08/2010                      Page       51 of 70

                                                                                                       CASE NO.


                  410.     Defendants        falsely    and   misleadingly               stated that Madoff                usually invested           in U.S.


    Treasury Bills when not executing the split strike                           conversion strategy                  as   indicated    by its   assertion

    that "in      practice   the Broker-Dealer            usually     invests in U.S.                     Treasury Bills." This         statement        was



    false.        Madoff     never        invested in U.S.           Treasury Bills because he                          never     executed        a    single
    transaction in his Investment                Advisory      business. The Defendants                          subject      to this Count failed to


    disclose that          they      had    no    independent         factual basis for their                         representations about the

    investments in U.S.             Treasury Bills       because       they       had           never     undertaken any        meaningful steps           to


    confirm that these government securities had                       actually been bought and were being held.

                  411.     Defendants        subject to this     count      falsely and misleadingly                        stated that "the assets of


     [Optimal SUS]          are    deposited with the         Broker-Dealer." This statement                           was     false. Madoff did not

    hold the assets of             Optimal       SUS in    deposit     because Madoff stole the assets.                                The Defendants


     subject to this       Count failed to disclose to Plaintiffs that                           they     had   no   independent factual basis            for

    their    representations             that the assets       were    deposited                     with Madoff because               they had        never



    undertaken any          meaningful steps to confirm that.

                  412.     Plaintiffs relied       on   the   representations                   and omissions of OIS, Santander Miami,

     Santander Bahamas,             Jaureguizar,       Sanchez Castillo and other                         officers, employees and/or agents of

     Santander Miami and Santander Bahamas in                          purchasing Optimal                       SUS and       Arbitrage.

                  413.     The Defendants          subject     to this    Count,                as   acknowledged          in their    own   documents,

    recognized the          fundamental          importance     of proper due                   diligence, strict monitoring, and oversight

     of the investment manager, broker, administrator and custodian, and their                                                 obligation    to   perform

    these functions and                  misrepresented       that    they conducted such due diligence.                                   In     fact, the

     Defendants          subject   to    this Count    negligently, recklessly                       or   knowingly        failed to   perform the       due


     diligence that they recognized was essential                     and     required by standard-industry practice.


     BANK     AMERICA TOWER
             OE                                                           120                                                     WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                      SUITE 317
    100 SOUTHEAST 2ND STREET                               LASH &GOLDBERG,
                                                                        ATT,,INEy,, A r r Avv
                                                                                                           Lr                          2500 WESTON ROAD
                                                                                                                                 FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050    FAX
                                                                 www.lashgoldherg.com                                            954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                  Document 1-1                 Entered         on      FLSD Docket 03/08/2010                      Page    52 of 70

                                                                                                CASE NO.


                 414.     Defendants          subject       to    this Count also              negligently, recklessly             or    knowingly
    disregarded         the red   flags surrounding              Madoff and that should have alerted                   them,       as   experienced
    investment professionals, to the need for                      heightened scrutiny.
                 415.     By     reason      of the       foregoing, Defendants subject                    to this Count         directly   violated

    Florida Statute Section 517.301 in that                        they negligently, recklessly                or    knowingly          made untrue

    statements of material facts                or    omitted to state material facts necessary in order to make the

    statements      made, in light of the circumstances under which they                                were   made, not misleading.

                 416.     Plaintiffs, in ignorance of the false and misleading                             statements and omissions made


    negligently, recklessly             or    knowingly by            Defendants             subject       to this   Count, relied,         to their


    detriment,      on   such    misleading statements and omissions in purchasing                              shares in the       Optimal      SUS

    and   Optimal Arbitrage            funds.

                 417.     Defendants         subject       to this action         are       therefore   jointly      and   severally liable       for

    rescission of Plaintiffs'           purchase of the Optimal                   SUS and        Arbitrage      Funds pursuant to Florida

    Statute Section 517.211             as   well    as   attorneys' fees and           costs incurred        by Plaintiffs.
                                                                    COUNT IX

                                  FOR VIOLATIONS OF RULE 10b-5(b)
                              AND SECTION 10(b) OF THE EXCHANGE ACT
                          AGAINST SANTANDER MIAMI, SANTANDER BAHAMAS,
                                       OIS, AND ECHEVERRIA

                 418.     Plaintiffs repeat and            reallege    all the     allegations        in   paragraphs      1    through    313   as   if

    fully    set forth in this Count.                 This Count is asserted                    against Santander Miami, Santander

    Bahamas, OIS, and Echeverria based only                           upon Rule             10b-5(b) promulgated pursuant                to Section


    10(b)    of the     Exchange Act,        15 U.S.C.            78j(b).

                 419.     Defendants         subject to      this Count      recklessly              knowingly made            various
                                                                                                or
                                                                                                                                          deceptive
    and untrue statements of material facts and omitted to state material facts
                                                                                necessary in order to


     BANK   OFAMERICA TOWER                                                 121                                                WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                SUITE 317
    100 SOUTHEAST 2N1) STREET                                LASH &GOLDBERGILP
                                                                       Ari,,, Nrys ATI Aw
                                                                                                                                 2500 WESTON ROAD
     MIAMI, FI.ORIDA 33131-2158                                                                                            FT, LAUDERDALE, FLORIDA 33331
  3O5 347 4040    305 347 4050   FAX
                                                                   www.lashgoldherg.com                                     954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1              Entered            on       FLSD Docket 03/08/2010                Page      53 of 70

                                                                                                    CASE NO.


    make the statements made, in                        light of the circumstances                   under which       they    were      made,    not


    misleading to           the Plaintiffs. The purpose and effect of said false and                             misleading      statements and


    omissions was, among other                     things,    to induce the Plaintiffs to                      purchase    shares in      Optimal

    Arbitrage and Optimal               SUS.

                 420.       Defendants       subject      to this Count sold the                    Optimal     Funds based         on   false and


    misleading        statements and        omissions, including, but not limited to, the following:

                            a.          that the   Optimal    SUS and           Optimal Arbitrage funds                were    well diversified,

    had low       volatility and had achieved              consistent returns and should constitute                     a core   investment for

    Plaintiffs'      portfolios;

                            b.          that the   Optimal     SUS and              Arbitrage Funds achieved specific quantified

     statistical     analyses, including, by              way of    example, Sharpe                  Ratios     (a   measure   of   risk-adjusted

    return) and Standard Deviations, all of which                            were           false   as    the funds were, in whole         or    part,

     frauds;

                            c.          failing    to    provide    or    offer to              provide Plaintiffs      with     copies    of any


     Prospectuses, called "Explanatory Memoranda"                                    or         "EMs" for any of the           Optimal Funds,

     including       SUS and        Arbitrage, they         recommended to Plaintiffs.                         Santander Miami, Santander

     Bahamas and OIS              thereby omitted to disclose              to Plaintiffs the risks otherwise stated in the EMs


     and failed to       provide Plaintiffs with the requisite subscription forms for these funds;

                            d.          omitting    from their disclosures to Plaintiffs any of the red                          flags regarding

     Madoff as set forth in this            complaint;

                            e.          omitting    from their disclosures that Santander Miami and its officers,


     employees          and agents      were   prohibited     from       offering           and/or       selling Optimal   SUS and       Arbitrage

     funds from Miami while                simultaneously doing just that;


     BANK   OF   AMERICA TOWER                                             122                                              WESTON CORPORATE CENTER
             SUITE   1200                                                                                                             SUITE 317
    100 SOUTHEAST 2ND STREET                                 LASH &GOLDBERG.,
                                                                         A-7,, km   Ai I   AW
                                                                                                                                 2500 WESTON ROAD
                                                                                                                           FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAX
                                                                   WWW.lashgoldberg.com                                    954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                      Document 1-1                 Entered         on      FLSD Docket 03/08/2010                      Page    54 of 70

                                                                                                      CASE NO.


                             f.           misrepresenting to the           Plaintiffs that their assets               were      being invested using
     a   split    strike conversion strategy when, in                      fact,     no     such strategy          was    being    executed because

     Plaintiffs' assets            were     being funneled into              Madoff s Ponzi scheme in which                             no    legitimate
     securities transactions              were ever       conducted and           failing to disclose the             material fact that        they had
     no    independent            factual basis for their              representations about                 the     Optimal      SUS's investment

     strategy because they had                never       undertaken any           meaningful steps              to confirm that the         split strike
     conversion strategy             was    actually being implemented by Madoff;

                             g.           misrepresenting          that    they        and their financial services                    providers      and

     auditors      were      conducting       extensive clue        diligence          and      monitoring       of Madoff s       operations,     which

     served       as   the   Optimal        Funds' investment advisors,                         as   well   as   broker, execution agent, and

     custodian, and that they had full transparency with respect to                                    all Madoff s           operations;
                             h.           failing   to disclose to the Plaintiffs the material facts that in                           reality    no one



     had conducted any              meaningful           due   diligence    on    Madoff prior to            establishing the Optimal Funds'
     investments with Madoff;                       no    one    was      meaningfully monitoring verifying,                           or    confirming
     Madoff s trade           activity; effectively            there   was no       transparency into Madoff s operations; and                         no


     one   had     an    independent, factual                  basis for    stating         that Madoff          was      executing     a   split strike
     conversion strategy             or   any other      legitimate trading strategy;

                             i.           providing Plaintiffs           with      a    fact sheet          prepared by         OIS    describing     the

     investment        profile      and strategy of the            Optimal         SUS Fund which                  misrepresented        that   Optimal
     SUS invested in "U.S.                large   cap stocks that         are    part of the S&P 500;" and that the Optimal SUS

     Fund's strategy              was   for "the    preservation and increase of capital with                             a   minimum of        volatility
     through liquid investments                in U.S. stocks and           options, when,              in   fact,   no   such strategy      was   being
     executed because Plaintiffs' assets                   were    being funneled                into Madoff s Ponzi scheme in which                   no




     BANK OF AMERICA TOWER                                                    123                                                 WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                      SUITE 317
    100 SOUTHEAST 2N1) STREET                                    LASH &GOLDBERG,,,
                                                                           ATTORNEY, AT L. /V
                                                                                                                                       2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                                   FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050     FAX
                                                                       Www.lashgoldberg.com                                      954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1           Entered         on     FLSD Docket 03/08/2010                   Page        55 of 70

                                                                                             CASE NO.


    legitimate        securities transactions          were    ever        conducted; and by also failing                  to disclose the


    material fact that these defendants had                    no    independent             factual basis for their        representations

    about the        Optimal      SUS's investment strategy because                    they had never undertaken           any   meaningful

    steps    to    confirm that the         Optimal Fund,       in   fact, had invested in              any    stocks, options        or   other

    "liquid investments;"

                           j.           misrepresenting      that Madoff usually invested in U.S.                     Treasury   Bills when

    not   executing        the    split strike   conversion strategy when, in                 fact, Madoff never invested in                 U.S.


    Treasury         Bills because he         never     executed       a    single      transaction in his Investment              Advisory
    business and        by failing to       disclose the material fact these defendants had                      no    independent factual
    basis for their         representations       about the investments in U.S.                     Treasury    Bills because         they   had

    never    undertaken any             meaningful steps      to confirm that these              government securities had actually

    been    bought and were being held;                and

                           k.           misrepresenting      that "the assets of             [Optimal SUS]       are   deposited      with the

    Broker-Dealer, when, in fact, Mado ff did not hold the                              assets   of Optimal SUS in         deposit because
    Madoff stole the assets, and              by failing     to disclose the material fact that these                   defendants had        no



    independent         factual basis for their         representations         that the assets         were    deposited     with Madoff

    because       they had never undertaken any meaningful steps to confirm that.

                 421.      Plaintiffs relied      on   the   representations           and omissions of OIS, Santander Miami,

    Santander Bahamas,              Jaureguizar,    Sanchez Castillo and other                 officers, employees and/or agents of

    Santander Miami and Santander Bahamas in                         purchasing Optimal              SUS and     Arbitrage.
                 422.      The Defendants         subject    to this   Count,          as   acknowledged       in their   own    documents,

    recognized the fundamental importance                     of proper due            diligence,    strict   monitoring,    and   oversight
    of the investment manager,               broker, administrator and custodian, and their obligation                           to   perform


     BANK   OF   AMERICA TOWER                                         124                                             WESTON CORPORATE CENTER
             SUITE   noo                                                                                                        SUITE 317
    100SOUTHEAST 2N1) STREET                             LASH &GOLDBERG
                                                                     AFR,NEYS AT LAW
                                                                                               UP                          2500 WESTON ROAD
    MIAMI, FI.ORIDA 33131-2158                                                                                        FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4030   FAX
                                                               www.lashgoldberg.com                                    954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                  Document 1-1            Entered          on     FLSD Docket 03/08/2010                   Page     56 of 70

                                                                                              CASE NO.


     these functions.             Nevertheless, the Defendants subject                    to this Count        recklessly   or   knowingly
     failed to      perform due diligence           that    they recognized             was    essential and      required by       standard-

     industry practice.

                  423.       Defendants     subject    to   this Count          knowingly         or    recklessly    did not conduct        a


     careful      analysis     of Madoff and failed to          ensure          that Madoff had the necessary competence,

     standing,      and     expertise to   hold the   Optimal Funds'           assets.     Further, the Defendants subject to this

     count did not disclose to Plaintiffs that                they    failed to conduct any              meaningful      due                of
                                                                                                                               diligence
     Madoff and had                never    independently      verified with              a    third-party      that any of the trade

     confirmations          provided by     Madoff were true and correct, and that the assets                         reported by Madoff
     existed.

                  424.       Defendants     subject to   this Count also           recklessly     or   knowingly disregarded the red

     flags surrounding             Madoff and that should have alerted                          them,     as   experienced investment

     professionals, to the           need for   heightened scrutiny and failed to disclose these                     facts to Plaintiffs.

                  425.       By   reason   of the   foregoing,       Defendants           subject      to this Count     directly   violated

     Section       10(b) of the Exchange              Act and Rule 10b-5                 promulgated there            under in that       they

     recklessly      or     knowingly      made untrue statements of material facts                       or   omitted to state material

     facts necessary in order to make the statements made, in                             light   of the circumstances under which


     they were made,           not   misleading.
                  426.       Plaintiffs, in ignorance of the false and misleading                      statements and omissions made


     recklessly      or     knowingly by     Defendants      subject      to this       Count, relied,     to their   detriment,     on   such

     misleading       statements and omissions in            purchasing shares            in   Optimal     SUS and     Arbitrage Funds.




