Madoff Trustee Files Suit Against Seven Banks for $1 Billion

Irving Picard, the trustee trying to recover money on behalf of the victims of Bernie Madoff, said he filed lawsuits against seven global banks seeking total compensation of more than $1 billion.

Picard filed complaints against Citibank (C), Natixis SA, Fortis, ABN AMRO Bank, Banco Bilbao Vizcaya Argentaria (BBVA), Nomura and Merrill Lynch, which is now part of Bank of America Corp. (BAC), Reuters reported.

The trustee says that the complaints allege the banks received money from Madoff's feeder funds when they knew or should have known about his fraud.

"The complaints allege that the banks enabled the Madoff Ponzi scheme by opening a spigot of new money into the Madoff feeder fund network, by creating and offering derivative investment products linked to various Madoff feeder funds," Picard said in a statement.

Picard has filed a series of lawsuits in recent weeks in a bid to win compensation for those who lost money with Madoff. He has taken aim at banks that did business with Madoff's firm as well as investors who profited from their involvement with the company.

Madoff is currently serving a 150-year prison sentence for operating the largest Ponzi scheme in U.S. history.

The sealed complaints were filed in the U.S. Bankruptcy Court of the Southern District of New York.

None of the banks were available for comment to Reuters.

Of the more than $1 billion that the lawsuits are seeking to recover from the banks, $425 million would come from Citibank. The compensation is related to a credit facility and a swap transaction that the bank provided Madoff feeder funds.

"Armed with considerable non-public information about Madoff, Citi either knew or should have known that Madoff's investment advisory business was a fake, and that the funds Citi received from these two Madoff feeder funds came from Madoff's fraudulent activities," Picard said.

Increase your money and finance knowledge from home

Behavioral Finance

Why do investors make the decisions that they do?

View Course »

Reading a Stock Quote

Learn to read the ingredients of a stock.

View Course »

Add a Comment

*0 / 3000 Character Maximum

4 Comments

Filter by:
elicalvelli

I am beginning to wonder how much this liquidation is costing the taxpayers. How about it trustee? Can you give us a figure on the cost so far? How long do you think this liquidation will last? My guess? 10 years.. My guess as to cost? 1 to 2 billion...

December 11 2010 at 7:41 PM Report abuse rate up rate down Reply
db

this is such crap. hasn't anyone herd of buyer beware. these people did not bother to check up on Madoff. It was truly "Irv or Sol have I got a deal for you" that's it. To good to be true. However, since it happened to certain people we and the banks are responsible. Crap. These people shouldn't get a cent. I don't remember them offering to share their profits. I will never forget the picture in the paper of a woman all decked out including gold from head to toe saying "I can't believe he did this to his own people, that isn't right". Meaning if he screwed Christians or Moslems well that would be all right.

December 09 2010 at 1:44 PM Report abuse rate up rate down Reply
jkennedy806

None of the banks were available for comment -- what a mess -- where was the oversight??? where was Barney and the Finance Banking committee??? How about the SEC -- go after that agency -- what happened to consumer Protection?? Is the US citizen not worthy anymore of protection?? Asbestos in our attic brought to you by the ePA (none for years that this agency is a bunch of lazy sit on my office chair do nothins), banks lying to local courts, Truth in Lending and PMI that's a joke, Security and Exchange Comm. Well there is no security and the exchange is Poverty for the middle class with the rich get richer by fraud, PONZI scheming and collusion.

December 09 2010 at 9:11 AM Report abuse rate up rate down Reply
1 reply to jkennedy806's comment
Hotdigittydog

Have a good day!!!!!!!!!!!!!

December 09 2010 at 11:08 AM Report abuse +2 rate up rate down Reply