Madoff trustee sues Austrian banker, 55 others

By Larry Neumeister
Saturday, December 11, 2010

NEW YORK - The trustee seeking to recover money for investors who lost billions of dollars in jailed financier Bernard Madoff's fraud said Friday he has filed civil racketeering charges against an Austrian banker and 55 other defendants, demanding they give up nearly $20 billion as a penalty for their "criminal relationship" with Madoff.

Court-appointed trustee Irving Picard used tough language to portray a 23-year relationship between Sonja Kohn of Bank Medici and Madoff, saying she and others engaged in money laundering, mail and wire fraud, and financial institution fraud. He also accused her of accepting secret kickbacks from Madoff.

Picard also announced Friday that he had reached settlements with a number of charities and nonprofit organizations to recover more than $80 million and resolve civil claims against charities that withdrew more money than they deposited in accounts with Madoff.

Picard filed a lawsuit in U.S. Bankruptcy Court in Manhattan against members of what he labeled the Medici Enterprise. He called Kohn the scheme's mastermind.

A message for comment sent to a Kohn spokeswoman was not immediately returned.

"In Sonja Kohn, Madoff found a criminal soul mate, whose greed and dishonest inventiveness equaled his own," Picard said as he asked for $19.6 billion in damages.

Timothy Pfeifer, Picard's court-appointed counsel, said Kohn used multiple names and guises in creating an "international network of spurious investment entities and masterminding an illegal scheme not only to support the Madoff fraud, but also to enrich herself, her family and the largest banks in Austria and Italy."

Charged in the complaint along with Kohn, the principal shareholder of Bank Medici, were six members of her family, along with various trusts and companies in New York, Austria, Italy, Gibraltar and elsewhere. Those companies included UniCredit and Bank Austria.

Picard alleged in the civil complaint that Kohn channeled more than $9 billion into Madoff's Ponzi scheme while she and her family siphoned at least $62 million from Madoff's accounts into their private accounts. He charges she used an elaborate network of sham entities in New York and elsewhere that existed solely to receive secret kickbacks from Madoff.

"The total amount lost in the Ponzi scheme is approximately $19.6 billion, making these actors arguably the single most critical building block . . . of the Ponzi scheme," Pfeifer said.

Pfeifer said Kohn demonstrated her "intimate knowledge of Madoff's fraud" by acting suspiciously in the days and weeks before Madoff's December 2008 arrest.

He said she and her family used a network of trusts and nominee companies to launder the stolen proceeds of her scheme and to conceal it.

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