Madoff Victims Try to Recover Money from Swiss Bank

Editor's Note:

Madoff is a symbol of the corruption and looting of the future generations of Americans during the Bush administration, which increased the US national debt by $4.3 trillion.

By News Wires (text)

November 25, 2010

REUTERS -

The Swiss bank UBS has been accused of helping the infamous fraudster Bernard Madoff cheat investors and is being sued, among others, for more than two billion dollars in a New York court.

The trustee seeking to recover money for defrauded Bernard Madoff investors has sued UBS AG and others for more than $2 billion, accusing them of collaborating in the imprisoned swindler’s massive Ponzi scheme.

UBS was accused of assisting Madoff’s fraud by sponsoring foreign feeder funds that sent client money to the once-respected money manager, lending them “an aura of legitimacy” while shielding itself from liability through secret side agreements.

Despite identifying red flags at Bernard L. Madoff Investment Securities LLC, the Swiss bank and feeder funds “chose to enable Madoff’s fraud for their own gain,” collecting at least $80 million in fees, court-appointed trustee Irving Picard said in a 107-page complaint.

“Madoff’s scheme could not have been accomplished unless the UBS defendants had agreed to look the other way and to pretend that they were truly ensuring the existence of assets and trades,” the complaint said. “In fact they were not and never did.”

The complaint alleges 23 counts of fraudulent transfers and other misconduct. UBS had no immediate comment. The other defendants either did not return calls and emails or could not be reached.

Madoff’s estimated $65 billion Ponzi scheme was uncovered on Dec. 11, 2008, and cost thousands of former clients all or most of their savings.

Madoff, 72, pleaded guilty in March 2009 to running a multi-decade fraud. He is serving a 150-year sentence in a North Carolina federal prison.

Prosecutors have also filed criminal charges against seven people connected to Madoff. In addition to Madoff, two others have entered guilty pleas.

Picard, a partner at Baker & Hostetler LLP in New York, is liquidating Madoff’s investment business. He has filed at least 20 “clawback” lawsuits to recover $17.5 billion from feeder funds that steered money to Madoff’s firm, friends, family members and others.

He filed his complaint against UBS under seal with the U.S. Bankruptcy Court in Manhattan on Tuesday. He made an edited version available to the public on Wednesday.

Suicide

Picard accused UBS of working with co-defendant Access International Advisors LLC and associated individuals “to extend the Ponzi scheme to European investors.”

Access was once led by Thierry Magon de la Villehuchet, a French executive found dead in an apparent suicide in New York less than two weeks after Madoff’s fraud was uncovered. He was reported to have been distraught over losing up to $1.4 billion of client money.

Other defendants include the feeder funds Luxalpha SICAV, with offices in Luxembourg, and Groupement Financier Ltd, with offices in the British Virgin Islands.

The complaint said these firms withdrew $796 million in the 90 days before his firm was forced into bankruptcy after the fraud was revealed, and $1.12 billion in the prior six years.

It is unclear whether Picard plans to pursue lawsuits against other European banks.

In March, a Luxembourg court rejected efforts by former Madoff clients to file direct claims against UBS, saying they must instead seek recovery through Madoff’s liquidators.

That ruling signaled that investors who claim to have lost nearly $1 billion through Herald, a fund affiliated with a Luxembourg unit of British bank HSBC Holdings Plc, might have to pursue the same path.

HSBC was not immediately available for comment.

Picard said he has through Sept. 30 recovered $1.5 billion for former Madoff clients. He is also reviewing which clients are entitled to recover, and through Nov. 19 has accepted 2,305, or 15 percent, of the 15,105 claims he has reviewed.

From monogrammed slippers to artworks, Madoff’s possessions go up for auction

By News Wires (text)

AP -

Thousands of articles seized from the homes of jailed financier Bernard Madoff go on auction in New York on Saturday. Proceeds from the 489 lots will go to compensate victims of Madoff’s infamous financial schemes.

Jailed financier Bernard Madoff led a lavish lifestyle until his downfall. The disgraced financier left homes filled with luxury goods - and everyday items like underwear, slippers and T-shirts, all monogrammed to fit his ego.

Thousands of belongings from the New York City penthouse Madoff shared with his wife are headed for auction at a Manhattan hotel this Saturday.

Federal marshals staged a preview Wednesday of items seized from the apartment and the Madoffs' Long Island beachhouse - from bed linens, clothing, cookware and luggage to intimate items like used socks, cuticle scissors and even bottles of shampoo. There also were artworks, more than a dozen luxury watches, and antique furniture.

"And he loved shoes and spent a lot of money on 250 pairs - some never worn,'' said auctioneer Bob Sheehan, who will conduct the auction for the U.S. Marshals Service that seized Madoff's properties and ordered his wife to leave.

Proceeds from the 489 lots with an estimated pre-sale worth of $1.5 million will go to the U.S. Department of Justice's Asset Forfeiture Fund to compensate the convicted swindler's victims. An auction last year of Madoff's property raised $1 million.

The most valuable lot in Saturday's auction is Ruth Madoff's 10.5-carat diamond ring, with an estimated value of $300,000 to $350,000. But it's hardly the most interesting item - or the most revealing - from the daily life of the pyramid scheme king who became a symbol of greed and deceit on Wall Street.

The trader cherished the winning bull in every form - as statues, paintings and even names for his boats ("Bull,'' "Sitting Bull'' and "Little Bull'').

The man who deceived thousands of investors also collected masks that were scattered around his home. On display Wednesday at Brooklyn's Navy Yard were three wooden masks with Native American motifs, all stained red. They're expected to fetch $210 to $240. A leather bull foot stool - including a tail that had fallen off - is valued at $250 to $360.

Bidders also will get a chance to buy his boxer shorts, T-shirts, and Italian black velveteen slippers bearing the initials "BLM'' in gold embroidery. The lot with the slippers is valued at $75 to $110, and includes Ruth Madoff's monogrammed shirt. The boxers come with a pair of silk Armani pants and dozens of pairs of socks, in a lot estimated to be worth $960 to $1,370.

Madoff's world tanked on Dec. 11, 2008, when he was arrested and charged with running a multibillion dollar pyramid scheme.

He quickly admitted the scheme and investigators said that he may never have traded securities for his customers and instead used billions of dollars in cash from new investors to pay old ones, cheating charities, celebrities and institutional investors. Prosecutors estimate he defrauded at least 3,000 investors.

Madoff pleaded guilty to fraud charges and was sentenced to 150 years in prison. Now 72, he is serving time at the Butner Federal Correctional Complex in North Carolina.

Saturday's auction at the Sheraton New York Hotel & Towers will be the last one in New York of Madoff belongings. A third and final auction is to be held in Florida to sell off items from a Palm Beach home that sold for more than $5.5 million.

The Manhattan penthouse went for $8 million. Also previously sold were his yacht and boats.

Fair Use Notice

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.