     BANK   OF   AMERICA TOWER                                         125                                            WES'FON CORPORATE CENTER
             SUITE   1200                                                                                                       SUITE 317
    100 SOUTHEAST 2N1) STREE I'                          LASH &GOLDBERG,,,
                                                                     ATII, TNL):, AAW
                                                                                   TI
                                                                                                                           2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                       FT. LAUDERDALE, FI.ORIDA 33331
   305 347 4040    305 347 4050   FAX
                                                              www.lashgoldherg.com                                    954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                          Document 1-1             Entered           on     FLSD Docket 03/08/2010                     Page       57 of 70

                                                                                                       CASE NO.


                 427.         Plaintiffs have suffered substantial                      damages          with respect to their investments in

     the   Optimal       SUS and          Arbitrage    Funds      as a   result of the wrongs               alleged herein in an amount to be

     proven at trial.

                                                                         COUNT X

                      FOR VIOLATIONS OF SECTION 20(a) OF THE EXCHANGE ACT
                            AGAINST SANTANDER SPAIN AND ECHEVERRIA

                 428.         Plaintiffs repeat and             reallege      all the     allegations       in   paragraphs    1    through       313 and

     417    through      426     as    if   fully   set forth in this Count.                  This Count is asserted           against       Defendants

     Santander        Spain      and Echeverria pursuant to Section                               20(a) of the Exchange Act,                15 U.S.C.


     78j(b).

                 429.         Defendants Santander                Spain       and Echeverria acted                as   controlling    persons within

     the   meaning of Section 20(a) of the Exchange Act,                                as    alleged herein.

                 430.         Defendant Echeverria               was   Chief Executive Officer and Chief Investment Officer

     of OIS from its            inception through July 2008,                     and     a   Director of         Optimal Multiadvisors and the

     Optimal       Funds. Echeverria had                   day-to-day         control and exercised                    day-to-day    control of OIS,


     Optimal Multiadvisors,                     and the    Optimal      Funds.          Accordingly,             Defendant Echeverria had the


     power to control the                 general    business affairs of OIS,                     Optimal Multiadvisors,             and the      Optimal

     Funds, and the           power to          directly   or   indirectly       control          or   influence the     specific corporate policy

     (e.g., the failure to          conduct due        diligence)        at   OIS, Optimal Multiadvisors, and the Optimal Funds

     which resulted in           primary liability.
                 431.         OIS     was a       wholly-owned subsidiary                     of Santander         Spain    at all relevant times.


     Santander       Spain      had       day-to-day      control and exercised                   day-to-day      control of OIS.          Accordingly,

     Santander        Spain      had      (i)   the power to control the                  general business affairs            of OIS, and          (ii)   the




     BANK   OF   AMERICA TOWER                                                  126                                            WESTON CORPORATE CENTER
             SUITE   1200                                                                                                                SUITE 317
    100   SOUTHEAST     2ND   STREEN                             LASH &GOLDBERGur
                                                                              AIT012NLYS AT LAW
                                                                                                                                    2500 WESTON ROAD
                                                                                                                              FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4030     FAX
                                                                       www.lashgoldberg.com                                    954   384   2300   954   384   2510   FAX
Case 1:10-cv-20695-FAM                     Document 1-1              Entered             on     FLSD Docket 03/08/2010                   Page    58 of 70

                                                                                                     CASE NO.


    power to       directly       or   indirectly   control   or   influence the                specific corporate policy (e.g.,          the failure

    to   conduct due         diligence)     at OIS which resulted in                 primary liability.

                 432.        As   a    direct and   proximate        result of the              wrongful      conduct   alleged    in this Count,

    Plaintiffs suffered           an    economic loss and       damages             in connection with their            purchases        of shares in

    the   Optimal       SUS and         Arbitrage Funds in an amount to be proven at trial.
                                                                    COUNT XI

                                             FOR DECLARATORY RELIEF
                                       RELATED TO THE "EXCHANGE AGREEMENT"

                 433.        Plaintiffs repeat and      reallege        all the        allegations       in   paragraphs   1   through     313   as   if

    fully set forth in this            Count.

                 434.      In late December           2008, Santander Spain disclosed that it had €2.33 Billion Euros

    exposure to the Madoff fraud                through investments made by its Optimal Funds.
                 435.        In late    December,     2008 and       early January 2009, Santander, through its officers and

    agents       at Santander      Miami,    met with Plaintiffs and their counsel to discuss a                          possible settlement of
    Plaintiffs' losses in connection with the Madoff fraud.

                 436.      At those       meetings,    Sanchez Castillo stated that Santander                          Spain was working         on a



    plan to fully reimburse              Plaintiffs for their initial investment in Madoff. Plaintiffs understood this

    proposal       to be   a   cash reimbursement of the full amount of their lost investments. The                                       Exchange

    Agreement was not discussed.

                 437.      On     January 27, 2009, Santander Spain issued                               a   press release     stating    that: "The

    Santander        Group        announces     that it has decided to offer                     a   solution to its   private banking        clients

    who have invested in                 Optimal Strategic          US    Equity fund (Optimal Strategic), which                           has been

    affected      by the     actions initiated       against   Bernard L. Madoff Investment." The                            proposed solution,
    "consists in        an    exchange      of assets   by     which the            private banking            clients will have the        right     to



     BANK   OFAMERICA TOWER                                                127                                               WESTON CORPORATE CENTER
            SUITE 1200                                                                                                               SUITE 317
    Ioo SOUTHEAST 2ND STREET                              LASH &GOLDBERG  1-101.NLI, Al I, VU
                                                                                                       al2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                             FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4050   FAX                              www.lash gold berg. c om                954 384 2500 954 384 2510 FAX
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                                                                                                       CASE NO.



     exchange       their investments in              Optimal Strategic for preferred securities                                 to be issued       by the

     Group."

                 438.     In late       January 2009, Sanchez                 Castillo and             Jaureguizar     called Plaintiffs' director,

     Elias, from Miami, and asked him                      to return to Miami to receive the offer                           regarding      the   Optimal
     SUS reimbursement.                 Elias met with Sanchez Castillo and                                Jaureguizar      on   January 29,       2009 at

     Santander Miami's office                   on   Brickell Avenue.                    At that           meeting,    Sanchez Castillo handed

     Plaintiffs the     proposed Exchange Agreement                        in   Spanish.

                 439.     The     proposed Exchange Agreement offered                                  Plaintiffs   perpetual non-cumulative              2%

     Santander      preferred       securities   (the     "Preferred       Shares")          in   exchange for the          worthless      Optimal       SUS

     shares.      Plaintiffs   were      told   they      had to accept          or     reject     the offer        by February 5,         2009 because

     Santander      Spain was reporting its earnings on February 6.

                 440.     Plaintiffs      rejected Santander's Exchange Agreement offer on February 2, 2009.

                 441.     At   Jaureguizar's suggestion,                Plaintiffs and Plaintiffs' counsel called Felix                       Rodriguez
     and    Jaureguizar     in Miami.           During          that call, Felix said that two months                        before, Santander had

     increased its      capital base, raising             its   core   capital     ratio to        seven      percent (7%). He explained that

     Santander had        always operated            at   six percent      (6%),        but increased its            core   capital   to   seven   percent

     (7%) to protect its shareholders. Then Madoff occurred.                                      Felix told Plaintiffs that if it paid out cash

     settlement funds, its          capital   ratios would fall. Therefore,                       according      to   Felix, Santander decided             to


     issue the Preferred Shares since their issuance would not affect Santander's capital ratios.

                 442.     Felix     represented that the Preferred Shares                              were   "fair resolution" between            existing
     Santander shareholders and clients harmed                           by   the Madoff fraud.                  Because Plaintiffs         rejected      the

     Preferred Shares          by    themselves       as    payment for the Optimal SUS losses, Felix then stated that

     Santander would take the Preferred Shares                           as   security           for   a   back-to-back     non-recourse          loan   (the


     BANK   OF   AMERICA TOWER                                                128                                                 WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                       SUITE 317
    100 SOUTHEAST 2N1) STREET                                   LASH &GOLDBERG.
                                                                           AT1, 712NLIS AI LAW
                                                                                                                                       2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                                   FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAX
                                                                       WWW.lashgoldberg.com                                       954 384 zsoo 954 384 2510 FAX
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                                                                                               CASE NO.


     "Note") at their "nominal value", but that the loan to value would be eighty percent of the settlement

     amount because it            was        unlawful under Bahamian             banking regulations            for Santander Bahamas to

     make    a    loan   equal to   100% of the collateral. At end of 10 years, the Preferred Shares would pay off

     the   principal      amount    due, which was now a discount of more than fifty percent (50%) of Plaintiffs'

     investment in        Optimal SUS, inclusive of fees paid to the Santander Defendants.

                  443.     Plaintiffs invited Santander to               provide them with proposed settlement documents,

     including      the   proposed Note, along               with   specific information regarding the payout                     of dividends,

     interest     charged on the Note,            and the    proposed investment program for the proceeds                        of the Note   so


     Plaintiffs could evaluate Santander's                    proposal.      After         receiving additional information, Plaintiffs

     rejected this offer as well.

                 444.      At all       times, Plaintiffs told Santander that it rejected the proposed Exchange

     Agreement           as a   stand-alone agreement and would consider the                             Exchange Agreement only               in

     connection with, and               as   part of,   an   comprehensive         settlement agreement which had to include                    a



     Note, the principal          amount of which would be secured                         exclusively by the        Preferred Shares which

     Santander would take control of at the end of the term of the Note in full satisfaction of the                                   principal
     amount of the        Note, with additional securities provided to                      secure   interest   on   the Note.

                 445.      Plaintiffs        repeatedly advised         Santander that there would be                    no   final agreement

     absent      finalizing and executing the Note and delivery of the proceeds of the Note to Plaintiffs.

                 446.      Over the next five           weeks, Plaintiffs and Santander engaged in extensive negotiations

     regarding the proposed settlement, including the Exchange Agreement and Note.

                 447.      Santander          repeatedly tried to     limit the amount of the Note to less than the full value

     of Plaintiffs' initial Madoff                Optimal      SUS investment less                redemptions.          Plaintiffs   repeatedly




     BANK   OE   AMERICA TOWER                                            129                                            WESTON CORPORATE CENTER
            SUIrE 1200                                                                                                             SUITE 317
    100 SOUTHEAST 2ND STREET                                  LASH              OLDBERGILI
                                                                        ATIORNEAS AT LAW
                                                                                                                              2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                          FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAX
                                                                    www.lashgoldberg.com                                 954 384 2500 954 384 2510 FAX
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                                                                                                     CASE NO.


    rejected Santander's proposals                     to reduce the amount of the Note as Santander had
                                                                                                                                                 originally

    promised to reimburse Plaintiffs                   100% of their     Optimal            SUS investments less            redemptions.
                 448.        On March          12, 2009, Jaureguizar          sent Plaintiffs'             counsel, for the first time and after

    repeated requests,             the     Exchange Agreements           in   English        for Plaintiffs' four accounts. Prior to that

    time, the parties had              not   negotiated      the terms of the        Exchange Agreement                 because Plaintiffs' U.S.

    legal   counsel        required the English version. Jaureguizar did not timely deliver it,                                even       after repeated

    requests      to do so.           Jaureguizar     informed Plaintiffs' counsel that the offer would                                          at 5 p.m.
                                                                                                                                    expire

    (EST)        on    March 13 and that Plaintiff§ had to return the                        signed agreements           to her      by the       next    day

    (March 13, 2009)             at   the latest. She        represented that it was             a   firm   deadline, which deadline was also

    reflected in a letter Santander Bahamas sent to Plaintiffs                              on   March 5, 2009.

                 449.        On March 12, 2009, after Plaintiffs'                 receipt of the Exchange Agreements, Plaintiffs'
    counsel and Sanchez Castillo had                     a   telephone   conference about the                 Exchange Agreement and Note
    transaction in which Sanchez Castillo                        represented        that the          Exchange Agreement                  is limited to

    Madoff claims            only, referring to          section 3 F of the       Exchange Agreement.
                 450.        Plaintiffs' counsel         requested changes          to the       Exchange Agreement.                Sanchez Castillo

    stated that the          Exchange Agreement                could not be modified and must be uniform worldwide for


    "regulatory reasons." Nevertheless,                      Sanchez Castillo told Plaintiffs that the Term Sheet for the Note

    would be          signed contemporaneously                with the   Exchange Agreement                     and that the Note and               Pledge
    would be made             as     set forth in the Term Sheet.             Sanchez Castillo made it clear that the                            Exchange

    Agreement, Note and Pledge were all part of one integrated settlement agreement.

                 451.        The fact that the        Exchange Agreement, Note                       and    Pledge   were   part of one integrated

    settlement agreement                 was   further   acknowledged by           Santander Miami and Santander Bahamas in                                     a


    letter sent to Plaintiffs              on or   about March 9, 2009. In that                  letter, Santander stated that "the purpose


    BANK    OFAMERICA TOWER                                                130                                                WESTON CORPORATE CENTER
            SUITE 1200                                                                                                                  SUITE 317
    TOO SOUTHEAST 2ND STREET                                   LASH &GOLDBE RG
                                                                         ATTORNEYS AT LAW
                                                                                                      UT                           2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                               FT. LAUDERDALE, FLORIDA 33331
  305 347 4040        305 347 4050   FAX
                                                                   WWW.Iashgoldberg.com                                       954   384   2500    954   384   2.510   FAX
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                                                                                                  CASE NO.


     of this letter is to summarize the                 principal     terms of        a     credit   proposal   in relation to the         preferred
     shares      ("Preferred Shares")          that you will receive under the terms and conditions of the                                 Exchange

     Agreement."

                 452.     The Term Sheet also               specifically refers             to the Preferred Shares and the                Exchange

     Agreement, clearly indicating the two documents are integrated as part of a single transaction.

