THE trustee seeking to recover money for defrauded Bernard Madoff investors has sued UBS for more than $2bn (£1.2bn), accusing it of collaborating in the imprisoned swindler’s massive Ponzi scheme.
UBS was accused of 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, the Swiss bank and feeder funds “chose to enable Madoff's fraud for their own gain,” collecting at least $80m 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.
In a statement, UBS called Picard’s allegations “completely unfounded and without merit” and pledged to defend itself.
Picard, a partner at Baker & Hostetler in New York, is liquidating Madoff’s investment business. He has filed at least 20 “clawback” lawsuits to recover $17.5bn from feeder funds that steered money to Madoff's firm, friends and family members.
FAST FACTS | MADOFF
The estimated $65bn Ponzi scheme run by Madoff was uncovered on 11 December, 2008, and cost former clients all or most of their savings.
Madoff, 72, pleaded guilty in March 2009, and is serving a 150-year sentence in the US.
City A.M. Reporter