Medici's Kohn Claims No Personal Payments from Madoff Bloomberg

Published on 3 Jul 2009 under category: article

By Dan Hyde, Consultant at Cubism Law

As published in Bloomberg July 3^rd 2009: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aMqV5mOwRpgY

July 3 (Bloomberg) -- Bank Medici AG Chairman Sonja Kohn didn’t receive any personal payments from Bernard Madoff, her lawyer Andreas Theiss said.

Kohn, 60, is being investigated in connection with Madoff in the U.S., the U.K. and Austria, Theiss said today in a telephone interview from Vienna. Kohn said in January that she was a victim of Madoff’s fraud.

Bank Medici, which last month changed its name to 20.20 Medici AG, managed and distributed three funds that put $3.2 billion with Bernard L. Madoff Investment Securities LLC. Medici, 75 percent owned by Kohn, with UniCredit SpA holding the rest, was stripped of its banking license in May.

“Kohn has no way of knowing what transactions were carried out at companies, in which she has holdings,” Theiss said.

Austrian authorities are probing Kohn, who hasn’t been charged with any wrongdoing, on fraud and breach of trust, Michaela Schnell, a spokeswoman for the Vienna prosecutor’s office, said in a telephone call from Vienna today.

Austria in May agreed to a request by the U.K.’s Serious Fraud Office for assistance in connection with an inquiry into alleged money laundering and false financial documents, Gerhard Jarosch, a spokesman for the Vienna prosecutors’ office, said last week.

“Austrian authorities are assisting the U.K.’s Serious Fraud Office and the U.S. Justice Department in their investigations,” said Jarosch.

The Justice Department is investigating payments of about $32 million that Bernard L. Madoff Investment Securities LLC made to New York-based Infovaleur Inc., the Standard reported. Kohn owns Infovaleur, the newspaper said.

Madoff Payments

“We do not confirm the identity of suspects unless they have been charged and have appeared in court,” SFO spokeswoman Jina Roe said in an e-mailed statement.

Madoff sent $526,000 in payments for Kohn to Cohmad Securities Corp., a New York broker-dealer he co-owned, according to a Feb. 11 complaint by Massachusetts securities regulators against Cohmad. Kohn hasn’t received any of the funds claimed in the regulators’ lawsuit, her lawyer Isaac M. Neuberger said in an e-mailed statement at the time.

While Medici has yet to file its financial report for 2008, it may have a loss of 590,000 euros ($825,000), Der Standard reported on June 4.

Fees and Commissions

Bank Medici had net income of 541,000 euros in 2007 and employed about 15 people. It took in 9.7 million euros in fees and commissions for finding investors for funds, and paid 7.1 million euros to other companies that referred investors for its funds, according to public filings.

The bank has said that its Herald USA Segregated Portfolio One and Herald (Lux) US Absolute Return funds invested all of their $2.1 billion with Madoff. The bank also took over managing a third fund, Thema International Fund Plc based in Dublin, at the end of 2006, according to Medici.

“Claiming ignorance is standard fare in this sort of case,” said Dan Hyde at London-based Cubism Law in an e-mail. “But does it stand up to scrutiny?”

Prosecutors will be looking into the bank’s relationship with Madoff to see whether it was “a standard arm’s length professional one.” If she thought Madoff was honest “what supported that belief,” he said. “What due diligence did she do? What did she know, and what should she have known?”