Dec. 16 (Bloomberg) -- Bank Medici AG, the Austrian private bank that is 75 percent owned by Chairman Sonja Kohn, said two funds invested $2.1 billion with arrested money manager Bernard Madoff.

Bank Medici’s Herald USA and Herald Luxemburg funds put all their money with Bernard L. Madoff Investment Securities, Chief Executive Officer Peter Scheithauer said today in a telephone interview. The Vienna-based bank is 25 percent owned by Milan- based UniCredit SpA.

Madoff, 70, was arrested Dec. 11 and charged with running what he told his sons was a long-running Ponzi scheme that advised rich people, hedge funds and institutions. Clients face losses that Madoff said were as high as $50 billion, according to the U.S. Securities and Exchange Commission. Bank Medici joins Fairfield Greenwich Group, Tremont Capital Management, Kingate Management Ltd. and Banco Santander SA among firms with more than $2 billion at risk in Madoff investments.

Bank Medici, founded in 1994 by Kohn, 60, focuses on asset management, investment banking and international private banking. Kohn wrote the book “Alternative Investments” and founded New York-based Eurovaleur Inc. She has been an adviser to the Vienna Stock Exchange, where she negotiated partnerships with Dubai Financial Markets and the Shanghai Stock Exchange, according to Medici’s Web site.

The two Medici Bank funds stopped redemptions on Dec. 11, Scheithauer said. The funds were sold to institutional investors, with 93 percent from around the world and 7 percent from Austria.

To contact the reporters on this story: Matthias Wabl at mwabl@bloomberg.net; Zoe Schneeweiss in Vienna at zschneeweiss@bloomberg.net.

Last Updated: December 16, 2008 10:38 EST