Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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

Index Last Change % Change
Dow 17,773.64 -57.12 -0.32%
Nasdaq 4,775.36 -29.93 -0.62%
S&P 500 2,065.30 -10.51 -0.51%
Treasuries 1.82 -0.02 -1.03%
Data as of 6:21pm ET
Company Price Change % Change
Bank of America Corp... 14.56 -0.23 -1.56%
Freeport-McMoRan Inc... 14.00 1.34 10.58%
Ford Motor Co 13.56 -0.53 -3.76%
Apple Inc 93.74 -1.09 -1.15%
Microsoft Corp 49.87 -0.03 -0.06%
Data as of 4:15pm ET
Sponsors

Sections

Dunkin' Donuts plans to expand on-the-go ordering that allows customers to skip waiting in line for their coffee or food. More

The Dow is down 300 points over the past two days, leaving the index on track for its worst week since early February. Blame fumbled earnings reports from the likes of Apple and Google as well as concerns about the Bank of Japan. More

Personal injury lawyers across the country have been asking people if they've been in a car accident that may have involved Snapchat. More

Visa says new software will allow consumers to check out with chip cards as fast as swiping a card with magnetic strip. More