The Irish investment fund that helped open a floodgate of European cash for Bernard Madoff’s bogus securities firm in the early 1990s agreed to pay $687 million to victims of the fraud to resolve a trustee’s lawsuit -- the biggest settlement in the case in six years.
The deal was struck with Dublin-based Thema International Fund Plc, part of a web of offshore entities linked to Austrian banker Sonja Kohn and the Benbassat family of Swiss investment professionals. They gave Madoff vital access to cash as his Ponzi scheme began to lose steam, the trustee, New York attorney Irving Picard, has said.
Details of the accord were filed on Wednesday with U.S. Bankruptcy Judge Stuart Bernstein in Manhattan. An approval hearing is scheduled for Oct. 25. The deal will boost total recoveries for victims to about $12.7 billion, or about 72 cents for every dollar in principal that was wiped out by the fraud.
Picard is still recovering large amounts of money for thousands of victims through lawsuits against funds and customers who profited from the scam. Manhattan-based Bernard L. Madoff Investment Securities LLC’s clients, including dozens of offshore feeder funds, lost $17.5 billion in principal.
The details of Thema’s case track the story of Madoff’s expansion into Europe in the early 1990s, as sources of new cash in the U.S. threatened to dry up. Kohn, who met Madoff while working in New York in the 1980s and later founded Vienna-based Bank Medici, regularly directed customers to the con man, according to court papers. In 1992, she introduced Madoff to Mario Benbassat, the Swiss family’s patriarch and founder of the Geneva-based asset manager Genevalor, Benbassat & Cie, as a possible source of new funds.
“Madoff recognized that the Benbassats could potentially direct a large influx of new money,” the trustee said in the filing. “For their part, the Benbassats came to believe that they had a ’favored’ position with Madoff.”
Benbassats Funds
The Benbassats in 1992 created their first Madoff feeder funds, Lagoon Investment Ltd. and Hermes International Fund Ltd., both based in the British Virgin Islands. Thema International’s Madoff account was opened in 1996 through a Bermuda-based custody bank, according to Picard. Bank Medici, where Kohn was chairwoman, was Thema’s investment manager, while Genevalor helped set it up and sell it. Management and advisory fees for the group of funds totaled about $221 million, according to court records.
Over 15 years, the Benbassats and their associates met with Madoff dozens of times at his offices in Manhattan, Picard said in 2015. They directed about $1.9 billion to Madoff from all over Europe, according to court records.
Thema’s lawyer, Joseph Moodhe of Debevoise & Plimpton LLP in New York, didn’t immediately return a call seeking comment on the deal.