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Madoff Trustee Sues UBS for $2 Billion by Michael Rothfeld the Wall Street Journal November 24, 2010

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Madoff Trustee Sues UBS for $2 Billion by Michael Rothfeld the Wall Street Journal November 24, 2010 Madoff Trustee Sues UBS for $2 Billion By Michael Rothfeld The Wall Street Journal November 24, 2010 The trustee recovering money for victims of Bernard Madoff's Ponzi scheme is seeking $2 billion from UBS AG through a lawsuit that accuses the giant Swiss bank of actively participating in the fraud. In a lawsuit filed in federal bankruptcy court in New York, trustee Irving Picard alleged 23 counts of financial fraud and misconduct against UBS and related entities. Mr. Picard said the bank "lent an aura of legitimacy" to several international feeder funds, including Luxalpha SICAV, by serving as their sponsor, custodian and administrator. At the same time, it avoided legal responsibility for the funds' actions through undisclosed indemnity agreements, he said. The bank had indications of fraud, but it nonetheless made Mr. Madoff the subcustodian of the feeder funds, ceding authority to him to value them, said Mr. Picard, who is overseeing the bankruptcy of Bernard L. Madoff Investment Securities. "Madoff's scheme could not have been accomplished unless UBS had agreed not only to look the other way, but also to pretend that they were truly ensuring the existence of assets and trades when in fact they were not and never did," said Mr. Picard's counsel, David Sheehan. UBS didn't immediately respond to a request for comment. Mr. Madoff pleaded guilty to running a multi-billion dollar Ponzi scheme in March 2009. He is serving a 150-year sentence in federal prison in North Carolina. The lawsuit comes as Mr. Picard faces a legal deadline next month, two years from Mr. Madoff's arrest, to go to court seeking to recover money from some of those who withdrew funds from the investment firm before its collapse. The suit against UBS was filed in redacted form because the bank has designated information related to its interactions with Mr. Madoff as confidential, said Mr. Picard. He accused UBS of "trying to shield this information from the public." Madoff trustee sues UBS for $2bn By Brooke Masters Financial Times November 24, 2010 The trustee charged with recovering money for the victims of jailed financier Bernard Madoff has sued UBS for fraud, alleging the Swiss bank enabled the vast Ponzi scheme and should be required to return $2bn. Irving Picard, who represents investors in Mr Madoff’s failed brokerage firm, alleged in a press release that UBS, its subsidiaries and several unnamed individuals “lent an aura of legitimacy” to the fraud by sponsoring several international feeder funds, including Luxalpha SICAV and Groupement Financier Ltd. UBS served as custodian and administrator of several funds. He said he had filed a lawsuit in bankruptcy court in Manhattan alleging that even though UBS’s due diligence “revealed indicia of fraud”, the bank went ahead and allowed Mr Madoff to serve as subcustodian, keep hold of the funds’ assets and serve as the only source of valuation. Federal investigators later learnt that Mr Madoff made no trades and used new investors’ money to pay off earlier clients. Total losses may have been high as $65bn. He is currently serving a 150-year prison sentence. “Madoff’s scheme could not have been accomplished unless UBS had agreed not only to look the other way, but also to pretend that they were truly ensuring the existence of assets and trades when in fact they were not and never did,” said David J. Sheehan, a lawyer with Mr Picard’s law firm of Baker & Hostetler. “Without UBS’s serving as promoter, custodian, manager and administrator for the feeder funds, [the scheme] would have been deprived of more than a billion dollars in investments, and Madoff’s fraud would have been diminished in both scope and duration,” he added. The full suit has been filed under seal and is not available to the public. Mr Picard said in a statement: “We have battled with UBS regarding disclosure of information about the bank’s knowledge of Madoff. Unfortunately, they are still trying to shield this information from the public by designating all of their information as confidential. We intend to move to have that designation removed and the complaint made public as soon as possible.” A UBS spokesman did not immediately return a call seeking comment. The bank has repeatedly denied wrongdoing in connection with the Luxalpha fund and other feeder funds and it is currently battling the investors in those funds in a Luxembourg court. Bank officials have said they set up the Madoff funds at the behest of large investors who were looking for a vehicle through which to invest with the financier and they say investors were required to sign forms acknowledging Mr Madoff’s role. Some investors, however, say they never saw the