                 453.     Sanchez Castillo informed Plaintiffs' counsel that bank would not be able to furnish

     the Note unless Plaintiffs first                 signed   the    Exchange Agreements.                     Sanchez Castillo stated that

     Plaintiffs'    signing       of the     Exchange Agreement             was an          act   of   "good   faith"   by   Plaintiffs and        was



     required      so   the bank knew it had            a   deal before it invested time                 preparing      the Note and         Pledge.

     Sanchez Castillo also said the Bank                 was    too   busy signing Exchange Agreements with                         other clients,

     and it did not have the time to prepare the Note and                                      Pledge agyeements          until the        Exchange

     Agreements were completed.                  In   fact, Santander asked Plaintiffs' counsel to prepare the Term Sheet

     because Santander did not have time to do                         so   before          expiration    of the deadline for          signing          the


     Exchange Agreements.

                 454.     Sanchez Castillo stated that Plaintiffs should not worry about the Note because it

     would be       signed     as   promised.     He told Plaintiffs          they     needed to        keep   in mind that the intention of

     the Bank      was   to   help its clients.

                 455.     Plaintiffs' counsel told Sanchez Castillo the Plaintiffs would not                                 sign the Exchange

     Agreement          without the Term Sheet                 being issued contemporaneously                       to evidence Santander's


     commitment to make the Note secured                         by    the Preferred Shares.                   Funding    of the Note         was a



     condition     precedent to           the effectiveness of the      Exchange Agreement.                    In   fact, it was the   essence           of

     the transaction since Plaintiffs had                   already rejected the Exchange Agreement                             as a   stand-alone


     agreement.



     BANK    AMERICA TOWER
            OF                                                            131                                              WESTON CORPORATE CENTER
           SUITE 1200                                                                                                                SUITE 317
    Too SOUTHEAST 2ND STREET                                LASH &GOLDBERG.,
                                                                        ATTORNEYS AT I AW
                                                                                                                                2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                             FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050     FAX
                                                                 www.lashgoldberg.com                                     954   384 2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                       Document 1-1            Entered           on    FLSD Docket 03/08/2010                   Page   63 of 70

                                                                                               CASE NO.


                 456.      On March           13, the parties reached              a    tentative    non-binding      settlement agreement

    which included the            Exchange Agreement and a Term                        Sheet which set forth the terms of the Note to

     be   prepared and executed by the parties as                   an   integral part of the settlement agreement.                   A copy of

     the Term Sheet is attached hereto                   as    Exhibit "4." Santander                Spain, through      its   Spanish wholly
     owned       subsidiary, Santander             International Preferred, S.A.              Unipersonal,      would issue the Preferred

     Shares in      an   amount     equal     to the Plaintiffs'     original investments              in   Optimal   SUS less     redemptions
     made.        The Preferred Shares would                secure   100% of the             principal      amount of the Note        on a non-



     recourse      basis   (evidently,       concerns    about Bahamas             "banking regulations" requiring              20%    equity   no



     longer applied confirming that the Bank's prior representations to this effect were false).

                 457.      Twenty percent (20%) of the loan proceeds would                               go into   an   encumbered account

     held   by    Santander Bahamas to                secure     the interest payments due under the Note.                       There   was no



     acceleration clause.               The   principal       amount of the Note               was     to be   non-recourse        and secured


     exclusively by the Preferred                  Shares. The loan documents would be delivered                        no     later than March


     25, 2009 and the Note would be funded no later than April 25, 2009.

                 458.      Based        on   Santander's      representations           that it would prepare and fund the Note in

     accordance with the Term Sheet, and based                              on     Santander's        representation that the Exchange

     Agreement portion of the overall settlement agreement had                                      to be   signed by   March 13, 2009 to

     ensure      that the Preferred Shares that were to be the                   security for the Note and Pledge could be timely

     issued to Plaintiffs, Plaintiffs              agreed   to   conditionally sign           the   Exchange Agreement           on   March 13.

     In sum, Plaintiffs        signed        the   Exchange Agreement subject                  to the final    preparation, execution and

     funding of the Note and Pledge agreement.




     BANK   OF   AMERICA TOWER                                             132                                           WESTON CORPORATE CENTER
            SUITE 1200                                                                                                               SUITE 317
    100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG.
                                                                         ATTORNI 1, AT LAW
                                                                                                                                2500 WESTON ROAD
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040    305 347 4050   FAX
                                                                   WWW.lashgoldberg.com                                 954 384 2500 954 384 2510 FAX
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                                                                                             CASE NO.


                 459.        The    Exchange Ageement was delivered by Plaintiffs to                         Santander Miami in Miami.

    At   no   time did Plaintiffs           speak    with any person          or    entity       at Santander Bahamas                regarding      the


    Exchange Agreement. Everything was done by and through Santander Miami from and in Miami.

                 460.        On    April 6, 2009, Jaureguizar       sent Plaintiffs' counsel the              proposed         loan documents,

    almost two weeks after the deadline set forth in the Term Sheet.                                   Except for the loan amount,                  the

    loan documents did not                remotely    reflect the Term Sheet. Instead of being                    a non-recourse             loan, it

    was a     full    recourse      loan. Santander also       sought    to   impose         a   security   interest   on   100% of the loan


    proceeds rather than 20%,               as   stated in the Term Sheet. Santander also introduced terms that                                   were



    expressly rejected during the negotiation of the Term Sheet, including but not limited to, a disguised

    acceleration clause. Santander also tried to introduce many                                  new   terms not       previously       discussed

    and   sought        to   impose       new    obligations   on   Plaintiffs, which Plaintiffs rejected.                       Plaintiffs thus


    rejected the draft non-conforming note by letter dated April 12, 2009.

                 461.        Some of the         provisions   Defendants tried to include in the draft note                           were a       jury

    waiver       provision, jurisdictional limitations, and              an     arbitration clause which the                parties     had       never



    agreed to or even discussed. Plaintiffs explicitly rejected these provisions as follows:

                 Pursuant to the agreement                  between the bank and S085 (Solymar) at
                                                       negotiated
                 inception, jurisdiction will be on a non-exclusive basis in the Bahamas. We do not
                 agree to arbitration nor to waiver of a trial by jury. These are rights granted by law,
                 unless agreed otherwise. We do not agree. Nor do we waive other protections
                 ganted under the laws of the Bahamas or agree to indemnify the bank, etc. We do
                 not agree that an action in Switzerland on the Preferred Securities can remove an
                 action based on the Loan Documents. These terms were never discussed and would
                 never have been agreed to      we always understood the Preferred Securities were a

                 "device" created by the bank to structure this transaction and that we would never
                 have any practical control over them so we accepted the Exchange Agreement as
                 drafted. This is not the case with the Portfolio Advance or the assets in the Portfolio
                 Account, which are "real" assets. None of these terms are in the Term Sheet and are
                 not   acceptable.

                 462.        Plaintiffs' counsel concluded the letter by                  stating:


     BANK   OEAMERICA TOWER                                            133                                               WESTON CORPORATE CENTER
            SUITE 1200                                                                                                             SUITE 317
    100 SOUTHEAST 2ND STREET                              LASH &GOLDBERG.,
                                                                     KIT )12NEY, AT LAW
                                                                                                                              2500 WESTON ROAD
                                                                                                                        FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040      305 347 4050   FAX                         wWW.lashgoldberg.com                                     954   384   2500   954   384 2510   FAX
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                                                                                               CASE NO.


                 I wish to remind you of the conversation we had immediately before Elias signed the
                 Exchange Agreement when I insisted, once again, that we first review and approve
                 the Note and Pledge. Manuel said that the bank would not furnish us the Note and
                 Pledge unless Elias first signed the Exchange Agreement and that Elias and I needed
                 to keep in mind that the intention of the bank was to help its clients and we should,
                 therefore, not wony about the Note and Pledge. Elias relied on this statement and
                 signed the Exchange Agreement, with the expectation the Note and Pledge would
                 reflect   our   agreement.

                 They do not as presently drafted.



                 Our agreement comprises the Exchange Agreement and a non-recourse loan secured
                 by the Preferred Shares they are intergral [sic] parts of the same transaction[.]

                 463.       Plaintiffs' counsel revised the draft note to conform to the Term Sheet and re-sent it

    to Santander         for   approval.       Santander      rejected   Plaintiffs' revised note. The         parties thereafter failed
    to reach      agreement         as    to the essential terms of the Note and               Pledge,   and Santander    never       delivered

    the   proceeds of the Note to Plaintiffs.

                 464.       As      a   result, the parties' settlement negotiations terminated without agreement.                                 As

    the economic substance of the settlement                       was     the Note and         Pledge,   the failure to agree upon its

    terms        eviscerated the entire transaction                   as     void ab initio, and the            Exchange Agreement

    conditionally signed by Plaintiffs                  never    became         a   binding    and enforceable contract.              Plaintiffs'

    counsel confirmed this                by email dated May 1,          2009 in which he advised the Bank's counsel that: "It


    appears      a   'meeting       of the minds' has not occurred and                  no   agreement has been reached between the

    parties."

                 465.       Plaintiffs therefore seek             a   declaratory judgment finding               that the         "Exchange

    Agreement" is              void ab initio      as   the    parties     never      reached    a   final and enforceable settlement

    agreement that was to include the Exchange Agreement.




     BANK   OFAMERICA TOWER                                                134                                      WESTON CORPORATE CENTER
            SUITE I200                                                                                                        SUITE 317
    100 SOUTHEAST 2ND STREET                                  LASH &GOLDBERG',
                                                                         ATTORNEYS AT LAW
                                                                                                                         2500 WESTON ROAD
     MIAMI, FLORIDA 33130-2158                                                                                     FT. LAUDERDALE, FLORIDA 33331
  305 347 4040       305 347 4050   FAX
                                                                  www.lashgoldberg.com                             954   384   2500    954   384   2510   FAX
Case 1:10-cv-20695-FAM                    Document 1-1            Entered        on     FLSD Docket 03/08/2010                 Page         66 of 70

                                                                                          CASE NO.


                 466.       Plaintiffs further seek    a   declaratory judgment that the Exchange Agreement and the
    arbitration clause contained therein, in                   particular,          is unenforceable because Plaintiffs                    were



    fraudulently induced to sign the Exchange Agreement and to                                agree to the arbitration clause         therein,

    in particular.

                 467.       At the time Plaintiffs         were    negotiating          the   global settlement ageement,              which

    included the        Exchange Agreement           as one    component, Defendants failed                to disclose the          following
    facts which         were     both relevant and material to Plaintiffs' evaluation of the terms of the                           proposed

    Exchange Agreement component of the global settlement agreement:

                            a.          Defendants failed to disclose any of the red               flags regarding the Madoff fraud
    as    alleged herein which were known to Santander;

                            b.          Defendants failed to disclose to Plaintiffs that                    they    had      negotiated         a



    settlement with the SIPC Trustee to deliver $150 million to the Trustee                                   funds that      belonged         to


    investors, including Plaintiffs, which could have been used                                to repay   Plaintiffs instead of            using
    the convoluted and               more   complicated Exchange Agreement                      and Note structure that         was        under

    discussion.

                 468.       At the time Plaintiffs         were    negotiating          the   global   settlement agreement, which

    included the        Exchange Agreement            as one      component, Defendants, by and through their agents,

    employees and representatives made the following misrepresentations of fact:

                            a.          In its December     14, 2008 press release, Santander Spain unequivocally

    stated:      "Optimal        will undertake the   legal   actions which may be needed to defend the interests of

    shareholders in the subfund."

                            b.          Santander   Spain represented            in its press release dated         January 27, 2009,
    that "The Santander              Group   has acted at all times with the due                diligence in the management                of its



     BANK   OF   AMERICA TOWER                                        135                                         WESTON CORPORATE CENTER
             SUITE   1200                                                                                                   SUITE 317
    100   SOUTHEAST   2ND   STREET                     LASH &GOLDBERG',
                                                                    ATTORNEY', AT LAW
                                                                                                                       2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                    FT. LAUDERDALE, FLORIDA 33331
  305 347 4040     305 347 4050   FAX
                                                              www.lashgoldberg.com                                 954   384 2500    954   384 2510   FAX
Case 1:10-cv-20695-FAM                    Document 1-1             Entered        on    FLSD Docket 03/08/2010                    Page        67 of 70

                                                                                           CASE NO.


    clients' investments in the             Optimal Strategic       fund and in accordance with all                applicable          laws and

    sound       banking practices          and   procedures       with respect to those investments.                 The sale of these


    products has always been transparent and in compliance with all applicable regulations and

    established        procedures."

                          c.           Francisco Felix      Rodriguez        and Sanchez Castillo          represented         to Plaintiffs'


    counsel from their office in Miami that Defendants understood,                                    agreed and intended that the

    Exchange Agreement was                  an   integral part of an overall            settlement agreement       including the Note.

                          d.           Francisco Felix      Rodriguez        and Sanchez Castillo          represented         to Plaintiffs'


    counsel from their office in Miami that the Bank                         fully      intended to finalize and execute the Note

    in accordance with the Term Sheet                      once   the   Exchange Agreement               was   signed. They              further


    represented that the Exchange Agreement had to be signed first and could not be modified due to

    regulatory reasons but that the Bank                  intended to     timely finalize          and fund the Note thereafter.

                469.      These        representations     and omissions         were     false when made and Defendants knew

    these   representations were false                and material at the time          they were made.
                470.      Defendants made the false                  representations and omissions with the specific

    intention of inducing the Plaintiffs to execute the                     Exchange Agreement,             and   more     specifically, to

    agree to the arbitration clause contained in the                    Exchange Agreement.

                471.      The arbitration clause            provided that           any    disputes arising       under the           Exchange

    Agreement would be subject                   to   binding   arbitration in Geneva, Switzerland, pursuant to the rules

    and   procedures       of the ICC.

                472.      Once the        Exchange Agreement            was      signed, however, Defendants              never        intended

    to   complete the Note and fund the Note as negotiated by the parties.




