In the summer of 2010, James Mooney, a partner at Baupost Group, the massive $24 billion Boston hedge fund run by investment legend Seth Klarman, sensed there was money to be made acquiring customer claims of Bernard Madoff’s bogus investment firm.

Mooney believed the Madoff claims represented a classic distressed debt situation, where “sophisticated participants in the market” who were “aided by their advisors, such as legal counsel,” could better understand the complex dynamics at play, according to a court-filed declaration Mooney made last year.