Madoff trustee sues UBS for $2 billion

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- The court-appointed trustee for the recovery of assets stolen by Bernard Madoff has sued UBS AG for $2 billion, accusing the Swiss financial firm of participating in Madoff's Ponzi scheme.

Trustee Irving Picard filed the suit in U.S. Bankruptcy Court in Manhattan, alleging 23 counts of financial fraud and misconduct against UBS (UBS) for collaborating in Madoff's scheme. The trustee seeks "at least $2 billion for equitable distribution to [Madoff] victims with valid claims."

"UBS actively assisted the Madoff Ponzi scheme by, among other things, serving as the sponsor, custodian and administrator of various affiliated feeder funds, including Luxalpha SICAV and Groupement Financier Ltd.," read the trustee's complaint. "As administrator of these funds, UBS allowed Madoff to be the only source of information for valuing the funds."

David Sheehan, counsel for the trustee, said that without UBS' involvement, Madoff's firm "would have been deprived of more than a billion dollars in investments and Madoff's fraud would have been diminished in both scope and duration."

As of Nov. 19, in the most recent tally available, the trustee had approved a total of 2,305 claims from victims, totaling nearly $5.8 billion in damages.

UBS did not immediately comment on the case.

Madoff, 72, pleaded guilty in March, 2009 to 11 counts related to running the most massive Ponzi scheme in history and was sentenced to 150 years. He is incarcerated at a medium security federal prison in Butner, N.C., and his release date is Nov. 14, 2139.

Madoff operated his scam in the classic Ponzi style while using his investment firm as a front. He claimed to be investing his clients' money. He kept the fraud going by using deposits from new clients to provide so-called returns to more mature clients. But in reality, he was stealing the money and there were no returns. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,828.24 0.49 0.00%
Nasdaq 4,791.63 4.31 0.09%
S&P 500 2,067.56 -5.27 -0.25%
Treasuries 2.19 -0.04 -1.79%
Data as of 8:26pm ET
Company Price Change % Change
Kinder Morgan Inc 41.35 -0.97 -2.29%
Halliburton Co 42.20 -5.14 -10.86%
General Electric Co 26.49 -0.38 -1.41%
Bank of America Corp... 17.04 -0.07 -0.41%
Apple Inc 118.93 -0.07 -0.06%
Data as of 1:02pm ET

Sections

Union-backed demonstrators are protesting outside some Walmart stores Friday, asking the company to pay workers at least $15 an hour. More

From their smartphones, tablets or laptops -- and the comfort of the living room or Thanksgiving dinner table -- Black Friday shoppers could find deals all week that rivaled the in-store doorbusters. More

Natalie's Cakes and More has raised $84,000 through GoFundMe after protests trash store. More

Retailers are promising big deals this Black Friday, but are the savings actually worth the shopping mayhem? Test your deal-sniffing skills. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.