NEW YORK: The trustee charged with recouping assets for victims of Wall Street fraudster Bernard Madoff is suing British banking giant HSBC and related entities, seeking at least nine billion dollars.
In a statement issued Sunday, trustee 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.
HSBC said it was defending itself “vigorously” against the claims filed in US federal bankruptcy court in New York.
“HSBC believes that the US court-appointed trustee’s claims of wrongdoing are unfounded,” the bank said.
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 JP Morgan 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.