- The Washington Times - Monday, July 6, 2009

VIENNA, Austria — U.S. and British investigators have joined Austrian prosecutors in examining possible ties between a Vienna fund manager and disgraced financier Bernard Madoff, whose multibillion-dollar Ponzi scheme wiped out thousands of investors and charities worldwide, an official said Monday.

Gerhard Jarosch, spokesman for the Vienna public prosecutor’s office, told the Associated Press his office is aiding the U.S. Justice Department and Britain’s Serious Fraud Office in separate investigations of Bank Medici AG and its chairwoman, Sonja Kohn.

Both Mrs. Kohn and Medici have been the focus of a fraud investigation in Austria since February, Mr. Jarosch said, stressing that Mrs. Kohn has not been charged with any criminal wrongdoing.

“I can confirm that we are assisting the U.S. and British authorities in their investigations of Mrs. Kohn in connection with the Madoff case,” he told the AP. Mr. Jarosch declined to elaborate or say whether Mrs. Kohn has been questioned by investigators from either country.

Mrs. Kohn, 60, has an unlisted phone number and could not be reached for comment Monday. Her attorney, Andreas Theiss, said she was not giving media interviews — but he insisted she had no personal dealings with Madoff.

“It’s just not true,” Mr. Theiss told the AP.

“There are some investors who lost money. Even the Kohn family lost a lot of money, full stop,” he said. “That wasn’t caused by Ms. Kohn. That was caused by Madoff.”

“Ms. Kohn is saying she never, ever got money from Mr. Madoff … and there’s no evidence of any payments like that,” Mr. Theiss added.

The Wall Street Journal, citing affidavits filed in the case, reported Friday that prosecutors from all three investigations believe Madoff — sentenced a week ago to 150 years in prison — paid Mrs. Kohn in exchange for allegedly funneling billions of dollars in European investments to Madoff.

In London, the Serious Fraud Office would not comment, saying it does not identify suspects until they are formally charged.

Vienna-based Bank Medici disclosed in December that it had suffered huge losses it blamed on Madoff. It said nearly all of its Herald USA Fund and Herald Luxemburg Fund — with a total volume of $2.1 billion — were invested with Madoff.

In subsequent interviews with Austrian media, Mrs. Kohn has characterized herself as one of Madoff’s biggest victims and has described Medici’s ordeal as a personal and professional tragedy.

In late May, the Financial Market Authority, Austria’s top financial supervisory authority, revoked Bank Medici’s banking license.

Mrs. Kohn, a former adviser to Austria’s economics and foreign affairs ministers and the Vienna Stock Exchange, owned 75 percent of Bank Medici, which recently changed its name to 20.20 Medici AG. Bank Austria, a unit of Italy’s UniCredit SpA, held the remaining 25 percent.

The Journal said prosecutors suspect Mrs. Kohn may have used the Medici funds as “feeders” that supplied Madoff with an estimated $3.5 billion from European investors. In return, it said, they believe she was paid more than $40 million.

But Mr. Theiss, her attorney, said Mrs. Kohn headed Medici’s supervisory board, not the bank itself.

“Her job was not to generate business,” he said. “Her job was only to control and to check and to act as a supervisor — not to work at the front.”

Carolin Treichl, a Bank Medici spokeswoman, denied the bank was involved in any wrongdoing.

“The company itself has suffered terrible damage” because of Madoff, she told the AP.

Officials have refused to release affidavits or other records relating to the case, citing the ongoing investigations and Austria’s strict privacy laws.

The Austrian newspaper Der Standard said the U.S. Justice Department was investigating roughly $32 million in payments that Bernard L. Madoff Investment Securities LLC allegedly made between 1998 and 2008 to Infovaleur Inc., a New York company the paper said is owned by Mrs. Kohn.

Prospectuses for the Medici funds now being examined by prosecutors made no mention of Madoff, Der Standard said.

That’s because they were invested in S&P 500 stocks, Mr. Theiss said, contending that Medici and Mrs. Kohn simply have been targeted by frustrated Austrian investors doing whatever they can to attempt to recover some of their losses.

“They want to put pressure on her,” he said.

A federal judge in New York rejected Madoff’s pleas for leniency and sentenced the 71-year-old on June 29 to spend the rest of his life in prison for an “extraordinarily evil” swindle that took a staggering toll on thousands of victims.

The massive Ponzi scheme run by Madoff since at least the early 1990s demolished the life savings of thousands of people, wrecked charities and shook confidence in the U.S. financial system.

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