Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, July 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Bernie Madoff Creditor Opens Fire on Big Banks

MANHATTAN (CN) - Four complaints in federal and state court allege that UBS and others aided and abetted Bernie Madoff's massive Ponzi scheme.

SPV OSUS filed two complaints in New York County Supreme Court on Thursday, a day after filing two identical federal complaints in New York's Southern District.

All filings describe the plaintiff as a Bahamian company that acquired the creditor rights of Optimal Strategic US Equity Ltd., an investment fund that lost assets with Bernard L. Madoff Investment Securities.

One set of complaints takes aim at UBS and Access International Advisors, while HSBC is the lead defendant in the second set of complaints. (The links in this article facilitate the download of the state-court complaints, whereas the federal complaints are available to Courthouse News subscribers in the normal manner.)

"UBS AG and its affiliated entities facilitated Madoff's fraud through numerous international feeder funds," the complaints state. "Two of those funds, Luxalpha SICAV and Groupement Financier Ltd., together withdrew approximately $796 million in the 90 days before December 11, 2008, and roughly $1.12 billion in the preceding six years, many millions of which were subsequently transferred to defendants."

"In the face of numerous red flags that alerted or should have alerted them [UBS] that Madoff and BLMIS were running a fraud," the bank and its affiliates "pocketed at least $80 million in fees from the Ponzi scheme," SPV OSUS adds.

Access and International Advisors allegedly worked with UBS "to extend the Ponzi scheme to European investors, earning millions of dollars in fees for their role in the Ponzi scheme."

The creditor meanwhile accuses HSBC of "encouraging investment into an international network of feeder funds, including several nonparty funds."

"Ultimately, the HSBC defendants directed over $8.9 billion into BLMIS's fraudulent investment advisory business," these complaints state. "HSBC's own September 2008 report estimated that at least 33% of all moneys turned over to Madoff were funneled by and through the HSBC defendants. The HSBC defendants aided, enabled, and sustained the massive Ponzi scheme masterminded by Madoff because they received an extraordinary financial windfall."

Other defendants in HSBC complaints "are the management companies and service providers of the Medici Funds and the Benbassat Funds, as well as their directors."

UBS, HSBC and other banks have long been on the radar of the court-appointed bankruptcy trustee in charge of compensating Madoff's victims, Irving Picard, but the courts have shut Picard down at every turn because his position technically calls for him to act as Madoff's representative.

Both UBS complaints are 87 pages, and name as defendants several individuals associated with Access International Advisors and Luxalpha. The HSBC complaints are 100 pages.

SPV OSUS accuses all the defendants of aiding and abetting fraud, the breach of fiduciary duty and conversion, as well as "knowing participation in a breach of trust."

It is represented in all four complaints by R. Paul Yetter, with Yetter Coleman, in Houston, Texas, and by Manhattan-based Matthew Heerde.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.