    BANK   OF AMERICA TOWER                                             136                                         WESTON CORPORATE CENTER
            SUITE 1200                                                                                                        SUITE 317
    TOO SOUTHEAST 2ND STREET                               LASH &GOLDBERG
                                                                     ATTORNEYS AT LAW
                                                                                             LEP                         2500 WESTON ROAD
     MIAMI, FLORIDA 33131-2158                                                                                     FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050   FAx
                                                                WWW.lashgoldberg.com                               954   384   2500    954   384   2510   FAX
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                                                                                             CASE NO.


                  473.     Rather, Defendants' specifically and fraudulently induced Plaintiffs                                 to agree to the


    arbitration clause in the            Exchange Agreement to prevent Plaintiffs from being able to assert punitive

    damages claims in court in the United States. Defendants sought to evade their potential liability for

    punitive damages           in federal and/or state court in the United States                            by   and    through   the Geneva

    arbitration clause.            They   used the   Exchange Agreement and, specifically,                         the arbitration      provision,

    to forum       shop in contravention of Plaintiffs previous express rejection of the Preferred                                Shares    as   the


    sole consideration for settlement of their Madoff based claims                            against Defendants.

                  474.     Once Santander believed the threat of                       litigation    in the United States and            punitive

    damages was removed,                 Defendants refused to consummate the Note and                            Pledge   in accordance with

    the Term Sheet.

                  475.     Santander then       sought     Plaintiffs' ageement to                   an   arbitration    provision      and other


     provisions in the Note and Pledge, which Plaintiffs expressly rejected.

                  476.     In response, Santander's outside counsel stated to Plaintiffs' counsel                                  on   April 28,

     2009: "We reiterate that Santander has made concessions here                               that,      at least to my      knowledge after

     handling       dozens of these transactions for Santander, it has not made with any other client."

     Santander's         counsel thus         recognized     that     negotiations            were         ongoing       with Plaintiffs and


     "concessions"         were     being   made in those    negotiations, confirming                     that the   parties   never    reached    a



     final   binding settlement agreement.

                  477.     Santander        fraudulently   induced Plaintiffs to               sign the Exchange Ageement and,

     specifically,       the arbitration clause,     knowing    it had       no     intention of tendering           a   conforming Note         and


     Pledge.

                  478.     In sum, Defendants            intentionally misled Plaintiffs                      about the extent of their

     misconduct in connection with the Madoff fraud,                             intentionally misrepresented                their intention to




     BANK    OFAMERICA TOWER                                           137                                                 WESTON CORPORATE CENTER
              SUITE 1200                                                                                                             SUITE 317
    TOO   SOUTHEAST 2ND STREET                           LASH &GOLDBERG,
                                                                    ATI1 /RNEY, AT I AVG
                                                                                                i,                              2500 WESTON ROAD
                                                                                                                          FT. LAUDERDALE, FLORIDA 33331
     MIAMI, FLORIDA 33131-2158
   305 347 4040     305 347 4050   FAX                        WWW.lashgoldberg.com                                        954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM                    Document 1-1              Entered            on   FLSD Docket 03/08/2010                         Page      69 of 70

                                                                                                  CASE NO.


     "undertake the        legal actions      which may be needed to defend the interests of shareholders in the


     [Optimal SUS] subfund, and fraudulently induced Plaintiffs                                       to    conditionally sign the Exchange

     Agreement and arbitration clause therein while having                                   no   intention of     executing           a   conforming
     Note and      Pledge as required to complete the parties'                         settlement agreement.

                 479.      Accordingly,       because        a   final    binding           settlement agreement           was never            agreed

     upon, and because Defendants                  fraudulently induced Plaintiffs                     to   conditionally sign the Exchange

     Agreement          with the        specific    intent of      inducing            Plaintiffs to accept the arbitration clause

     contained therein, the arbitration                  provision,       in   particular,         and the      Exchange Agreement                   as a



     whole,      are   void ab initio and void          by fraud.

                 480.      Plaintiffs have     a   bona fide, actual, present and                    practical    need for   declaratory            relief

     to determine their            rights   and        obligations   with        regard       to the        parties' settlement agreement,

     including the Exchange Agreement.
                 481.      Plaintiffs have         a   present, legal, and             not    theoretical, right      to    have their doubts

     removed, and Plaintiffs have             a    clear   legal right to the declaratory relief sought

                 482.      All    parties necessary to granting of declaratory relief are parties to this action.

                                                          PRAYER FOR RELIEF


                 WHEREFORE, Plaintiffs Solymar Investments, Ltd., Astrolite Investments, Ltd., Eternalite

     Investments, Ltd., and Sunrays Investments, Ltd. demand judgment against Defendants as follows:

                       1) Awarding         Plaintiffs compensatory               damages, punitive damages, prejudgment                               and


                           post-judgment interest against all Defendants in an amount to be determined at trial;

                       2) Declaring       that Defendants OIS, Santander                       Miami, and         Santander Bahamas have

                           been    unjustly enriched and imposing                  a   constructive trust to recoup Defendants' fees,


                           unjust benefits,       and other assets for the benefit of Plaintiffs;




     BANK    AMERICA TOWER
            OE                                                             138                                           WESTON CORPORATE CENTER
           SUITE 1200                                                                                                              SUITE 317
    MO SOUTHEAST 2ND STREET                                 LASH &GOLDBERG
                                                                         AMORNEYS AT LAW
                                                                                                   LI I'                      2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                           FT. LAUDERDALE, FLORIDA 33331
   305 347 4040    305 347 4050   FAX
                                                                 WWW.lashgoldberg.com                                      954   384   2500   954   384   2510   FAX
Case 1:10-cv-20695-FAM                  Document 1-1               Entered        on     FLSD Docket 03/08/2010               Page    70 of 70

                                                                                            CASE NO.


                      3) Awarding Plaintiffs statutory              rescission of Plaintiffs'           purchase   of the   Optimal   SUS

                            and   Optimal Arbitrage       Funds in      an    amount based on the           statutory formula     set forth


                            in Florida Statute Section 517.211;


                      4) Declaring       the    "Exchange Agreement"               null and void ab initio and of           no   force and

                            effect;

                      5) Declaring that          the   "Exchange Agreement"                as    null and void ab     initio, precluding

                            Defendants from        compelling Plaintiffs            to submit their claims to       jurisdiction before

                            any courts   or   arbitration   panels in Geneva, Switzerland;

                      6) Awarding            Plaintiffs their reasonable                attorneys' fees, experts'       fees and costs

                            and expenses; and


                      7) Granting such other and further relief as the Court may deem just and proper.

                                                       JURY TRIAL DEMAND

                 Plaintiffs demand       a   jury trial on all   issues and claims          so   triable.

    Dated: March 8, 2010
                                                                                         YS


                                                                      8450LDBERG,



                                                          Martin B. Goldberg, Esq.
                                                          Florida Bar No. 0827029
                                                          mgoldberg@lashgoldberg.com
                                                          Lawrence        Lambert, Esq.
                                                          Florida Bar No. 0032565
                                                          Ilambert@lashgoldberg.com
                                                          Bank of America Tower
                                                          100 Southeast 2nd Street, Suite 1200
                                                          Miami, FL 33131-2158
                                                          Tel: (305) 347-4040
                                                          Fax: (305) 347-4050
                                                          Attorneys for Plaintiffs


     BANK   OFAMERICA TOWER                                            139                                          WESTON CORPORATE CENTER
             SUITE 1200                                                                                                     SUITE 317
    100   SOUTHEAST   2ND   STREET                       LASH &GOLDBERG.,
                                                                     ATTORNEYS AT LAW
                                                                                                                         2500 WESTON ROAD
    MIAMI, FLORIDA 33131-2158                                                                                      FT. LAUDERDALE, FLORIDA 33331
  305 347 4040    305 347 4050    FAX
                                                                 WWW.lashgoldberg.com                              954 384 2500 954 384 2510 FAX
Case 1:10-cv-20695-FAM   Document 1-2   Entered   on   FLSD Docket 03/08/2010   Page   1 of 26




                    EXHIBIT 1
Case 1:10-cv-20695-FAM                  Document 1-2                Entered        on   FLSD Docket 03/08/2010                     Page   2 of 26




                                                                                                                         REDACTED


                                                               1

                                                   EXCHANGE AGREEMENT
        On,, 2009, this agreement is altered into:

                                                       BY AND BETWEEN

        1.    Santander.Banli& Trust Ltd(the "Bank"), a Bahamian.banking and trust company, with registeted address at
              PAX Box N-1682, Goodman's Bay Corporate Centre, el Moor, West Bay Street &Sea View Drive, Nassau,
              The Bahamas. The Bank is represented by the person(s) identified in the signature page of this Agreement.

       'IL     The:following person/s:

               Name(1):SOLYMAR INVESTMENTS LTD.                       Name(2):
               Name(3):                                               Name(4):
               Name(5);                                               Name(6):
               Name(7):                                               Name(8):

              !(all of whom shall be referred jointly, if there are more than one, as the' "Client") with address for these
              purposes at ONE REGIS, PLACE,,90 PORT STREET GRAND-CAYMAN CAYMAN ISLANDS and
             :client number 14785
              Hie person(s) identified below (1)(a). execute(s) this AgreeMent for the person(s) indicated       as   Client and
             .01) he/sbe/theythges) so in the capacity set: out opposite his/her/their namein theeolumn entitled "Capacity",
                                   Es indicated that he/she/they act(s) in his/her/their own name and ftir his4 er/their. own
             ..(2) so that (a) if it
              account, he/she/they act(s). in such capacity anti (b) if it is indicated that he/she/they act(s) in the name and
              ferth0 acciiant Ofotherperson(s) identified as Client, be/She/they att(t) in such capacity.and(b)represent(s)
              and warrant(s) to the Bank that, (1) he/she/they has/have sufficient authority to execute this. Agreement on.
             behalf of the person(0) identifieclaS Clieht on whose name anti for Whose accountit is indicated below that
             lielthetthey act(s). and (ii). with his/herltheir signature chid Agreement becomes binding upon the pertion(s)
             identified. as Client on -whose name and for whose aceount it is indicated below that he/she/they act(s).
             Sections ZOO. and 2(b) apply as approptiate to person(s) acting both (nth his/her/their own nettle:and for
             his/her/their own. account and (2) in the name and for the account of other person(s) identified as Client

              nom                                      Nationaliq                  Idendfloamunnibm             capacity

                                                                                                                a0/. A&—crvk




     Each -of the Bank and the Client shallibe:rofetmd to as'a. Tarty"   and„ collectively, as the 'Tarfies".
Case 1:10-cv-20695-FAM               Document 1-2               Entered         on   FLSD Docket 03/08/2010                       Page   3 of 26




                                                                                                                       4CE0795
                                                              WHEREAS
          1.      The Client is the owner of the shares in the Optimal Strategic US Equity Series of Optimal Multiadvisors
                  Ltd. and/or in the Optimal US Equity Ireland Funds (as defined below) identified in Part A of Annex 1
                  hereto, and which are currently held for the Client with the Bank (the "Client's Optimal SUS Securities").
          11.     The Optimal Strategic US  Equity Ireland Euro Fund and the Optima Strategic US Equity Ireland US Dollar
                 Fund (the "Optimal Strategic US Equity Ireland Funds") are qualifying investor funds (i) established in
                 Ireland, and authorised by the Financial Regulator in Ireland as funds Of Optimal Multiadvisors Ireland plc
                 an umbrella fund with segregated liability between different funds and (ii) investing all or substantially all
                 of their assets in shares in the Optimal Strategic US   Equity Series of Optimal Multiadvisors Ltd.
                 .Optimal MUltiadvisors Ltd. is a Bahamian Fund whose assets corresponding to its Optimal Strategic US
                 Equity Series are held by and through its Bahamian trading subsidiary, Optimal Strategic US Equity Ltd.
                 (Optimal Strategic US Equity Ltd. will be referred to as "Optimal Strategic" and, together with any persons
                 or hinds controlled, directly or indirectly, by, or whose investment manager is, Optimal Investment Services,
                 S.A. (Switzerland), as the "Optimal Funds").

          IV,    Optimal Strategic, in turn, had engaged Bernard L. Madoff Investment Securities LLC ("Medoff
                 Securities"), an entity registered as broker-dealer and investment adviser with the Securities and Exchange
                 Commission of the United States of America ("SEC") and regulated and supervised by the SEC and
                 the Financial Industry Regulatory Authority of the United States of America ("FINRA"), to execute its
                 investment strategy and had all or a substantial part of its assets deposited.with and traded through Medoff
                 Securities.
          17;    On 11 December 2008, a criminal complaint was filed against Bernard L. Medoff ("Medoff"), the founder
                 end CEO of Medoff Securities, under which he stands accused of several charges for, amongst other things,
                 securities fraud; and on 12 December 2008, the LIS. Federal Court for the Southern District of New York
                 appointed a reCeiver to take control of all of Madofrs assets.
          VL     On 15 December 2008, the U.S. Federal Court for the Southern Dittrict Of New York ordered that Medoff
                 Seeurities be piped into bankruptcy and simultaneously appointed a trustee to oversee the liquidation of
                 Madoff Securities as well as the issuance of debts against the Securities Investor Ptotection Corporetion
                 ('SIPC").
         VIL     As   consequence of the foregoing events, all redemptions and the calculation of the net asset value (the
                      a

                 'NAV") for the shares in the Optimal Strategic US Equity Series and the Optimal Strategic US Equity
                Ireland Funds were suspended with immediate effect on, respectively, 15 December 2008 and 16 December
                2008 (which suspension also applies tO redemption requests in those shares for redemption with reference
                to the moat recent redemption or dealing date, which is 30 NoVember 2008 for the Optimal Strategic US
                Equity Series and 1 December 2008 for the Optimal Strategic US Equity Ireland Funds).
         TIM However, (a) in view of the exceptional and unforeseeable circurnstances affecting Medoff Securities and
              :Medoff, the uncertainties surrounding the legal, fmancial and economic sittiation of Medoff Securities
              deriving therefrom, the lack of clarity as to the amounts and timing of any potential recovery by Optimal
             Strategic of its assets held by Medoff Securities and, therefore, by the Client under the Client's Optimal
              SUS Securities; (b) in spite of none of the Bank, the Optimal Funds and the ultimate parent company of
             'the Bank (the ultimate parent corripany of the Bank and its subsidiaries, including the Batik, am referred
             to as the "Bank Group") having any legal or contractual obligation or diity to do so; and (6) exclusively
              for the (merlin benefit of the Bank and the Bank Group 40mmercial interest, and taking into. account the
             particular circumstances of the Client and the Bank Group's interest in maintaining its long-term commercial
             relationship with the Client; the Bank has, at the request of the Client and as an exceptional and special
             commercial effort, accepted agreeing to exchange, on the terms and conditions set forth in this.agreement (the
             "Agreement"), (i) the Client's Optimal SUS Securities for (ii) the aggregate number of preferred securities,
             whose principal terms and conditions will be those referred to in Annex 2, Identified in Para. of Annex
             1 (the "Preferred Securities").
         IX,    The Parties, irrevocably and unconditionally, agree to abide by the provisions set forth in the following:
Case 1:10-cv-20695-FAM                  Document 1-2                 Entered         on   FLSD Docket 03/08/2010                         Page   4 of 26




                                                                                                                              4CE0795
                                                                    CLAUSES



            The Parties agree that, on the Effective
                                                       Date (as defined below), they will, exchange the Client's Optimal SUS
            Seeuritiesfor the Preferred Securities (the "Exchange") so that on the Effective Date the Client becomes the
                                                                                                                          owner
            ofthe-Preferred Securities and the Bank becomes the owner of the Client's Optimal
                                                                                                SUS Securities, all on the terms
            and. conditions set forth in thii Agreement.

