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07 Dec, 2010
Scam was sustained by HSBC -
lawyer
Irving Picard the New York lawyer who has been appointed as the
trustee for Madoff's victims, the man in charge of liquidating the
con man's bankrupt investment firm, is claiming that HSBC continued
to act for funds that fed money into Bernard Madoff's Ponzi scam in
spite of repeated warning.
HSBC allegedly ignored steps to protect its investors against the
scam, as the bank's own executives and outside auditors have warned
against the "baffling" and potentially fraudulent structure of the
fund, according to a US lawsuit launched against the global
bank.
In the $9billion claim against HSBC, amongst other European
institutions, Picard claims that scam warnings began as early as
2001, seven years before the scheme collapse, revealing one of the
biggest frauds in history.
The HSBC complaint was made public on Monday as the trustee
announced his largest settlement to date, with a bank-sponsored
feeder fund that sent money to Mr Madoff. Picard said that Union
Bancaire Privée, the Swiss private bank, had agreed to pay
up to $500 million into a restitution fund for Mr Madoff's victims.
Under the settlement, which must be approved by a bankruptcy judge,
UBP will pay $470 million to benefit Madoff's victims. The deal
also provides for an additional payment of as much as $30 million,
according to court papers.
"The UBP settlement agreement is the largest feeder fund bank cash
settlement to date, and the first major international bank
settlement", Irving Picard said yesterday in a statement. The
settlement brings to $2 billion of Picard's recoveries for
creditors of Bernard L. Madoff Investment Securities LLC.
We believe the agreement and the settlement payment represents a
reasonable compromise among the parties involved and, importantly,
adds a guaranteed half-billion dollars to the Madoff Customer Fund,
added David J. Sheehan, a lawyer for Mr Picard.
Madoff, 72, is serving a 150-year sentence in a federal prison in
North Carolina, after admitting he directed the biggest Ponzi scam
in history. At the time of his arrest, Madoff's account statements
reflected 4,900 accounts with $65 billion in nonexistent
balances.
Including the HSBC suit, Picard is seeking a total of more than $33
billion from Madoff and his family, former employees, banks, feeder
funds and investors alleged to have profited from the scam. That
amount is said to surpass the estimated $20 billion in principal
lost by Madoff investors.
In its defence, HSBC said in a statement that Picard's allegations
are "unfounded" and that it will defend itself against them in
court.
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