June 22 (Bloomberg) -- The court-appointed bankruptcy trustee for Bernard L. Madoff Investment Securities LLC sued Cohmad Securities Corp., claiming the firm had a “symbiotic” relationship with Madoff and earned hundreds of millions of dollars from his fraud.

The trustee, Irving Picard, today sued Cohmad, its founder Maurice “Sonny” Cohn and more than two dozen individuals and trusts in U.S. Bankruptcy Court in New York. Picard claims that up to 90 percent of Cohmad’s income came from referring clients to Madoff’s alleged $65 billion Ponzi scheme.

“Cohmad’s primary business was directed towards helping BLMIS recruit an ever-expanding list of high-net-worth clients into the Ponzi scheme, and ultimately Cohmad and its registered representatives diverted several billion dollars to Madoff,” Picard claimed in the complaint.

The trustee seeks to recover more than $100 million for Madoff’s victims, money paid to Cohmad in the six years before Madoff’s firm declared bankruptcy. Madoff, who pleaded guilty to 11 felony counts in March, is awaiting sentencing.

Clifford Thau, a lawyer for Cohmad and Cohn, didn’t immediately return a call seeking comment.

The suit comes as the U.S. Securities and Exchange Commission today also sued Cohmad, Cohn and others connected to the firm.

According to Picard, Cohmad, a New York firm whose name combines “Cohn” and “Madoff,” was founded in 1985 by Madoff and Cohn, Madoff’s friend and former neighbor.

Shared Offices

Cohmad shared offices with Madoff’s firm and steered investors’ money into his fraudulent scheme for more than two decades, according to Picard. Cohmad, Cohen, other Cohmad officials and family members made “hundreds of millions of dollars” from Madoff investors, the trustee claimed.

Picard said Madoff avoided contact with most investors, “wrapping himself in a Wizard of Oz-like aura” that made the firm seem even more attractive. Cohmad officials knew or should have known Madoff’s claimed investments were fraudulent, he claimed.

Cohmad was paid based on the amount of money entrusted to Madoff by clients it referred. Cohmad was not paid a portion of the phony profits or net balances that Madoff’s firm showed on clients’ account statements, Picard said.

The case is Picard v. Cohmad Securities Corp., 09-AP-1305, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.

Last Updated: June 22, 2009 16:46 EDT