            LI.     Effective Date

            The Exchange shall take place on the date unilaterally designated by the Bank (the "Effective Date") following
           Me issuance of the Preferred Securities,
                                                    provided,. however, that the Exchange shall in any event occur not later
           'than 51 March 2009.

                   Frgilltnge
           -On the Effective Date all the actions listed below shall be taken
                                                                                simultaneously, without any such action          being
           effective until all such actions have been taken and am all effective:

           (A)     Transfer of Client's Optimal SUS Securities. The Client shall transfer'to the Bank the Client's Optimal SUS
                   Sectuitiesfite and clearfroin any lien, mortgage, pledge or encumbrance of
                                                                                                 anykind (each of the foregoing,
                   a "Lien") (other than Liens for the benefit of the Bank covered under Clausal
                                                                                                 2.(C))           and with any and all
                  'rights attaching to, or deriving from, the Client's Optimal SUS Securities;

          .03)-   Transfer of the Preferred Securities. The Bank shall transfer to the Client
                                                                                              (at a securities account maintained
                  by the Client with the Bank) the Preferred Securities tree and clear from any Lien (other than Liens for the
                  benefit of the Bank covered tinder Clause 1.2.(C)) and with
                                                                               any and all rights attaching to, or deriving from.
                  the.Preferred Securities;

          '(C):    Treatment of Liens. If on The Effective Date the Client's
                                                                             Optimal SUS Securities are subject to any Lien
                  guaranteeing obligations of the Client vis-I-vis the Bank, such Lien shall be removed from the Client's
                  -Optimal SUS Securities and automatically apply' (with the same terms; including, withont limitation, the
                  same ranldng and- privileges, such Lien over the Client's
                                                                              Optimal SUS Securities had) to the Preferred
                  SeCurities being transferred under this Clause 1.2; and

                  Purther assurance. The Parties shall coinply with all formalities required for such transfers and extension of
                  Liens for the benefit of the Bank to be effected and perfected.
         Effective upon the     completion of the transfer of the   Preferred   Securities, pursuant   to   Clause 1.2.(B), the Client
         shallhereby, without the need for execution of any further instrument (save as may he requested by the Bank),
        automatically assign, transfer and convey to the Bank in consideration for such transfer of the Preferred Securities
         the Client's entire right, title and interest in and to all present and future claims, counterclaims, actions, causes of
        action and suits against any person (excluding any Bank Party (es defined below) released under Clause 3.(F) but
        ineluding, without limitation, Medoff Securities, Medoff, the bankruptcy estate of Medoff, the bankruptcy estate of
        Medoff Securities, the officers, directors, employees, agents and representatives Medoff
                                                                                                Of        Securities and Medoff
        (*biding, without limitationrcleining agents, custodians, trustees, receivers, auditors and legal counsel), the family
         •embers of    Madoff the  SIPC,   otherinsurers, the governmental entities and quasi-governmental entities having-
         supervisory jurisdiction over Medoff Securities and the custodians, administrators, auditors and legal counsel of
         the Optimal Funds and the predecessors of any of
                                                             the-foregoing at any time), in eaeh elite that the Client has now
        Or, may have and arising out of or in connection with or relatine to the Optimal Strategic US Equity Series of
        .Optimar Multiadvisors Ltd., the •Crptimal Strategic US Equity Ireland Fund, the Client's OptiMal SUS' Sectuities
        or the Client's investment in the Optimal FUnds, Following Rich
                                                                               assignment, the Client will cooperate in any
        enforcement try the Bank ofThe essigned rights and shall pay to the.Bank
                                                                                     any proceeds the Client inerrecelve. or
        bave received from the date hereof -under, or deriving from, assets or rights assigned to the Bank hereunder. For
        the puvese of euswing that the claims, couuterclaims, actions, causes ()faction and suits
                                                                                                     assigned hereundervest
Case 1:10-cv-20695-FAM                         Document 1-2                 Entered         on     FLSD Docket 03/08/2010                          Page   5 of 26




                                                                     4                                                 4CE0795
             .upon the Bank, the Client undertakes to, as soon as reasonably practicable following the Bank's request, comply
              with any formalities (including, but not limited to, executing any agreements or other documents)
                                                                                                                required for such
              assignment to be effective vis-h-vis any third parties.
         2.         OTHER •UNDFRTAKINGS OF THE CLIENT

         fn :consideration for the exceptional and special commercial effort of the Bank
                                                                                               consisting in the transfer to the
         Cllent,fthe Preferred Sdcurities, the Client, as additional consideration for the transfer by the Bank of the Preferred
         Securities, undertakes, for as long as the Preferred Securities are, outstanding, to:
         (A)       peposit  of the Preferred Securities wit.luire_Bank: Entrust the Bank with the
                                                                                                      custody of the Preferred
                   Securitiet and, if the Client disposes of or transfers any Preferred Securities, have the
                                                                                                             proceeds received
                   by the Client frnm .any such disposal or transfer deposited with the Bank Group and/or invested through
                   the Bank. Group;
         .(B)      Maintenance of level of business: Maintain (and cause the other entities pertaining to the same group as the
                   Client, which shall be referred to as the "Client's Group") (I) an amount of assets of the Client and the
                   Client's Group deposited with the Bank Croup and/orinvested through the Bank Group and (ii) a volume
                   of .otherbaniting (including, but not limited to, financing), securities and investment products, and services
                   contracted by the Client and the Client's Group with the Bank Group, for both .(i) and (ii), at least
                                                                                                                         equal to-
                   the amount and volumes existing as ofthe date hereof; and

         (c)       The Bank      as    preferential business partner:   Treat the Bank and the Bank         Group   as a   preferential business
                   partner with respect to the banking, securities and investment products and services the Client may contract.

                  .CLIMNT REPRESENTATIONS AND ACKNOWLEDGEMENTS

        The Client represents and warrants, for the benefit of the Bank, the Optimal Funds, the Bank Group and any other
        Bank Parties, that:

        (A)       status. The Client is an "accrediteciinvestor" (within the meaning of Regulation D under the U.S. Securities
                  Act of 1933) and is not a "U.S. person" (within the meaning of
                                                                                   Regulation S under the U.S. Securities Act
                  of 1933). The Client is the legal and beneficial owner of all assets and rights transferred or
                                                                                                                 agreed to be
                  transferred to the Bank pursuant to this Agreement, holding those assets and Eights free and clear from any
                  Lien (other than Liens for the benefit of the Bank overthe Client's Optimal SUS Securities covereclunder
                  Clause 1.2.(C)). The Client is entering into this Agreement and acqUiring the Preferred Securities for its own
                  account.The Client is a sophisticated investor and is able to assess and bear the risks and costs of illiquidity
                  of its investment in the Preferred Securities in accordance with this Agreement The Client
                                                                                                                      acknowledges
                  that (i) the Preferred Securities are being transferred to the Client as part of a
                                                                                                     privately negotiated agreement-
                 and not pursuant to any public offer (within the meaning of
                                                                                    any applicable securities law) or pursuant to
                 the discharge by any Bank Party of any investment advisory, investment management, fmancial advisory;
                 banking or fiduciary responsibility to the Client and (ii) in acquiring thePreferred Semidries pursuant to this
                 Agreement the Client is not entitled to' the benefits of any registration, qualification, or suitability provisions
                 of any securities, investment advisory, investment management, financial
                                                                                                     advisory or banking law. The
                 Client shill not (i) offer or sell the Preferred Securities in the United States or to a U.S.
                                                                                                                  person, (ii) offer
                or sell the Preferred Securities in any public. offer (within the meaning Of
                                                                                                  any applicable sectitities laW) or
                (iii)-otherwise offer or sell the Preferred Securities in any manner that requires registration or qualification
                under any applicable law, other than in asale to The Bank or
                                                                                  through the facilities of a recognizedEuropean
                securities exchange and subject to such sale being exempt from registration in the U.S.

       (B)       Information. Prior to the execution of this Agreement, the Client has received, read.arid understood a
                                                                                                                        copy of
                :tbo dpeomentation enclosed or referred hereto (including the description of the Preferred Securities referred
                Min Annex. 2 and delivered to the Client as a separate
                                                                        booklet) and an execution version of-this Agreement
                identical   to   the   one   being   executed and has   sought   and   received,   to   its entire satisfaction, independent
                hnaneiali legal and taxation advice in relation to thiS Agreement, the investment in the Preferred Seturities
                •ndthe risks deli ving therefrom. In making its decision to enter into this
                                                                                            Agreeinent, to exchange the Client's
                Optimal SUS Securities and to' acquire the Preferred Seourities.pursoltut to this.Amentent, tbo Client is not
Case 1:10-cv-20695-FAM                 Document 1-2                Entered       on    FLSD Docket 03/08/2010                          Page   6 of 26




                    relying on any information, representation or warranty given the                                   4CE0795
                    of the Bank Group, other than as
                                                                                     by Bank, any Optimal Ftrnd or any member
                                                      specifically set forth in this Agreement, and acknowledges that the Bank is
                    not making any representation or
                                                        warranty in connection with the Preferred Securities other than
                    will on the Effective Date have title to the Preferred                                              the Bank
                                                                           Securities.
          i(C)     :Immobilization of the Client's Optimal SUS Securities.
                                                                            The Client understands that,
                    exchange the Client's Optimal SUS Securities in the terms                              having undertaken to
                   the terms hereof) have the right from the
                                                                                  hereunder, it will not (except to the Bank on
                                                             date hereof to sell, charge or otherwise
                   Client's Optimal SUS Securities,                                                    dispose of or transfer the
                                                     including, without    limitation, requesting their mdemption or cancellation.
          (D)       •egal actions. The Client represents (a) that it has not
                                                                               initiated any action, claim or
                   arbitral or otherwise) deriving fro:m the                                                  proceedings (judicial,
                                                               Client's Optimal SUS Securities or
                   assigned to the Bank hereunder and, pending the                                      other assets or rights to be
                                                                       asaignment of those assets or fights :to the Bank, shall not
                   initiate any such action or claim
                                                      (except at the Bank's request) and (b). that the.Client has not initiated
                  'Claim (as defined below) or that, if the Client                                                               any
                                                                     has initiated any such Claims, all such Claims
                  in the waiver set forth in Clause                                                                    are included
                                                     3.(F) and therefore withdraws (and agrees:to Formalize such
                  the extent appropriate or as requested by the                                                      withdrawal to
                                                                  Bank) all Claims by signing this Agreement.
         '(E)     :Exceptional nature Of terms. The Client understands that the circumstances
                  the Recitals hereto are of an exceptional nature                             leading.to the events described in
                                                                   and that the Bank has accepted the terms ofthis
                  an exceptional                                                                                   Agreetnent as
                                  commerchaeffort with the Client andin view of the Client's
                  and, therefore, that the Bank shall not have any                             obligations under this Agreement
                                                                     obligation to adept similar measures with respect to any
                 investments (including, but not limited to, the Preferred
                 :even if those investments come to be
                                                                           Securities) involvingthe Bank Parties Many manner,
                                                         affected by circumstances or matters as
                                                                                                   exceptional as the ones now
                 eoneurring.
        (1)      Acknowledgement and waiver of claims.
                 At the  time  the Client'sOptimal SUS Securities were acquired by the Client, the Client was
                 of, and accepted, the terins, conditions and risks of such                                         duly informed
                                                                              securities and, therefore, the Client has
                 claim in connection thereto from the Bank, the                                                         nothing- to
                                                                   Optimal Funds, the Bank Group or any (present or
                 directors or employees of any of the referred entities                                                    former)
                                                                        (all the foregoinitentities and other persons,      "Bank
                 Varties").                                                                                              the
                 The Client: (i) releases, remises, acquits, and forever
                                                                              discharges the Bank Parties of and from all past,
                present, and future claims,     counterclaims, complaints, actions; causes of action, promises,
                duties, damages, losses, rights of set-off,                                                             covenants,
                                                               indemnity, right or interest of arty kind or nature whatsoever
                -(whether compensatory, consequential, punitive, or
                                                                         exemplary, and whether known or unknown, suspected
                or unsuspected, foreseen or
                                               unforeseen, direct or indirect, contingent or actual,
                and whenever arising and in whatever                                                   present or future, however
                                                          capacity and jurisdiction) and any and all snits of law, or in
                and any liability (and whether                                                                             equity,
                                                 arising out of statute, regulations, -contract, breach of fiduciary
                otherwise, and whether basedon strict liability, fraud;                                              duty or tort or
                                                                            gross negligence or negligence or
               :kind of nature whatsoever (each, a "Claim" and,                                                  otherwise) of any
                                                                     jointly, the "Claims") arising out of or in connection with
               :or relating. to the Optimal
                                            Strategic US Equity Series of Optimal Multiadvisors Ltd., the
               .U.S.Equity Ireland Fund, the Client's Optimal SUS.Securities, the Client's                      Optimal Strategic
              or any other matter
                                                                                                 investment in the Optimal Funds
                                       deriving from any investment managed .by any Bank Party, or in
                                                                                                                  connection with
              which a Bank Party may have rendered advice or investment
                                                                                   services, and having. any actual or potential
              exposure to Medoff Securities or Macloff
              take any additional actions.that the Bank
                                                              (collectively, the "Matters"); and (ii) undertakes to promptly
                                                        may request to formalize the release of the Bank Parties from all
              Attions arising out of or in connection with or
                                                              relating to the Matters. The Client also deems answered any
              information petition or other communication addressed
                                                                        by:the.Client to any BankParty in connection With
              the Client's Optimal SUS Securities.

