Swiss investors seek justice in cases tied to Madoff fraud

Bernard Madoff is behind bars but the impact of his monumental financial fraud is continuing to ricochet around the world - and the scandal has not left Switzerland untouched.

Employees of at least three companies in the country have been implicated in connection with the pyramid scheme masterminded by the disgraced Wall Street financier.

Madoff, former chairman of the Nasdaq stock exchange, was sentenced last June to 150 years in jail for defrauding thousands of investors of billions of dollars through the scheme, billed as the scam of the century.

But investigators believe other many other actors are liable in the case, including those in Switzerland who marketed the fraudster’s funds.

In the latest case to emerge, Geneva cantonal justice authorities charged one of five directors of the Aurelia Finance company with money laundering in connection with the affair.

The man is alleged to have transferred millions of francs in commissions from the sale of investments with Madoff to London and Singapore. He is said to have made the transfers in the form of a donation to a member of his family.

Investigators believe he acted out of fear of being subjected to civil and criminal charges in connection with the Madoff affair.

The Auerelia director has denied wrongdoing. His lawyer, Michel Halpérin, told the Tribune de Genève newspaper that his client  transferred the money because of concerns about market “turbulence . . . but not to escape legal proceedings that had not, in any event, even started.”

Halpérin said the money was never, in fact, transferred. The lawyer lamented the slow process of the case against his client and said he believed customers of Aurelia who are claiming wrongdoing are merely trying to win a financial settlement from the process.

The accused was one of five associates at Aurelia charged by a Geneva examining magistrate on April 24 for “aggravated, disloyal management.” The financial managers are suspected of investing up to 800 million francs for at least 65 clients in Madoff funds without taking due precautions and diversifying the risks.

In the process, they pocketed substantial commissions from the investments, justice authorities say.

All five directors resigned from the Aurelia board after the charges were laid. Geneva examining magistrate Marc Tappolet subsequently froze their assets.

Among Aurelia’s clients was the Beau-Rivage hotel, which lost one million francs through the Madoff scheme.

Investors in Switzerland who lost millions from the Madoff scam have lodged complaints against other middlemen in the case, including investment companny Notz Stucki.

French song composer Jacques Revaux, credited with co-writing the hit “My Way,” among other tunes, is reported to have lost hundreds of millions of francs in investments with Madoff funds.

Madoff promised steady, high rates of return on money in good times and bad but he never actually invested the money. Instead he pocketed it using inflows from new investors to pay off older ones.

Meanwhile, UBS is under investigation for an alleged two-billion franc fraud in Luxembourg, where dozens of investors have filed for damages in another Madoff-related affair.

The case involves LuxAlpha funds sold by Switzerland’s largest bank and marketed through Luxembourg. A group of investors last March took UBS to court demanding restitution for losses suffered through the fund and the case remains ongoing.

LuxAlpha was advertised as a fund that invested largely in US real estate companies but the bank is charged with investing instead principally with Madoff funds, without alerting clients.

Dozens of investors in France have filed a legal complaint over the issue. UBS, which handed over management of LuxAlpha to Access, a French money management firm in October 2008, less than two months before Madoff was charged.

Thierry de la Villehuchet, oneof Access’s co-founders, committed suicide after learning that the Madoff fraud had led to financial ruin for many of his clients.

The other founder of the company, Patrick Littaye, was charged by French authorities earlier this month with complicity in “abuse of confidence.”

Other so-called “feeder funds” have been implicated for marketing Madoff funds around the world.

Clients of Banco Santander’s Geneva-based subsidiary, Optimal Investment Services, lost three billion euros through the Madoff scandal, believed to be the biggest single hit related to the case by a Swiss financial firm.

The Spanish bank last year set aside 500 million euros to compensate victims. But observers say it will still take months to resolve the myriad disputes related to the pyramid scheme.