Madoff trustee sues Austria banker for $19.6 billion

madoff.gi.top.jpgBernard Madoff pleaded guilty in 2009 to running the most massive Ponzi scheme in history. By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- The court-appointed trustee in the recovery of assets stolen by Bernard Madoff has accused an Austrian banker of being a key player in the Ponzi scheme, suing her for $19.6 billion.

Trustee Irving Picard filed suit Friday in U.S. Bankruptcy Court in New York against Sonja Kohn, principal shareholder of Bank Medici, along with Bank Austria and UniCredit, owners of a 25% share in Medici, and six members of Kohn's family.

"In Sonja Kohn, Madoff found a criminal soul mate, whose greed and dishonest inventiveness equaled his own," said Picard, in a prepared statement. "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 through discovery."

The suit accused Kohn of being the "mastermind" in the so-called Medici Enterprise, which served an "indispensable role in facilitating his Ponzi scheme" over a 23-year "criminal relationship."

The trustee also accused Kohn and co-conspirators of violating federal Racketeer Influenced and Corrupt Organizations Act, or RICO, which is typically used against the Mafia and other criminal organizations.

The complaint accused Kohn and her co-conspirators of a "pattern of racketeering activity comprised of, among other things, money laundering, mail and wire fraud, and financial institution fraud."

UniCredit said in an emailed statement that the company planned to defend itself "vigorously," adding that it had a no comment policy regarding pending legal matters. "Our attorneys are reviewing the matter and we will manage this through the normal course legal process," the company said.

Efforts to reach Kohn's attorney in Vienna and Bank of Austria representatives were not immediately successful.

The trustee said that more than $9 billion of the stolen money was "directly attributable" to Kohn and her enterprise.

"The total amount lost in the Ponzi scheme is approximately $19.6 billion, making these actors arguably the single most critical building block -- the sine qua non -- of the Ponzi scheme," said Timothy Pfeifer, the court-appointed counsel from the firm Baker & Hostetler, in a prepared statement.

The trustee said the Madoff and Kohn first met in New York in 1985 and from that point on, he "paid her to feed money into the Ponzi scheme." Kohn allegedly established Bank Medici in Austria for the express purpose of serving "as a mechanism to solicit investors for the Ponzi scheme," the trustee said.

The complaint alleges Kohn and her family funneled at least $62 billion through Madoff's firm and into private accounts.

The trustee has filed a wave of lawsuits ahead of the second anniversary of Madoff's arrest on Dec. 11, 2008. Madoff pleaded guilty in March, 2009 in federal court for orchestrating the largest Ponzi scheme in history. He was sentenced to 150 years and is incarcerated at a medium security federal prison in North CarolinaTo 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 17,806.76 -3.30 -0.02%
Nasdaq 4,750.80 37.83 0.80%
S&P 500 2,068.44 4.94 0.24%
Treasuries 2.31 -0.00 -0.22%
Data as of 3:32pm ET
Company Price Change % Change
Bank of America Corp... 17.14 0.02 0.15%
Apple Inc 118.35 1.88 1.62%
AT&T Inc 34.67 -0.61 -1.74%
Intel Corp 36.23 0.64 1.79%
Ford Motor Co 15.60 0.18 1.13%
Data as of 3:16pm ET

Sections

Russia's finance minister warned Monday that his country is losing up to $140 billion per year because of falling oil prices and sanctions with Western nations. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. 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.