Madoff Investors Outside U.S. Settle With Banks for $15.5 Billion

Photographer: Jin Lee/Bloomberg

Bernard Madoff, leaves federal court in New York. Close

Bernard Madoff, leaves federal court in New York.

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Photographer: Jin Lee/Bloomberg

Bernard Madoff, leaves federal court in New York.

Banks agreed to pay about $15.5 billion to settle claims by about 720,000 investors outside the U.S. who lost money in Bernard Madoff’s fraud, said the chairman of a group of law firms representing victims.

After the findings were disclosed publicly, some lawyers representing Madoff victims, including members of the lawyer’s group, said they were surprised by the results or questioned the accuracy of the data.

“There’s no doubt that the banks are compensating their clients,” Javier Cremades, chairman of Cremades & Calvo-Sotelo and president of the law firm network, said yesterday at a press conference in New York while discussing the results of a survey of the group’s 60 member firms.

Cremades’s Madrid-based law firm last year helped set up the Global Alliance of Law Firms that took on Madoff-related complaints. The estimated $15.5 billion in settlements was first reported by the New York Times.

The total amount of the settlements reported by Cremades, between non-U.S. investors and a group of mostly unnamed banks, is 10 times the total recovered for investors by the trustee liquidating Madoff’s defunct firm in a U.S. bankruptcy court.

“The number is shockingly large compared to anything we’ve seen on this side of the Atlantic,” Charles Grice, managing director of CRI Compliance, a New York based firm that consults with banks, said yesterday in a phone interview. “I’m just afraid it isn’t true.”

Victims Database

Grice said his firm, a member of the Global Alliance, has worked to assemble a database of Madoff victims. The firm interviewed 220 U.S. victims -- mostly families -- and 195 European victims, including families and trusts, he said.

Grice said he believes the data reported by Cremades comes from a four-question survey e-mailed to Global Alliance members last month.

“No lawyer I know was willing to fill this thing out because of confidentiality,” Grice said.

Grice said he and other Global Alliance members he’s spoken to since the data was made public are “very nervous” that the figures aren’t accurate.

Cremades didn’t return a voice-mail message left on his cell phone after regular business hours yesterday.

Cremades & Calvo-Sotelo was one of the founders of a network of law firms from countries including France, the U.S., the U.K., Spain and Switzerland that agreed to pool resources in Madoff-fraud cases and act as a “coordinated pressure group.”

Custodian Duties

European banks have been sued in France, Ireland and Luxembourg by investors seeking repayment of losses from Madoff funds. UBS AG and HSBC Holdings Plc, Europe’s largest bank, face more than 100 investor complaints accusing them of failing in their duties as custodians for European Union-regulated funds.

Banco Santander SA, Spain’s biggest lender, last year offered compensation in the form of preferred shares paying 2 percent interest in an attempt to repair relationships with private banking clients who lost 1.38 billion euros ($1.7 billion) on Madoff-linked products that Santander sold them.

The National Bank of Kuwait last year paid $50 million to compensate its clients who lost money to Madoff, the Financial Times reported.

“We have never, ever heard of these settlements,” Edouard Fremault, a senior analyst at Deminor International, which advises about 1,200 investors in Europe who lost money invested with Madoff, said in a phone interview. “We are a bit skeptical. I am certain that there’s been no deal in France, Belgium, Luxembourg or the Netherlands.”

French Litigation

French lawyers Jean-Pierre Martel and Olivier Metzner, who are involved in separate Madoff-related litigation, said they haven’t been informed of any settlements.

“No idea, but either way, my clients are not included,” said Martel, who represents French investors suing Zurich-based UBS in Paris.

“I haven’t heard of that,” said Metzner, who represents an unidentified French investor with a criminal complaint in Paris regarding the fate of his 2 million-euro ($2.47 million) investment.

Lex Thielen, a Luxembourg lawyer who is part of the law firm coalition, said in an e-mail yesterday that he was travelling and not aware of the settlement.

Irving Picard, the New York lawyer who was appointed as the trustee overseeing the Madoff bankruptcy in New York, declined to comment on Cremades’s claims.

To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net; Charles Penty in Madrid at cpenty@bloomberg.net.

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