Madoff Proceedings: Billion Lawsuit against Bank Austria

Madoff Proceedings: Billion Lawsuit against Bank Austria / Picture: © Reuters

The administrator of the insolvent fund of convicted Bernard Madoff, Irving Pircard, filed a claim of over € 19.6bn against the Medici Bank, its former director, Sonja Kohn, and Bank Austria, the biggest compensation claim so far in the Madoff proceedings. Overall damages suffered by investors because of the cheating scandal made public in 2009 amount o to around $ 51bn.

Judicial authorities from Austria, Switzerland and Liechtenstein are investigating. The Vienna public prosecution has been involved in investigations about Kohn for the last two years. Massive commercial fraud is suspected. HSBC, JP Morgan and UBS are also faced with actions for damages for an amount of billions.

Kohn acquired money for Madoff from European private investors over 23 years, and is accused of having a central role in the fraud system. This was done via the "Herald" fund of Bank Medici. Bank Austria also invested  monies via the "Primeo”-fund with Madoff.

In addition to Kohn, other former executives of Bank Medici are being accused by the Vienna public prosecution. There are allegedly violations of the Securities Act and the Investment Funds Act. Several criminal charges have already been filed and also civil lawsuits, particularly against Bank Austria and Bank Medici.

The accusations are being denied by all parties. An indictment is not yet foreseeable because the investigation is still going on. Judicial authorities from Switzerland and Liechtenstein are also investigating. There is suspicion of money laundering against Kohn. Bank Austria declares that there is no knowledge about the action yet, but that it will be fought vehemently.