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Long IslandCrime

Bernard Madoff civil case kicks off in Britain this week

Peter Madoff, the imprisoned brother of Ponzi schemer Bernard Madoff, is expected to appear as headline witness -- via video link -- in a London courtroom for what is the first major civil trial to come out of the massive Wall Street fraud.

The case, which is scheduled to begin Wednesday in London's historic High Court, involves attempts by British bankruptcy experts -- known as liquidators -- to recoup millions of dollars from a number of Bernard Madoff's associates. The liquidators, similar to bankruptcy trustees in the United States, represent the now-defunct British company known as Madoff Securities International Limited (MSIL).

Among those being sued is Austrian banker Sonja Kohn, who headed Bank Medici and other European enterprises, and who bankruptcy officials said introduced numerous investors to Madoff during the years when he secretly ran the estimated $19.7 billion fraud.

Court papers filed in London show that the liquidators of MSIL are alleging that Kohn, through a number of her companies, received tens of millions of dollars from Madoff in the form of secret kickbacks for introducing customers to him. The payments were allegedly disguised on invoices as research fees, court records state.

In the London case, Kohn isn't accused of actually taking part in Madoff's fraud. Her attorneys contend that she did provide investment research for Madoff. But Kohn has stated, in her written statement to the British court, that the payments "were not primarily for research, but were commissions for introductions made," according to court records.

"The false description on the invoices over many years cries out for a proper explanation from Mrs. Kohn," High Court justice Julian Flaux said in a November 2011 ruling in the case.

Legal sources said that Kohn is expected to testify in the London case the week of July 15. Under the British legal system, since Kohn earlier gave a written statement in the case, her time on the witness stand will be for cross-examination, the sources said.

Peter Madoff, 67, formerly of Old Westbury, is serving a 10-year federal prison sentence in Estill federal correction institution in South Carolina, after pleading guilty in January to charges he falsified business records of the Madoff operation in New York. His brother is serving a 150-year federal prison term in North Carolina.

It is expected that Peter Madoff will be asked during the British trial what he knew of the way the London operation was run and what dealings it may have had with Kohn.

John Wing, the New York defense attorney for Peter Madoff, said Friday that his client had earlier settled claims against him by the British liquidators. Wing said that while Madoff agreed to answer questions in the British case, he also reserved the right to invoke his privilege against self-incrimination.

It is expected that the London trial will last until the end of July. The court is likely to hand down a decision on the issue of damages in early fall, sources said.

Irving Picard, the American trustee in the Madoff bankruptcy case, is not a party in the London case. Picard has a pending civil racketeering lawsuit in New York against Kohn, her family members and various companies, alleging she exploited her friendship with Madoff to feed over $9.1 billion from investors into the scheme. Picard has alleged that Kohn profited from Madoff's dealings.


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