Saturday, 11 December 2010

Madoff trustee sues HSBC for nine billion dollars

Business 2010-12-07 11:56

NEW YORK, Tuesday 7 December 2010 (AFP) - The trustee charged with recouping assets for victims of Wall Street fraudster Bernard Madoff is suing British banking giant HSBC and related entities for at least nine billion dollars.

In a statement issued Sunday, Irving Picard accused the firms of enabling Madoff's massive Ponzi scheme by creating, marketing and supporting "an international network of a dozen feeder funds based in Europe, the Caribbean and Central America."

HSBC and the related funds led investors to direct over 8.9 billion dollars into Bernard L. Madoff Investment Securities LLC (BLMIS) -- Madoff's fraudulent investment advisory business, according to Picard.

"The defendants also earned hundreds of millions of dollars by selling, marketing, lending to and investing in financial instruments designed to substantially assist Madoff by pumping money into BLMIS and prolonging the Ponzi scheme," despite being aware of the fraud, he added.

Italian bank UniCredit, Austrian banker Sonja Kohn and her Bank Medici are among those accused of helping the former Nasdaq chairman expand his scheme.

"Had HSBC and the defendants reacted appropriately to such warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars and countless victims sooner," Picard said.

"The defendants were willfully and deliberately blind to the fraud, even after learning about numerous red flags surrounding Madoff."

Last week, Picard said he was seeking 6.4 billion dollars from JPMorgan Chase for supporting the scam and he has filed a suit against Swiss bank UBS seeking two billion dollars in damages for its part in the massive fraud.

Madoff, who touted himself as one of New York's most successful money managers, was arrested in early December 2008 for running a pyramid scheme. He was sentenced in June 2009 to 150 years in prison.

Madoff's victims, including charities, major banks, Hollywood moguls and savvy financial players, handed him tens of billions of dollars over more than two decades.

The crime rocked Wall Street, where Madoff was a pillar of the New York and Florida Jewish communities.

Madoff's right hand man, Frank DiPascali, and his accountant, David Friehling, have since pleaded guilty in an investigation that has yet to fully unravel the crime or compensate the approximately 16,000 direct victims.

Even the amount of money stolen remains elusive: Madoff originally claimed to have been managing 65 billion dollars, but in October the court-appointed liquidator said the real bottom line was 21.2 billion dollars.

Madoff has insisted he acted alone, but a handful of others, including an assistant, two executives, computer experts and a bookkeeper have also been arrested.

Madoff, who rose from a humble start as a lifeguard in New York to become one of Wall Street's most trusted and powerful money managers, is incarcerated in North Carolina.

His luxury watches, piano and other personal items were sold at auction to raise money for his fraud victims on November 13.

MySinchew 2010.12.07

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