forms. Picard Goes Big, Sues UBS for $2 Billion in Madoff Case By Ashby Jones The Wall Street Journal – Law Blog November 24, 2010 Thought Irv Picard was winding down his attempts to recover the money lost by Bernie Madoff? Think again. Wednesday morning, Picard, the trustee recovering money for victims of Bernard Madoff’s Ponzi scheme, filed a lawsuit in New York bankruptcy court seeking $2 billion from UBS AG. The accusation: The giant Swiss bank actively participated in the fraud. Click here for the release from Picard. The WSJ’s Michael Rothfeld is on the story. In the suit, Picard alleged 23 counts of financial fraud and misconduct against UBS and related entities. Picard said the bank “lent an aura of legitimacy” to several international feeder funds, including Luxalpha SICAV, by serving as their sponsor, custodian and administrator. At the same time it avoided legal responsibility for the funds’ actions through undisclosed indemnity agreements, he said. The bank had indications of fraud, but it nonetheless made Madoff the sub-custodian of the feeder funds, ceding authority to him to value them, said Picard. “Madoff’s scheme could not have been accomplished unless UBS had agreed not only to look the other way, but also to pretend that they were truly ensuring the existence of assets and trades when in fact they were not and never did,” said Picard’s counsel, David Sheehan. UBS did not immediately respond to a request for comment. The lawsuit comes as Picard faces a legal deadline next month, two years after Madoff’s arrest, to go to court seeking to recover money from some of those who withdrew funds from the investment firm before its collapse. The suit against UBS was filed in redacted form because the bank has designated information related to its interactions with Madoff as confidential, said Picard. He accused UBS of “trying to shield this information from the public.” More on this story as it develops. Madoff trustee sues UBS, others for $2B Associated Press November 24, 2010 NEW YORK (AP) — The trustee trying to recover money for investors cheated by jailed financier Bernard Madoff announced a lawsuit Wednesday against the Swiss bank UBS AG and related entities and individuals, alleging they collaborated in Madoff's Ponzi scheme. The lawsuit alleges 23 counts of financial fraud and misconduct, and seeks to recover at least $2 billion to be distributed to Madoff's victims, who lost billions when Madoff revealed in December 2008 that his investment company was a gigantic fraud, Trustee Irving Picard said. It was filed in U.S. Bankruptcy Court. UBS actively assisted Madoff's scheme by serving as the sponsor, custodian and administrator of various affiliated feeder funds, Picard alleged. The full complaint was filed under seal. Only a redacted version was available to the public. "We have battled with UBS regarding disclosure of information about the bank's knowledge of Madoff," Picard said. "Unfortunately, they are still trying to shield this information from the public by designating all of their information as confidential. We intend to have the designation removed and the complaint made public as soon as possible." Madoff's scheme could not succeed "unless UBS had agreed not only to look the other way, but also to pretend that they were truly ensuring the existence of assets and trades when in fact they were not and never did," said David Sheehan, counsel for the trustee. Without UBS's serving as promoter, custodian and administrator, "Madoff's fraud would have been diminished in both scope and duration," Sheehan added. Madoff is serving 150 years in federal prison for the fraud. Madoff Trustee Sues UBS By Jeffrey Cane The New York Times – DealBook November 24, 2010 The bankruptcy trustee charged with trying to recover money for the victims of Bernard L. Madoff’s huge Ponzi scheme has sued the Swiss bank UBS and affiliates, accusing them of enabling the scheme. The lawsuit, filed in United States Bankruptcy Court in Manhattan, says that Luxalpha, Groupement Financier and other European feeder funds withdrew $796 million from Bernard L. Madoff Investment Securities in the 90 days before the firm filed for bankruptcy in December 2008. They withdrew $1.12 billion in the previous six years, the complaint contends. UBS served as custodian for Luxalpha and sponsored its formation, the complaint says. The defendants made at least $80 million from fees on raising money from investors and pooling it to invest with Mr. Madoff “The ‘fees’ they received in their various roles were nothing more than ‘fees’ for looking the other way, and lending their prestigious name to legitimize and attract money” to the Ponzi scheme, according to the complaint, filed by the trustee, Irving H. Picard. The lawsuit charges that UBS and the other defendants are liable for at least $2 billion. The complaint alleges 23 counts of fraud and breaches of fiduciary duty against the defendants.
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