Administrator sues UBS for $2bn over Madoff scheme
Thursday 25 November 2010
The trustee seeking to recover money for Bernard Madoff investors has sued UBS for $2bn (£1.3bn), accusing the Swiss bank of collaborating in the massive Ponzi scheme.
UBS was accused of assisting Madoff's fraud by sponsoring foreign feeder funds that sent client money to the money manager, lending them "an aura of legitimacy" while shielding itself from liability through secret side deals.
Despite identifying red flags at Bernard L Madoff Investment Securities LLC, the Swiss bank and feeder funds "chose to enable Madoff's fraud for their own gain," collecting at least $80m in fees, the court-appointed trustee Irving Picard said in a 107-page complaint.
"Madoff's scheme could not have been accomplished unless the UBS defendants had agreed to look the other way and pretend that they were truly ensuring the existence of assets and trades," the complaint said. "In fact, they were not and never did."
The complaint alleges 23 counts of fraudulent transfers and other misconduct. UBS called Picard's allegations "completely unfounded and without merit" and pledged to defend itself.
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