           .-MISCET4.,ANEOUS
Case 1:10-cv-20695-FAM                      Document 1-2            Entered       on   FLSD Docket 03/08/2010                         Page   7 of 26




                                                                                                                         4CB0795
            4.1.     Confldentialfty
            The existence of this Agreement and the fact that it has been
                                                                             entered into, the terms and conditions contained in
            this Agreement and any information delivered by one
                                                                    Party to any other Party in connection with this Agreement
            (the "Information") shall be kept strictly confidential by the receiving
                                                                                      Party.
           Each Party    agrees      to   limit the
                                             distribution of the Information received (including, without limitation, this
           •greement) only to those officers, employees, agents, professional advisers or auditors of such
           shall he informed of the confidentiality thereof and shall
                                                                                                           Party (all of whom
                                                                       agree to     keep
                                                                                      it confidential to the      same   eXtent the
           distributing Party is bound) as far as such distribution is necessary for the completion, enforcement and
                                                                                                                     fulfilment
            f this Agreement and for audit, accounting or internal
                                                                     compliance purposes of each Party.
           Notwithstanding the foregoing, a Party May disclose Information if and to the extent such disclosure is: (i)
                                                                                                                           required
           by any applicable laws, administrative or judicial order, or by the rules or regulations of
                                                                                                          any stock exchange or
           other regulatory body to which such Party is subject; (ii)
                                                                      required to complete the actions, fulfil the obligations and
           west or enforce the rights set forth hereunder; or
                                                              (iii) the disclosed Information has come into the public domain
           through no fault of the Party making the disclosure.
          4.2.     ilankyarliglis.afflinchlligAusfitumnit
          This   Agreement shall, apply to, inure ta the benefit of; and be binding upon and enforceable against the Parties
           (and their successors and permitted assignees) only, except that all rights, waivers and benefits set forth
                                                                                                                       hereunder
          .for the Bank Parties shall be deemed aceepted by the Bank for the
                                                                                 benefit of the Beek Parties  and, themfore, 'this
          Agreement, in as much as it contains those rights and benefits for the.Bank Parties shall inure to the benefit of, and
          be enforceable by, the Bank Parties (and their successors and
                                                                           permitted assignees).
          Any atsignment of rights or obligations hereunder byany Party will require the prior written consent of the other
         l'arty, except that assignments of rights or obligations bythe Bank taany Bank
                                                                                           Party shall not reclaim the consent of
         :the Clientif the Bank remains jointly and severally liable with the relevant
                                                                                       BaaPartywith respect tathe obligations
         assigned to such bank Party,

         4.3.      Entire Agreement. Severability
         It is expressly understood and agreed by the Parties that this Agreement contains the
                                                                                                 entire agreement between
         the Client, on the one hand, and the Bank Croup, on the other hand,
                                                                               regarding the subjact matter hereof and this
         'Agreement supersedes any and all prior agreements, arrangements or understandings between the Parties
         to the subject matter of this Agreement. No oral
                                                                                                                   relating
                                                          understandings, statements, promises or inducements contrary to
         the terms of this Agreement exist.
        If any of the provisions of this Agreementis or becontes invalid,
                                                                          illegal or unenforceable under any applicable laws
        of any competent jurisdiction, the validity, legality or enforceability. of the
                                                                                        remainingprovisions shall not in any
        way be affected or impaired. The Parties shall nevertheless negotiate in good faith in order
                                                                                                       to agree the terms of
        .muteally satisfactory provisions, achieving as closely as possible the Same conimeneial effect, to be substituted for
        tbe proviSions so found to be void or unenforceable.

                 fttlieztissUrance
       Each     Party   to   this Agreement covenants and agrees that it will, at the
                                                                                      'request and expense of the.    requesting
       :tarty, execute and deliversuch documents, including all such additional conveyances, transfers, consents.ancl other
       ;Assurances and do  all such other acts and things as the other Patty hereto,
                                                                                     acting reasqnably, may from time tatime
        request to be executed or done in order to evidence better or perfect or effectuate
                                                                                              any provision of this Agreement
       :or Cif any agreement er other decument executed pursuant to this Agreement or any of the
                                                                                                        respective obligations
       intended to be created hereby or thereby.
       The Parties agree to take all actions, and to do all things
                                                                    necessary, proper or advisable to consummate and make
       :effective, in the most expeditious practicable manner, the transactions contemplated
                                                                                             hereby, ineludingthe defending
       of any lawsuits or other legal proceedings, whether judicial or
                                                                          adminisuative, challenging this Agreement or the
    Case 1:10-cv-20695-FAM                 Document 1-2               Entered       on   FLSD Docket 03/08/2010                        Page   8 of 26


1




                                                                7                                                   4CE0795
              consummation of the transactions contemplated hereby, including seeking tohave any stay or temporary restraining
             order entered by any court or other competent authorities vacated or reversed.
             To the fullest extent permitted in law, the Client irrevocably and unconditionally authorizes and instructs the Bank
             to take in the name and on behalf of the Client any and all actions that the Client    may be required to take under
             thisAgreement, including, but not limited to, the execution of any stock transfer forms with respect to the Client's
             Opdmal SUS, Securities and any other formalities or actions contemplated in, or required pursuant to, Clauses 1.2
             and 4.

                     GOVERNINO LAW
             This Agreement   shall be   governed by and construed in accordance with the laws of the Commonwealth of The
             Bahamas, including any applicable     statutes of limitation, without regard to any otherwise applicable principles of
             :conflicts of law or choice of law rules that would result in the application of the laws of any other jurisdiction.

            :6.      AMMIXAMM

             6.1.    ELIVISSIORTQABBITRATION
            :(A)     THE FARTIE• AGREE THAT ALL CONTROVERSIES BETWEEN THE CLIENT AND THE BANK
                    .OR THE BANK PARTIES ARISING OUT OF OR.RELATING TO THIS AGREEMENT OR MAZITtRS.
                    RELATED THERETO, SHALL BE FINALLY AND EXCLUSIVELY SETI'LED BY ARBITRATION
                     IN LAW IN ACCOIWANCE WITH THE RULES OF ARBITRATION OF THE INTERNATIONAL
                    CHAMBER OF COMMERCE' BY ONE ARBITRATOR APPOINTED IN ACCORDANCE WITH ME
                     SAID RULES, WHICH THE PARTIES DECLARE TO KNOW. ALL ARBITRATION PROCEEDINGS
                    WILL BE HELD IN GENEVA, SWITZERLAND. THE LANGUAGE OF THE ARBITRATION WILL
                    BEENGLISH. THE PARTIES AND THE ARBITRATOR WILL KEEP THE CONFIDENTIALITY OF
                    THE ARBITRATION AND THE PROCEEDINGS. THE AWARD OF THE ARBITRATOR SHALL BE
                    FINAL AMONGST THE PARTIES TO THE ARBITRATION.

            (8)     BOTH THE CLIENT AND THE BANK ACKNOWLEDGE AND AGREE THAT ARBITRATION IS
                    FINAL AND BINDING ON THE PARTIES.

            6.2.    Consent to jurisdiction

            Subject to and without limiting the provisions of the Parties' agreement to arbitrate, the Client irrevocably agrees
            that all claims: (i) to enforce the Parties' agreement to arbitrate, (ii) to confirm any arbitration aviard entered
            pursuant to the Parties' agreement to arbitrate, (iii) in the event that the Parties' agreement to arbitrate is found to
           beunenforceable, or (iv) in the event that a court finds that claims brought by the Bank or the Client are not covered
           Within:the scope cif the Parties' agreement to arbitrate will be heard and determined exclusively inthe courts sitting
           in Geneva, Switzerland. The Client herebyirrevocably submits to the exclusive jurisdiction of any court sitting in
           Geneva; Switzerlandrelated to these claims. In any such action or proceeding, the Client waives any objection based
           on forurri non conveniens or venue. Without affecting the Bank's right to serve legal process in any other manner
           perinitted by applicable law, the Client irrevocably consents to the service of any arid all process in any such action
           orproceeding by the mailing of copies of the.process to the address for the Client indicated in the Agreement or
           :the Client's address of record on the Bank's books. The Client also agrees that a final judgment in any such action
          or proceeding and/or final arbitration award is conclusive   and may be enforced in any jurisdiction by suit on the
          judgmeht min any other manner provided by law.
           6.3.     JURY WAIVER
          IN CIRCUMSTANCES CONTEMPLATED BY CLAUSE 6.2, EACH OF THE CLIENT AND THE BANK
          HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY 11:I^1 ANY PROCEEDING
          ARISING OUT OR RELATED TO THIS AGREEMENT, THE MATTERS,                                   OR 'IHE TRANSACTIONS
          CONTEMPLATED HEREE Y.
Case 1:10-cv-20695-FAM               Document 1-2                  Entered        on   FLSD Docket 03/08/2010                       Page   9 of 26




                                                                               REDACTED


                                                               8                                                       4030795
          44,     •ndemft.for prevailing. party
          In the event any Party brings an action against any other
                                                                    Party to enforce a provisiOn of this Agreement (including
          this Clause) Or any arbitratien award With respect to the Agreement, 'the
                                                                                        prevailing. Party in such action shall
         lre indemnified' by the rion-movalling Party for the reasonable expense% 'including the reasonable fear: and
         disbursenients of 'counsel or other professional and court costs, incurred in connection therewith by the     prevailing
         PlYty.
         IN WITNESS WHEREOF, the Parties hereto have etecuted this              Agreement as of.the date first above written.
         Client



                                                                         By:


          By:                                                            By:


         By:.                                                            By:


         By;                                                             By:.


         Jay;                                                             Y:



         Beak


        By:
                Name;
                        AI              WM
                                         'MOW
                                                                   Bank



                                                                   By;
                                                                          Name:
                                                                                                        1I   4
                                                                                                             A
                                                                                                                 41e
Case 1:10-cv-20695-FAM           Document 1-2         Entered   on   FLSD Docket 03/08/2010             Page   10 of 26




   160 Santander
           PRIVATE BANKING                           REDACTED



     Solvmar Investment Ltd.




                                                                                                 March 13, 2009




     Dear Client:

     We hereby refer to the Exchange Agreement that was signed
                                                                by you with our Bank on
     March 13, 2009 for the Exchange of the Optimal SUS Securities for the Preferred Securities. All
     capitalized terms not defined herein shall have the meaning ascribed in the                       Exchange
     Agreement.
     In connection with Clause 2.(B) of the Exchange Agreement, we wish to
                                                                               clarify that such clause
     is not intended to place a pledge or otherwise block your
                                                               positions with the Bank Group, except
     in such cases where it has been or will be agreed so by you and
                                                                          any of the members of the
     Bank Group in a separate written agreement other than the
                                                                         Exchange Agreement.


     Sincerely,




      zzq
     José G onzal   de   .1111111111jit
     Director Santander Bank & Trust Ltd.




          Santander Bank & Trust Ltd.
          P.O. Box N-1682, Goodman's Bay Corporate   Centre, 3rd Floor, West Bay Street & Seaview Drive, NASSAU, BAHAMAS
          Tel: (242) 502-7900 Fax: (242) 322-3585
Case 1:10-cv-20695-FAM   Document 1-2   Entered   on   FLSD Docket 03/08/2010   Page   11 of 26




                    EXHIBIT 2
Case 1:10-cv-20695-FAM        Document 1-2      Entered   on   FLSD Docket 03/08/2010         Page   12 of 26




           Original Message
    From: "Ana     Jaureguizar" <alaureguizarabpi-Ltruposantander.com>
    To:   <Olasmiz@eyelq4.com>
    Sent: Monday, March 14, 2005 3:21 PM


    <<SUS.pdf>>

    Ehas:


    Aqui esta el   fondo que Manuel te comento que estaba cerrado, y   puede   que tengamos
    oportunidad    de palicipar en las proximas sernanas,


    Saiudos,
    Ana J.
Case 1:10-cv-20695-FAM                                                      Document 1-2                                                                          Entered                     on                FLSD Docket 03/08/2010                                                                                            Page   13 of 26
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Case 1:10-cv-20695-FAM                                                                                                        Document 1-2                                                                                                 Entered                                       on          FLSD Docket 03/08/2010                                                                                                                                                                   Page                 14 of 26
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                                                                                                                                                                                       t.:                _..1     o                                               LL,            0      -1-...                                                                                         _012,
Case 1:10-cv-20695-FAM   Document 1-2   Entered   on   FLSD Docket 03/08/2010   Page   15 of 26




                    EXHIBIT 3
Case 1:10-cv-20695-FAM         Document 1-2        Entered   on   FLSD Docket 03/08/2010         Page   16 of 26




                                                  REDACTED




 From: Vanessa Remond <vremond@pb-santander.com>
 Subject: FW: Inversiones
                                     REDACTED
 Date:   Tuesday, September 30, 2008, 3:21 PM
 Estimada




 Banco Santander esta recomendando la liquidaciem de una de sus inversiones. El nombre es "OPTIMAL SUS
                                                                                                           EQ
 IRL A USD". El banco considera que es de alto riesgo y debido a la volatilidad del mercado
                                                                                            preferimos ser
 conservadores y liquidar la inversiOn.




 Por favor Ilememe para converser de este tema.




