Former Bank Medici AG chairwoman Sonja Kohn and directors of Bernard Madoff’s European operations, including his sons Mark and Andrew, don’t owe anything to liquidators seeking to recoup losses to repay the conman’s victims, a judge ruled.
Judge Andrew Popplewell dismissed a lawsuit yesterday filed by liquidators of Madoff Securities International Ltd., based in London. They were seeking to recover about $50 million, including payments for a luxury yacht and an Aston Martin sports car.
Mark Madoff, who killed himself in 2010, and Andrew Madoff were defendants in the six week trial. The judge cleared them of any breach of duty. Peter, Bernard Madoff’s brother, was dropped as a defendant in the trial and provided evidence via video link from a U.S. prison. He had pleaded guilty to aiding the fraud.
“The stress imposed on them and their families must have been immense, just as it must also have been on Andrew Madoff, seriously ill with cancer, and his brothers families,” Popplewell said of the defendants in the U.K. case. “Their honesty and integrity has been vindicated.”
The exoneration of the U.K. defendants comes as five former employees of the elder Madoff are on trial in New York federal court for allegedly aiding his $17 billion Ponzi scheme. They claim they were kept in the dark about the fraud and duped by the fraud mastermind’s personality and reputation.
Kohn and former SG Warburg executive Stephen Raven, both long-time associates of Madoff, also gave evidence in the London case, which ended in July. Lawyers for both Kohn and Raven said they welcome yesterday’s ruling in separate e-mailed statements.
“I cannot forbear from recording the commendable dignity and restraint which I have observed in each of” the defendants in the trial, Popplewell said in the ruling. “Madoff’s fraud itself blighted their lives and tainted their good names simply by association, quite apart from the financial losses suffered by some from investments in the Ponzi scheme.”
Madoff, 75, is serving a 150-year sentence for what prosecutors said was the biggest Ponzi scheme in U.S. history. Liquidators of his companies have sued banks, feeder funds, and Madoff’s employees to recover some of the $17 billion lost by victims.
“Mark and Andrew Madoff were honest directors who knew nothing of their father’s fraud,” said David Archer Partner, a lawyer for Andrew Madoff and Mark Madoff’s estate with Pitmans LLP. “Andrew Madoff and his family are pleased that, after a thorough review of all the facts, justice has been served.”
Madoff’s European operations were owned almost exclusively by Madoff and served as his proprietary trading unit. More than $910 million was transferred between the London unit and Bernard L. Madoff Investment Securities LLC in New York from the time of the office’s founding in 1983 until firm’s collapse in December 2008, the liquidators said when they filed the lawsuit in 2010.
“We are obviously extremely disappointed with the judgment handed down today as claims made against the defendants were serious and there was undoubtedly a case to answer,” Simon Rothschild, a spokesman for Grant Thornton LLP, the liquidators winding down Madoff’s U.K. unit, said yesterday in an e-mailed statement.
The case is Madoff Securities International Ltd. v. Raven, Case no. 10-1468, High Court of Justice, Queen’s Bench Division.