The trustee overseeing the bankruptcy of Bernard Madoff's investment firm launched a $19.6bn (£12.4bn) suit against 60 people and institutions including an Austrian banker he accused of being Madoff's "criminal soulmate".
Irving Picard, the court-appointed trustee, said the latest suit represents the entire amount investors lost in the fraud, even though he has sued many others to recover money for victims.
According to Picard, Sonja Kohn, who headed Bank Medici in Austria, "masterminded a vast illegal scheme" that fed $9.1bn of investors' money to Madoff, starting in the mid-1980s. Picard labelled her conspiracy "the Medici Enterprise" and said Kohn, her relatives and other entities related to her were responsible for 8,000 violations of US racketeering laws.
"In Sonja Kohn, Madoff found a criminal soulmate, whose greed and dishonest inventiveness equalled his own," said Picard. "Given the scope of Madoff's Ponzi scheme, the deceptive nature of the defendants, and the deliberately Byzantine structure of the Medici Enterprise, we believe that even more information regarding the full scope of this criminal enterprise will be revealed."
Timothy Pfeifer – counsel at Baker & Hostetler, the court-appointed legal counsel for the trustee – said: "Sonja Kohn went by many names and operated under many guises, creating an international network of spurious investment entities and masterminding an illegal scheme not only to support the Madoff fraud, but also to enrich herself, her family and the largest banks in Austria and Italy."
The lawsuit said that "no Ponzi scheme can survive without a constant influx of fresh capital,", adding that without Kohn, "the Ponzi scheme could not have continued for as long as it did."
The suit alleges that Kohn held herself out as a close friend of Madoff and intimated that this relationship would yield special returns for investors that she referred to the convicted fraudster. Picard alleges that Kohn began working with Madoff shortly after the pair first met in New York in 1985.
"Madoff paid her to feed money into the Ponzi scheme. The agreement was a secret even inside BLMIS [Bernard L Madoff Investment Securities] and Kohn took calculated measures to distance herself and her family from the fraud," said David Sheehan of Baker & Hostetler.
Picard said Madoff kept records of the BLMIS accounts for which he secretly paid Kohn and he appeared to have attempted to destroy these before he confessed on 11 December 2008. He is now serving a 150-year sentence for what's believed to be the largest Ponzi scheme of all time..
Kohn has denied any involvement with Madoff's fraud.Picard has until today to file suits against those he accuses of benefitting from Madoff's illegal schemes. In recent weeks he has sued banks including HSBC, JP Morgan and UBS.