 Saludos,




 Vanessa Remond


 Vice President


 Banco Santander Intl Private Bank
Case 1:10-cv-20695-FAM          Document 1-2      Entered   on   FLSD Docket 03/08/2010   Page   17 of 26




 11401 Brickell Ave.

         Floor
 115th
 1 Miami, Fl. 33131

 I Phone#305-530-7256

 VRemond@PB-Santander.com


 Internet communications are not secure and therefore Banco
 Santander International does not accept legal responsibility for
 the contents of this message. Any views or opinions presented are
 solely those of the author and do not necessarily represent those
 of Banco Santander International unless otherwise specifically
 stated.

 Las comunicaciones via Internet no son seguras y por lo tanto
 Banco Santander International no asume responsabilidad
                                                          legal ni
 de   ningun otro tipo por el
                            contenido de este mensaje. Cualquier
 opinion  transmitida pertenece unicamente al autor y no
 necesariamente representa la opinion del Banco Santander
 International a no ser que este expresamente detallado.
Case 1:10-cv-20695-FAM   Document 1-2   Entered   on   FLSD Docket 03/08/2010   Page   18 of 26




                    EXHIBIT 4
Case 1:10-cv-20695-FAM              Document 1-2                Entered       on    FLSD Docket 03/08/2010                Page   19 of 26




     44 Santander
               PRIVATE RANKING
                                                                       REDACTED
     March 13, 2009
     Astro lite Investment Ltd
     Account

      Dear Sirs:
      Here is the final term sheet      agreed upon:


                                                         FINAL TERM SHEET

     Hybrid Facility: (i)     As to principal, non-recourse 10 year term loan secured
                                                                                           by face                      value of 2%
                      preferred shares.
                      (ii)    As to interest, recourse to assure payment of interest, secured
                                                                                              by a                      20% security
                        interest    the investments made with loan
                                   on
                                                                                    proceeds, but   no   acceleration     "Use shall
                        appear in the note.


     Lender:            Santander Central         Hispano Bank     & Trust
                                                                              (Bahama44
     Borrower:          S085. All 4     companies      will   sign Exchange zdree—Ogentii
     Amount:                            (the "Loan")

     Funding:          Funded no later than Friday, Ami,L25,               200k Delivbry       of draft loan documents before
                       March 25th.

                                                                         th -Ai
     Ba lion Note:                      balloon   payriAltiluelkl 0         ar niversary date.

     Fixed Rate:       10   year fixed       ratAti.p.:"41:-X, F--4-i-'.wap       Rate   plus 1% spread.      The rate is at
                       http://www.econotiliadecom/em-cd'raata.exe/fedbod/swp10y.                     The current rate is 3.10%,
                       but the rate to                         haAreffect on
                       to exragd 4_25°    bktsed     is the                         the loan disbursement date, but in no event


     Amortization:     Simple intertslitanlyWamarly              on   anniversary date computed      on a   360 year.

     Notice:           Bank shall
                                      peleast 30 days prior written notice of interest due.
     Security   1:     Non-recourse        loan
                                            secured by                    in Santander (Spain) non-cumulative
                        perpetual preferredshares yielding 2% tax free (no withholding taxes apply in
                                                                                                                any
                       jurisdiction). At endof k:lan term, if the preferred shares are not purchased by bank at
                       face value, bank forecloses on preferred shares to extinguish the note in full
                                                                                                         (all costs
                       borne by Bank). No margin call applies and no
                                                                        deficiency judgment is possible.
     Security   2:     Borrower undertakes to pay all interest under the note
                                                                                during the ten years. To secure
                      this obligation, Borrower will grant a security interest in 20% of the investments made
                      with the loan proceeds, which shall be in a separate account. Borrower
                                                                                                  may use income
                      generated in the separate secured account to make payment of interest on the loan. At
                      the end of the 10 year term, provided interest on the loan has been
                                                                                                   paid in full, the
                      security interest shall be cancelled by the bank, the separate secured account closed and
                      the money transferred to the unencumbered 8085 account
                                                                                    (all costs to create or cancel
                      the security interest are borne by the bank).

    Currency:          U.S. Dollar.
_Case_t_l_0_,cv.,20695-FAM           Document 1-2             Entered   on   FLSD Docket 03/08/2010            Page   20 of 26



        Final Term Sheet for:
        Astrolite Investment Ltd.
        Account



                                                               REDACTED


        Law:               Commonwealth of the Bahamas.

        Trading Costs:     As agreed with Manuel, bank shall absorb all
                                                                               trading   costs and not charge custodial   or
                           other fees on the investments made with the                     loan proceeds.

       Assignment:         Bank to allow assignment of
                                                          Exchange Agreement from 3 companies to S085. The
                           companies will transfer the preferred shares issued to them to S085. Bank shall confirm
                           assignment and that all legal requirements have been fulfilled. No costs shall be borne
                           by Borrower to transfer the Exchange Agreement or Preferred Shares.
       Fees:               No fees, costs, expenses, taxes, or other
                                                                      payments of any kind, other than interest due
                           under the note, shall be borne
                                                          by the client, except for the fees of its own advisors and
                           consultants   (if any).




                  /q45
               José Gonzalez de
                                Castepn
               Managing Director Santander           f3ankieTriist Ltd.
               Santander Bank & Trust
               Goodman's Bay Corpora 4- C.;1"     3rd Floor
               West Bay Street & Seavle..f-
               Po Box N-1652, Nassau,        nuts
               Tel (242) 502 7900 Fax (242) 322 3585
Case 1:10-cv-20695-FAM             Document 1-2                Entered    on   FLSD Docket 03/08/2010               Page   21 of 26




      44. Santander
               PRIVATE BANKING



      March 13, 2009
                                                              REDACTED
      Etemalite Investment Ltd.
      Account

      Dear Sirs:
      Here is the final term sheet     agreed upon:

                                                         FINAL TERM SHEET

      Hybrid Facility: (i)     As to principal, non-recourse 10 year term loan secured
                                                                                            by face value of 2%
                       preferred shares.
                       (ii)    As to interest, recourse to assure payment of interest, secured
                                                                                               by a 20% security
                       interest   on   the investments made with loan          proceeds, but     no   acceleration clause shall
                       appear in the note.


      Lender:          Santander Central Hispano Bank & Trust
                                                                           (Bahamar LtdA,
      Borrower         S085. All 4     companies       will   sign Exchange,tre         nt.

      Amount:                          (the "Loan").

      Funding:         Funded no later than Friday,             Apsil.25, 200k DeliVery       of draft loan documents before
                       March 25th.

      Ballon Note:                     balloon
                                                 payrrptiWuewithL101"        niversary date,
     Fixed Rate:       10 year fixed rat              47,,,?wap Rate plus 1% spread.           The rate is at
                       htt ://mvw.econo a ic!tom/em-col_'iata.exe/fedbog/swp 10y. The current rate is
                                                                                                         3.10%,
                       but the rate to bused is the        effect on the loan disbursement date, but in no event
                       to exceed
                                    VW,
     Amortization:     Simple intertsvwxyzawarly                on   anniversary date computed    on a   360 year

     Notice:           Bank shall
                                     prkvieleNt*least 30 days prior written notice of interest due.
     Security    1:    Non-recourse       loan    secured       by II          0        Santander
                                                                                   in                 (Spain) non-cumulative
                       perpetual preferred shares yielding 2%              tax free
                                                                              (no withholding taxes apply in any
                       jurisdiction). At end of loan term, if the preferred shares are not purchased by bank at
                       face value, bank forecloses on preferred shares to
                                                                               extinguish the note in full (all costs
                       borne by Bank). No margin call applies and no
                                                                         deficiency judgment is possible.
     Security   2:     Borrower undertakes to pay all interest under the note during the ten
                                                                                                years. To secure
                      this obligation, Borrower will grant a security interest in 20% of the investments made
                      with the loan proceeds, which shall be in a separate account. Borrower
                                                                                                  may use income
                      generated in the separate secured account to make payment of interest on the loan. At
                      the end of the 10 year term, provided interest on the loan has been
                                                                                                   paid in full, the
                      security interest shall be cancelled by the bank, the separate secured account closed and
                      the money transferred to the unencumbered 5085 account
                                                                                    (all costs to create or cancel
                      the security interest are borne by the bank).

     Currency:        U.S. Dollar.
Case 1:10-cv-20695-FAM             Document 1-2            Entered   on   FLSD Docket 03/08/2010         Page 22 of 26

      Eternalite Investment Ltd.
      Account




                                                                     REDACTED

      Law:               Commonwealth of the Bahamas.

     Trading Costs:      As agreed with Manuel, bank shall absorb all
                                                                           trading costs and not charge custodial   or
                         other fees on the investments made with the
                                                                                         proceeds.
     Assignment:         Bank to allow assignment of
                                                        Exchange Agreement from 3 companies to S085. The
                         companies will transfer the preferred shares issued to them to S085. Bank shall confirm
                         assignment and that all legal requirements have been futfilled. No costs    shall be borne
                         by Borrower to transfer the Exchange Agreement or Preferred Shares.
     Fees:               No fees, costs, expenses, taxes, or other
                                                                    payments of any kind, other than interest due
                         under the note, shall be borne by the client,
                                                                       except for the fees of Its own advisors and
                         consultants (if any).




                /7C)43,
             José Gonzalez de Castej.k
             Managing Director Santafider Bank &TriAt Ltd.

             Santander Bank & Trus
             Goodman's Bay CorporJ,,,.        -31d1r1oor
             West Bay Street & Seavl A
             Po Box N-1682, Nassau,
             Tel (242) 502 7900 Fax (24 322 3586
Case 1:10-cv-20695-FAM                 Document 1-2                  Entered       on      FLSD Docket 03/08/2010                     Page    23 of 26




      44) Santander
               PRIVATE BANKING



      March     13, 2009
      Solymar Investment Ltd.
      Account
                                                                                           REDACTED
      Dear Sirs:
      Here is the final term sheet          agreed upon:


                                                              FINAL TERM SHEET

      Hybrid Facility: (i)     As to principal, non-recourse 10 year term loan secured
                                                                                            by face                              value of 2%
                       preferred shares.
                       (ii)    As to interest, recourse to assure payment of interest, secured
                                                                                               by a                         20% security
                           interest    the investments made with loan
                                      on
                                                                                           proceeds. but   no   acceleration clause shall
                           appear in the note.


      Lender:              Santander Central          Hispano      Bank & Trust
                                                                                     (BahamaSUM
      Borrower:            S085. All 4      companies       will   sign Exchange iggreertiapt.
     Amount:                                (the "Loan").

     Funding:              Funded      no   later than    Friday, Apcil-25. 2009'.L Delivtry           of dratt loan documents before
                           March   25th.

     Ba llon Note:                          balloon     payruerrdue         10"'   afy niversary   date.

     Fixed Rate:           10   year    fixed     rat               .awap Rate plus 1% spread.       The rate is at
                           http://www.econ            agictom/em-ccf ata.exetfedbog/swp10y. The current rate is 3.10%,
                       but the rate to        b4used       is the   brigrOf effect   or)   the loan disbursement date, but in          no   event
                       to exceed
                                   .1.,


     Amortization:     Simple intereStmnivIMieurk.kly                 on   anniversary      date   computed   on a   360 year.

     Notice:           Bank snail
                                        prvide"4least 30 days prior written notice of interest due
     Security   1:     Non-recourse             loan     secured      by                      in   Santander    (Spain)      non-cumulative
                       perpetual preferred shares yielding 2% tax free (no withholding taxes apply in any
                       jurisdiction). At end of loan term, if the preferred shares are not purchased by bank at
                       face value, bank forecloses on preferred shares to extinguish the note in full
                                                                                                      (all costs
                       borne     by Bank).       No     margin call applies    and    no
                                                                                            deficiency judgment      is   possible.
     Security 2:       Borrower undertakes to pay all interest under the note during the ten years. To secure
                       this obligation, Borrower will grant a security interest in 20% of the investments made
                       with the loan proceeds, which shall be in a separate account, Borrower
                                                                                                 may use income
                       generated in the separate secured account to make payment of interest on the loan. At
                       the end of the 10 year term, provided interest on the loan has been
                                                                                                 paid in full, the
                       security interest shall be cancelled by the bank, the separate secured account closed and
                       the money transferred to the unencumbered S085 account (all costs to create or cancel
                       the security interest are borne by the bank).


     Currency:         U.S. Dollar.
Case 1:10-cv-20695-FAM             Document 1-2               Entered   on   FLSD Docket 03/08/2010           Page   24 of 26



      Solymar Investment Ltd.
      Account



                                                                             REDACTED

      Law:                Commonwealth of the Bahamas.

      Trading Costs:     As agreed with Manuel, bank shall absorb all         trading   costs and not charge custodial   or
                         other fees on the investments made with the                      loan proceeds.

      Assignment:        Bank to allow assignment of Exchange Agreement from 3
                                                                                       companies to S085. The
                         companies will transfer the preferred shares issued to them to S085. Bank shall confirm
                         assignment and that all legal requirements have been fulfilled. No costs shall be borne
                         by Borrower to transfer the Exchange Agreement or Preferred Shares.
      Fees:              No fees, costs, expenses, taxes, or other payments of
                                                                                  any kind, other than interest due
                         under the note, shall be borne by the client, except for the fees of its own advisors and
                         consultants (if any).




                /c)45
              José Gonzalez de CastejOnjt_
              Managing Director Santal3anlat                  Taist Ltd.

              Santander Bank & T           Ltdl
              Goodman's Bay Corp,:
                                            eCeiRargierloor

                                       110.
              West Bay Street & Se          "'It
                                               ve  P

              Po Box N-1682, Nesse     J        ^I', ":as
              Tel (242) 502 7900 Fax       _s.;". .f, 3585
Case 1:10-cv-20695-FAM              Document 1-2                 Entered      on   FLSD Docket 03/08/2010              Page   25 of 26




               S antander
               PRIVATE BANKING



      Sunrays Investment     Ltd.
      Account



      Dear Sirs:
                                                                                    REDACTED
      Here is the final term sheet   agreed upon:


                                                         FINAL TERM SHEET

     Hybrid Facility: (i)      As to principal, non-recourse 10
                                                                  year term loan secured by face value of 2%
                      preferred shares.
                      (ii)     As to interest, recourse to assure
                                                                  payment of interest, secured by a 20% security
                      interest on the investments made with loan
                                                                     proceeds, but no acceleration clause shall
                       appear in the note.


