Bermuda insurer Argus is being sued for $15 million in damages by an American client who claims he lost millions allegedly invested in Bernard Madoff’s Ponzi scheme.

Antonio Calabrese, 61, says he lost $9 million and is suing Argus Group Holdings Ltd and a subsidiary, Bermuda Life Insurance Company Ltd in a complaint that was filed at the Superior Court of the State of Rhode Island on September 15, 2014 and removed by the defendants to federal court in Rhode Island on October 21.

According to court papers quoted by the Offshore Alert website, the causes of action are breach of contract, mutual mistake of fact, negligent misrepresentation, negligence and gross negligence.

An Argus spokesperson said last night: “We believe that the allegations have no merit. We will vigorously defend against it.”

Mr Calabrese’s complaint states that “this action arises from Defendants’ investment of Plaintiff’s money in the wrong investment fund”.

“Although Plaintiff directed Defendants to invest his money in a specific low-risk fund, Defendants incorrectly invested it in a different high-risk investment fund, resulting in massive losses to Plaintiff.” Mr Calabrese says he purchased two deferred variable annuity policies totaling approximately $9 million in September, 2008 — just three months before Madoff was arrested and his huge fraud brought to light.

“To fund those two policies, Plaintiff was required to select from various investment options offered by Defendants and, in turn, Defendants were required to invest Plaintiff’s money in accordance with his investment selection,” it was stated.

Mr Calabrese was presented with “the names of their various investment options” and chose “Rye Select Broad Market Insurance Portfolio”, a fund he understood to be “a low-risk investment”, it was claimed.

“Upon information and belief, and unbeknownst to Plaintiff when he made his investment selection, no investment fund by the name of ‘Rye Select Broad Market Insurance Portfolio’ actually existed.

“On some date after September 16, 2008 and without Plaintiffs knowledge or permission, Defendants invested 100 per cent of Plaintiff’s $9 million in a high-risk fund, titled ‘Rye Select Broad Market Insurance Portfolio LDC’ (the ‘LDC Investment Fund’), which was not listed in the Election of Investments Agreement executed by Plaintiff.

“Defendants never disclosed to Plaintiff, and Plaintiff was unaware, that Defendants invested his money in the high-risk LDC Investment Fund.

“Plaintiff did not agree, and never would have agreed, to invest his retirement money in the LDC Investment Fund given its high-risk investments.

“The LDC Investment Fund was invested in funds managed by the infamous Bernard Madoff and as a result of the Madoff bankruptcy, the LDC Investment Fund is virtually worthless today. In the couple of months between Plaintiff’s selection of the ‘Rye Select Broad Market Insurance Portfolio’ fund as his investment vehicle and the Madoff scandal, Plaintiff received two statements from Defendants regarding the performance of Plaintiff’s investment, neither of which revealed that Defendants had invested Plaintiff’s $9 million in the LDC Investment Fund, as opposed to in the ‘Rye Select Broad Market Insurance Portfolio’ selected by Plaintiff from the Election of Investments Agreement.

“As a result of Defendants, wrongful conduct, Plaintiff not only lost his initial $9 million investment, but he was also deprived of the return he could have obtained if his money had been invested in a conservative investment vehicle, as was his direction to Defendants.”