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 did not return calls and e-mails or could not be reached.
Madoff’s estimated $65 billion Ponzi scheme was uncovered on Dec. 11, 2008, and cost thousands of 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 Tuesday. He made an edited version available to the public Wednesday.
The case is Picard v. UBS AG et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04285.