     Lender:           Santander Central Hispano Bank & Trust
                                                                             (Bahamaerret
     Borrower:         S085. All 4    companies will sign Exchange Acarempellr
     Amount:                         (the "Loan").

     Funding:          Funded no later than         Friday, April      2    20% Delivqy        of draft loan documents before
                       March 25`b.

     Ballon Note:                    balloon                                               date.
                                               payrnewuele 1u-sainivertary
     Fixed Rate:       10   year    fixed   rate    CI    ea                                    1% spread.
                                                                      .SVPalaiorRate plus                      The rate is at
                      http://www.econorsc                                  ata.exeifedboa/swp10y. The current rate is 3.10%,
                      but the rate to beirsed       i    the one     in ..-:ffect on the loan disbursement date, but in no event
                      to exceed 4.25%1

    Amortization:     Simple   inteiptonftaid ye/1y on anniversary date computed on                    a   360 year.

    Notice:           Bank snail prtivigent least 30           days prior written   notice of interest due.

    Security   1:     Non-recourse      loan       secured      by                   in   Santander   (Spain)    non-cumulative
                      perpetual preferred shares yielding 2%                 tax free
                                                                             (no withholding taxes apply in any
                      jurisdiction). At end of loan term, if the preferred shares are not purchased by bank at
                      face value, bank forecloses on preferred shares to
                                                                              extinguish the note in full (all costs
                      borne by Bank). No margin call applies and no
                                                                        deficiency judgment is possible.
    Security   2:     Borrower undertakes to pay all interest under the note
                                                                                 during the ten years. To secure
                     this obligation, Borrower will grant a
                                                              security interest in 20% of the investments made
                      with the loan proceeds, which shall be in a
                                                                   separate account. Borrower may use income
                     generated in the separate secured account to make payment of interest on the loan. At
                     the end of the 10 year term, provided interest on the loan has
                                                                                             been paid in full, the
                     security interest shall be cancelled by the bank, the separate secured account closed and
                     the money transferred to the unencumbered S085 account
                                                                                     (all costs to create or cancel
                     the security interest are borne by the
                                                            bank).
   Currency:         U.S. Dollar.
 1.0-cv-20695-FAM            Docurnent 1-2          Entered    on   FLSD Docket 03/08/2010               Page       26 of 26



 Sunrays Investment   Ltd.
                                                      REDACTED
Account




Law:              Commonwealth of the Bahamas

Trading   Costs: As agreed with Manuel, bank shall absorb
                                                             all
                 other fees on the investments made with the
                                                                     trading   costs and not   charge   custodial   or
                                                                               I loan   proceeds.
Assignment:      Bank to allow assignment of
                                                Exchange Agreement from 3 companies to S085. The
                 companies will transfer the preferred shares issued to them to S085. Bank
                                                                                           shall confirm
                 assignment and that all legal requirements have been fulfilled. No costs           shall be borne
                 by Borrower to transfer the Exchange Agreement or Preferred Shares.
Fees:            No fees, costs, expenses,
                                            taxes, or other payments of any kind, other than interest due
                 under the note, shall be borne
                                                by the client, except for the fees of its own advisors and
                 consultants (if any).




        /C)43
    José Gonzalez de
                             Castet&n
    Managing Director aantaler Bankt, Trust             Ltd.

    Santander Bank & Trust.
                                  n3rd
    Goodman's Bay Corpora
    West Bay Street & Seavie  Ikive w.
    Po Box N-1682, Nassau, Bahamas
                                            Floor


    Tel (242) 502 7900 Fax (242) 322 3585
         Case 1:10-cv-20695-FAM                                                       Document 1-3                                      Entered                        on     FLSD Docket 03/08/2010                                                                  Page              1 of 1

    k-LJS 44      (Rev. 2/08)                                                                              CIVIL COVER SHEET
    Thc JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other pape
                                                                                                                                                                                                                                                                                  the purpose of initiati
    by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Cl                                                                                                   r                    or
    the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)                  NOTICE: Attorneys MUST Indicate All Re-fi                                                                                                                                                                    D.C.
    I.   (a) PLAINTIFFS                                                                                                                                           DEFENDANTS

    Solymar Investments, Ltd.,                          et    al.                                                                                              Banco           Santander, S.A.,                       et al.                                     MAR 08 2010
                                                                                                                                                                                                                                                             STEVEN M. LARIMORE
         (b)       County of Residence of First Listed                      Plaintiff                                                                             County       of Residence of First Listed Defendan
                                              (EXCEPT                                       CASES)                                                                                              (IN U.S. PLAINTIFF 1)                                   SES
                                                              IN U.S. PLAINTIFF                                                                                                                                                                               Sull)of FLA.                    MIAMI
    (c) Attorney's (Firm Name,                Address, and Telephone Number)                                                                                              NOTE:          IN LAND CONDEMNATION                                 CASES, USE THE LOCATION OF T"
                                                                                                                                                                                             LAND INVOLVED.

Martin B. Goldberg, Esq. & Lawrence B. Lambert,                                                           Esq.
Lash & Goldberg LLP                                                                                                                                               Attorneys            (If Known)

100 SE 2nd Street, Suite 1200                                                                                                                                 Sam Danon, Esq., Gus Membiela, Esq., Hunton & Williams LLP,
Miami             FT   11111                                                                                                                       la         1111 Brickell Avenue, Suite 2500, Miami, Florida 331321                                                                                              a
    (d) Check       County      Where Action Arose:                 106   MIAMI- DADE              0 MONROE                 0   BROWARD                     0 PALM BEACH                      0       MARTIN           0 ST. LUCIE                 0    INDIAN RIVER               0 OKEECHOBEE
                                                                                                                                                                                                                                                                                         HIGHLANDS

    II. BASIS OF JURISDICTION                                               (Place   an    "X" in One Box          Only)                    III. CITIZENSHIP OF PRINCIPAL PARTIES(Place                                                                                 an    "X" in One Box for Plaintiff

                                                                                                                                                             (For Diversity Cases Only)                                                                               and One Box for Defendant)
    O    I      U.S. Government                    l0     3      Federal      Question                                                                                                                  PTF          DEF                                                                      PTF          DEF

                   Plaintiff                                         (U.S. Government Not             a   Party)                                   Citizen of This State                          0         1         0        I         Incorporated   or   Principal Place              0         4      3 4
                                                                                                                                                                                                                                         of Business In This State


    O    2      U.S. Government                         0 4         D   iversity                                                                   Citizen of Another State                       0             2     0            2     Incorporated   and   Principal Place             7         5      0   5

                   Defendant                                                                                                                                                                                                                of Business In Another State
                                                                        (Indicate Citizenship of Parties in          Item   III)

                                                                                                                                                   Citizen        or   Subject    of a            0             3     0            3     Foreign Nation                                   0         6      0   6
                                                                                                                                                        Pnrpion Cnunn,

    Tie           A TITTIOU             CITT'T                                         n




I                   CONTRACT                                                                TORTS                                                  FORFEITURE/PENALTY                                                      BANKRUPTCY                                        OTHER STATUTES                         I
    O    110 Insurance                                   PERSONAL INJURY                                  PERSONAL INJURY                          0        610   Agriculture                                   0   422   Appeal          28 USC 158             0     400 State        Reapportionment
    O    120 Marine                                7 310       Airplane                           0         362 Personal Injury                    0        620 Other Food &  Drug                              0   423 Withdrawal                               0     410 Antitrust

    O    130 Miller Act                            0 315       Airplane      Product                          Med.  Malpractice                    0        625 Drug Related Seizure                                      28 USC 157                             0     430 Banks and           Banking
    O    140    Negotiable     Instrument                     Liability                           0        365 Personal Injury                                 of Property 21 USC 881                                                                            0     450 Commerce

    O     150   Recovery of Overpayment            0 320 Assault, Libel &                                     Product Liability                    0        630 Liquor Laws                             I           PROPERTY RIGHTS                              0     460    Deportation
                & Enforcement     ofludgment                  Slander                             0        368 Asbestos Personal                   0        640 R.R. & Truck                                    0   820   Copyrights                             0     470 Racketeer Influenced and

    O     151 Medicare Act                         0 330 Federal            Employers'                        Injury Product                       0        650 Airline       Regs.                             0   830 Patent                                                Corrupt Organizations
    O     152   Recovery of Defaulted                         Liability                                       Liability                            0        660    Occupational                                 0   840 Trademark                                0     480 Consumer Credit

                Student Loans                      0 340 Marinc                                    PERSONAL PROPERTY                                              Safety/Health                                                                                  0     490 Cable/Sat TV

                (Excl. Veterans)                   0 345 Marine Product                           0        370 Other Fraud                         0        690 Other                                                                                            0      810 Selective Service

    7     153   Recovery of Overpayment                       Liability                           0        371 Truth in     Lending            I                         LABOR                                      SOCIAL SECURITY                              Al    850 Securities/Commodities/
                of Veteran's Benefits              0 350 Motor Vehicle                            0        380 Other Personal                      0        710 Fair Labor Standards                            0   861 HIA  (1395ff)                                     Exchange
    3     160 Stockholders' Suits                  0 355 Motor Vehicle                                        Property Damage                                     Act                                           0   862 Black  Lung (923)                        0      875 Customer          Challenge
    CI    190 Other Contract                                  Product      Liability              0        385 Property Damage                     3        720   Labor/Mgmt. Relations                         0   863   DIWC/DIWW (405(g))                                  12 USC 3410

    O     195 Contract Product       Liability     0 360 Other Personal                                       Product Liability                    0        730   Labor/Mgmt.Reporting                          0   864 SSID Title XVI                           0      890 Other   Statutory Actions
    O     196 Franchise                                       Injury                                                                                              & Disclosure Act                              0   865 RSI            (405(g))                  0     891    Agricultural Acts
I_REAL                 PROPERTY                           CIVIL RIGHTS                             PRISONER PETITIONS                              0        740   Railway      Labor Act                            FEDERAL TAX SUITS                            0      892 Economic Stabilization Act

    O    210 Land Condemnation                     CI 441      Voting                             0        510 Motions to Vacate                   0        790 Other Labor            Litigation               0   870 Taxes (U.S. Plaintiff                    0      893 Environmental Matters
    O    220 Foreclosure                           0 442       Employment                                        Sentence                          0        791    Empl.      Ret.     Inc. Securit)                      or   Defendant)                        0      894   Energy Allocation          Act
    O    230 Rent Lease &        Ejectment         0 443       Housing/                                    Habeas     Corpus:                               Act                                                 0   871 IRS--Third      Party                           895 Freedom of Information Act
    O    240 Torts to Land                           Accommodations                               0        530 General                                                                                                    26 USC 7609
    O    245 Tort Product       Liability          0 444 Welfare                                  0        535 Death Penalty                   I        I              IMMIGRATION                                                                               0     900    Appeal of Fee Determination
                                                        445      Amer.       w/Disabilities                                                                 462 Naturalization                                                                                          Under   Equal Access to Justice
    O    290 All Other Real        Property        71                                             0        540 Mandamus & Other                    0
                                                        Employment                                                                                          Application
                                                        446      Amer.       w/Disabilities                                                                 463 Habeas        Corpus-Alien
                                                   0
                                                        Other
                                                                                                  0        550 Civil   Rights                      0
                                                                                                                                                            Detainee
                                                                                                                                                            465 Other      Immigration                                                                                  950 Constitutionality of State
                                                   0 440 Other Civil               Rights         0        555 Prison Condition                    0                                                                                                             0
                                                                                                                                                            Actions                                                                                                        Statutes



    V. ORIGIN     (Place an "X" in One Box Only)                                                                                                                                              Transferred from
                                                                                                                                                                                                                                                                                         Ippeal to District
vri   I OriginalCI 2 Removed from
                Proceeding
                                              0 3
                                                 State Court
                                                                                               Re-filed-
                                                                                               (see VI below)
                                                                                                                                   10       4 Reinstated
                                                                                                                                                   Reopened
                                                                                                                                                                         or       11     5
                                                                                                                                                                                              another district
                                                                                                                                                                                              (specify)
                                                                                                                                                                                                                                         EI 6 Multidistrict
                                                                                                                                                                                                                                                  Litigation
                                                                                                                                                                                                                                                                         0 7
                                                                                                                                                                                                                                                                                         Illiestfr aotme
                                                                                                                                                                                                                                                                                         Judgment
                                                                                                   a) Re-filed Case 0 YES 0 NO                                                           b)    Related Cases                           gi YES       0 NO
    VI. RELATED/RE-FILED
                                                                    (See instructions
    CASE(S).                                                        second page):                  JUDGE           HUCK/O'SULLIVAN                                                                                  DOCKET NUMBER                           09-20215

                                                             Cite the U.S. Civil Statutc under which you                                are   filing and           Write      a    Brief Statement of Cause (Do not cite                                jurisdictional             statutes unless

                                                             diversity):
    VII. CAUSE OF ACTION Securities                                      Exchange Act, 15 U.S.C. §78j(b); violation of federal and state securities statutes and                                                                                                                   common               law
                                                              claims for breach of fiduciary duty, recklessness and negligence.                                                                                                                                                                                    el
                                                             LENGTH OF TRIAL via 14                                  days   estimated              (for both sidcs            to   tiy entire case)
                                              IN             0                                                                                          DEMAND                                                                         CHECK YES        only    if demanded in             complaint:
    VIII.         REQUESTED                                          CHECK IF THIS IS,                           ASS ACTION
                  COMPLAINT:                                         UNDER F.R.C.P,                                                                                                                                                    JURY DEMAND:                      .0       Ycs      0        No

    ABOVE INFORMATION IS TRUE & CORREC                                                        0            SIGNATURE 0                  A     0         E     OF       REA         0                                                               DATE
    THE BEST OF MY KNOWLEDGE
                                                                                               7           ./../..i.                                                                                                                              March      8, 2010
                                                                                                                    fotsel
                                                                            /or                                                                                                              FOR OFFICE USE ONLY

                                                                                                                                                                              AMOUNT                                                       RECEIPTS                                           IFP

				
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