NY Firm To Probe Austrian Banks' Madoff Dealings

NY Firm To Probe Austrian Banks' Madoff Dealings - 1/21/2009 , Class Action News, Class Action, Securities News, shareholder class action, claim, litigation, securities action, common stock'>

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NY Firm To Probe Austrian Banks' Madoff Dealings
Morgan Bettex

Securities Law 360. January 21, 2009
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EXCERPT: As the scope of disgraced fund manager Bernard L. Madoff's alleged $50 billion Ponzi scheme emerges, a New York law firm has launched an investigation into whether two major Austrian banks used funds to fraudulently funnel billions of dollars into the scheme. Working internationally with nearly a dozen individuals, partnerships and companies whose funds with Bank Austria and Bank Medici may have been improperly channeled to Madoff's firm, New York-based Zwerling Schachter & Zwerling LLP is investigating the appropriate legal approaches and remedies that may be available to its clients, the firm announced Wednesday. Bank Austria owns 25 percent of Bank Medici, and both banks are said to be among the biggest victims of Madoff's alleged scheme, the International Herald Tribune reported last week. During the first week in January, Austrian financial watchdog the Finanzmarktaufsicht put Bank Medici, the small merchant bank that sold $3.3 billion worth of funds exposed to Madoff's scheme, under supervision of a state commissioner. Last Thursday, Austria's central bank said it had initiated a probe into Bank Medici, according to Reuters. Bank Medici's former chairwoman, Sonja Kohn, a long-time Madoff acquaintance, had recruited many European clients for the private bank, the Wall Street Journal reported in December. The bank said its Herald US, Herald Luxemburg and Thema International funds invested almost all the money they raised with Madoff. Their combined losses are among the biggest European exposure to Madoff's alleged fraud, Reuters said. In addition to those funds, Zwerling Schachter is also taking a closer look at financial funds that include Pioneer, Primeo Select and Primeo Executive funds. “The auditors of these funds allowed this financial disaster to occur, and we think they have responsibility along with the banks,” said Robert S. Schachter of Zwerling Schachter.

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