UPDATE 3-Austrian banker Kohn key to Madoff crimes-trustee

* Kohn masterminded a vast scheme for Madoff-trustee

* Trustee seeks $19.6 billion from Kohn, banks, others
(Adds complaint details on Kohn and family)

By Grant McCool

NEW YORK, Dec 10 (BestGrowthStock) – Austrian banker Sonja Kohn was
a “criminal soul mate” of Bernard Madoff for 23 years, running
an international network of banks and funds to help perpetrate
the biggest fraud in financial history, a court-appointed
trustee for the Madoff firm said on Friday.

Irving Picard, the lawyer recovering money for the victims
of Madoff’s decades-long multibillion dollar fraud, sued Kohn
and the bank she founded, Bank Medici, as well as Italy’s
UniCredit (CRID.MI: ) and its unit, Bank Austria, and 53 other
defendants.

The complaint in U.S. Bankruptcy Court in New York said the
litigation seeks to recover $19.6 billion in damages. Since
Madoff’s arrest two years ago, Kohn has not traveled to New
York, where she first met Madoff in 1985 and they became
business partners, the 161-page complaint said.

Separate lawyers representing Kohn and Bank Medici, now
known as 2020 Medici, were not available to comment.

Picard’s complaint said that Kohn’s denial to Austrian
authorities that she was close to Madoff, was false.

“In Sonja Kohn, Madoff found a criminal soul mate, whose
greed and dishonest inventiveness equaled his own,” Picard said
in a statement. Her husband, her mother and son and daughter
were also named as defendants in the lawsuit.

Some of them invoked their Fifth Amendment Rights to remain
silent hundreds of times when they were deposed by the trustee,
the court document said.

It said even after Madoff’s arrest, Kohn laundered hundreds
of thousands of dollars through various sham entities. “This
dissipation is ongoing,” Picard claimed.

The liquidator of BLMIS has filed a blizzard of lawsuits in
recent weeks to meet a mid-December legal deadline, the second
anniversary of Madoff’s arrest. [ID:nN09162653]

Madoff, 72, is serving a 150-year prison sentence after
pleading guilty in March 2009 to orchestrating a massive Ponzi
scheme in which early investors were paid with the money of new
clients and almost no actual trading took place.

“THE MEDICI ENTERPRISE”

The complaint dubbed Kohn’s part “The Medici Enterprise”
and a “deliberately Byzantine structure,” and said elements had
been “purposefully concealed” from the trustee, United States
and other law enforcement authorities.

“We believe that even more information regarding the full
scope of this criminal enterprise will be revealed,” Picard
said.

Separately on Friday, Picard said that his team of lawyers
at Baker & Hostetler LLP had reached settlements totaling $80
million with an undisclosed number of charities and nonprofit
organizations that withdrew more than they deposited in
Madoff’s firm.

Overall, about $2.6 billion has been recovered. The trustee
and his lawyers have sued individual investors, hedge funds and
banks for amounts totaling about $51 billion. They said on
Friday that the estimate of the total lost in the Ponzi scheme
is approximately $19.6 billion.

Previous estimates of the amount of money that flowed
through Bernard L. Madoff Investment Securities LLC (BLMIS)
over the decades have varied from as much as $65 billion by
U.S. prosecutors to $21.2 billion by the trustee.

KOHN’S CENTRAL ROLE

The complaint claimed that $9.1 billion of stolen money was
directly attributable to Kohn, her relatives and a labyrinth of
feeder funds and banks in Austria, Italy and Gibraltar. It said
Kohn presented herself to potential investors with BLMIS as
Madoff’s close friend.

“Kohn was paid by both Madoff and by those who sought to
invest with Madoff” and lived a luxurious lifestyle, staying
regularly at Claridge’s hotel in London, the complaint said.

Timothy Pfeifer, counsel at Baker & Hostetler LLP, said
that those accused in the Kohn lawsuit were “arguably the
single most critical building block” for Madoff’s massive
fraud.

The amount sought by Picard in the Kohn lawsuit was the
largest yet in his bid to collect Madoff money to repay
thousands of swindled investors who have made claims in the
same court. See Factbox [ID:nN09225683]

It was also the first to cite racketeering claims.

The complaint against Kohn said that Madoff kept records of
the BLMIS accounts for which he secretly paid Kohn and may have
tried to destroy them before he was caught. Madoff secretly
paid Kohn at least $62 million in secret kickbacks for bringing
investors to BLMIS, the complaint said.

Kohn and the Medici Enterprise fed almost $4 billion
through so-called feeder funds into BLMIS, including Primeo
Fund, Thema International, Herald Fund, Alpha Prime Fund,
Senator Fund, and Herald (Lux), the complaint said.

It said they had nominally different operating structures
or regulatory regimes, but were functionally identical, as each
was invested exclusively through BLMIS.

The case is Irving Picard v Sonja Kohn et al, U.S.
Bankruptcy Court for the Southern District of New York, No.
10-5411.
(Additional reporting by Sylvia Westall, editing by Dave
Zimmerman)

UPDATE 3-Austrian banker Kohn key to Madoff crimes-trustee