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Madoff trustee goes after 7 global banks for more than $1 billion

The court-appointed trustee seeking to recoup money for victims of Bernard Madoff on Wednesday said it filed complaints against seven global financial institutions in hopes of recovering more than $1 billion.

Irving Picard, the trustee for the liquidation of Bernard L. Madoff Investment Securities, filed complaints against Citigroup’s Citibank; Natixis; Fortis; ABN AMRO Bank; Banco Bilbao Vizcaya Argentaria; Nomura; and Merrill Lynch, now owned by Bank of America Corp.

None of the banks was available for immediate comment.

The complaints were filed under seal in U.S. Bankruptcy Court for the Southern District of New York.

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The financial institutions received transfers of money from Madoff’s investment firm through numerous feeder funds when they either knew or should have known of Madoff’s fraud, according to a statement by the trustee.

“The complaints allege that the banks enabled the Madoff Ponzi scheme by opening a spigot of new money into the Madoff feeder fund network, by creating and offering derivative investment products linked to various Madoff feeder funds, including the Fairfield Greenwich, Kingate and Tremont families of funds,” the trustee said in a statement.

Picard is also trying to recover money for investors with a claim for $2.5 billion filed in Zurich, Switzerland, against Swiss bank UBS.

Madoff, 72, is serving a 150-year prison sentence after admitting to orchestrating a worldwide fraud of about $65 billion.

So far Picard and his team of lawyers have recovered about $2.6 billion.

The money will be distributed to victims of the decades-long multibillion-dollar fraud that shook confidence in securities regulators when it was revealed two years ago and Bernard L. Madoff Investment Securities collapsed.

The trustee is seeking $425 million of the more than $1 billion from Citi. About $300 million of that is connected to a credit facility Citibank made available to a Madoff feeder fund, Rye Select Broad Market Prime Fund. The remaining $125 million is related to a swap transaction linked to another Madoff feeder fund, Fairfield Sentry Limited.

“Armed with considerable non-public information about Madoff, Citi either knew or should have known that Madoff’s investment advisory business was a fake, and that the funds Citi received from these two Madoff feeder funds came from Madoff’s fraudulent activities,” Picard said in a statement.

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In the action against Natixis, the trustee is seeking to recover at least $400 million the bank received in connection with structured products.

The trustee is also seeking to recover $230 million from Fortis Prime Fund Solutions Bank in connection with swap transactions; $270 million from ABN AMRO; and $45 million from Banco Bilbao Vizcaya Argentaria in connection with structured notes issued by BBVA using Madoff feeder funds.


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