December 6, 2010 / 1:49 AM / 9 years ago

Madoff trustee sues HSBC for $9 bln in U.S. court

* Asserts HSBC enabled international Madoff network

* Lawsuit also includes feeder funds, management firms

By Grant McCool

NEW YORK, Dec 5 (Reuters) - The lawyer searching the globe to recover money for defrauded investors of convicted swindler Bernard Madoff sued HSBC for $9 billion on Sunday, accusing the bank of enabling the largest financial fraud in history.

Court-appointed trustee Irving Picard accused HSBC of aiding the Madoff fraud “through the creation, marketing and support of an international network of a dozen feeder funds based in Europe, the Caribbean, and Central America,” a statement by Picard said.

It said the lawsuit in U.S. Bankruptcy Court in New York identifies “feeder funds”, management companies and service providers of those funds.

A spokesman for HSBC could not immediately be reached for comment.

Among the directors and managers Picard sued were Sonja Kohn, Genevalor, Mario Benbassat and his sons, Albert and Stephane, Bank Medici and UniCredit , the statement said.

Madoff, 72, is serving a 150-year prison sentence after pleading guilty in March 2009 to running a decades long investment fraud of up to $65 billion, an unprecedented scheme that shook investor confidence in market regulators.

The trustee, appointed to recoup investor money lost to Madoff, on Thursday sued JPMorgan Chase & Co for $6.4 billion, accusing his primary banker of ignoring warning signs of his massive fraud.

“Had HSBC and the defendants reacted appropriately to warnings and other obvious badges of fraud outlined in the complaint, the Madoff Ponzi scheme would have collapsed years, billions of dollars, and countless victims sooner,” Picard said in a statement.

A Ponzi scheme is one in which early investors are paid with the money of new clients.

Picard has filed hundreds of lawsuits in the past week in addition to other lawsuits over the past year. The trustee must file such lawsuits to recover money by the two-year anniversary of Madoff’s arrest and his firm’s demise on Dec. 11, 2008.

So far, Picard’s team says it has recovered $1.5 billion.

(Editing by Muralikumar Anantharaman)

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