Bernie Madoff's Austrian Connections Get Sued For $59 Billion

Saturday, December 11, 2010

Sonja Kohn
Little Austria's banking world moved on the global financial radar overnight. Bloomberg reports on a 44.65€ billion lawsuit against Austrian Sonja Kohn, her Medici Bank (under state curatorship since Jan 2, 2009), Bank Austria and parent UniCredit as well as 53 other defendants. It seeks a payback plus RICO damages, as Kohn is suspected to be the mastermind of an Austrian feeder scheme for Bernie Madoff's biggest Ponzi scheme of all times.
Before I am going to have a serious discussion with my stylist about my next multi-billion hairdo I am at least happy to have found the answer to the question about whether to rob or incorporate a bank.
As it appears to the outsider Ms. Kohn has managed to pull off the biggest banking heist in Austrian history, funnelling potentially 7.57€ billion to confidante Madoffs Ponzi. 
The lawsuit filed by Court-appointed trustee Irving Picard says that her collusion was so pivotal to the fraud that Mr. Madoff tried to destroy evidence of their connection before his arrest in 2008. “In Sonja Kohn, Madoff found a criminal soul mate, whose greed and dishonest inventiveness equaled his own,” said Picard.
Kickbacks included a €405 million payment shortly before Madoff's bust, indicating a close 23-year friendship with Bernie Ponzi Madoff.
Talk in Vienna has it that this will develop into a feast for lawyers as duped investors include a good part of Austria's upper crust, Vienna's Jewish community and even many bankers themselves. Bank Austria held 25% of Bank Medici, which saw two former government ministers serving on its supervisory board. 
Denying via her office that she went AWOL last Wednesday Kohn's lawyers have not yet responded to the latest allegations. Kohn had always insisted she was a Madoff victim herself.

From Bloomberg:
The lawsuit names Kohn, Bank Medici, Bank Austria, UniCredit SpA and dozens of other parties. It seeks 14.83€ billion tripled to 44.5€ billion under the Racketeer Influenced and Corrupt Organizations Act. It’s by far the biggest claim filed by Picard, who has sued investors, banks, feeder funds and others seeking money to pay investors with valid claims.
In the 153-page complaint against Kohn, Picard claims she told investors she was very close to Madoff and could deliver higher returns on investments made through his firm. Instead, Madoff was secretly paying Kohn, who knew Madoff was running a fraud, to funnel money into the Ponzi scheme, Picard said.
According to Picard, Kohn ran her own complex scheme centered on Bank Medici, parts of which overlapped with Madoff’s own fraudulent enterprise, delivering 6.89€ billion into the Ponzi scheme. They funneled billion of the total through feeder funds including Primeo Fund, Thema International, Herald Fund Alpha Prime Fund, Senator Fund and Herald (Lux), which placed all of their investors’ money with Madoff, according to Picard.
Travel Kitty: €405 Million Withdrawal

Shortly before Madoff confessed, in December 2008, Kohn withdrew 405.63€ million from Madoff’s firm, Picard said. She also took steps to hide her connection to him, Picard said.
Bank Medici operated as a branch of Bank Austria, which administered its accounts, according to Picard. In return, Bank Austria, which is named as a defendant, was paid at least 23.46€ million.
Bank Medici renamed itself 2020 Medici AG after Austria’s Financial Markets Authority withdrew the company’s banking license because of insufficient capital in May 2009.
Andreas Theiss, a lawyer for Kohn, didn’t respond to a call to his cell phone or an e-mail seeking comment.
“Our attorneys are reviewing the matter and we will manage this through the normal course legal process,” Martin Halama, a spokesman for Bank Austria, said yesterday in an e-mail. “We intend to defend ourselves vigorously.”
For more details check out the NYT which keeps updating the post, or so far 1,087 more reports coming up in a Go ogle search. For more background find a piece in the NYT from January 2009.


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