Citigroup accused of ignoring warning signs of Bernie Madoff’s fraud

24 February 2011

Citigroup was aware of Bernard Madoff’s Ponzi scheme but ignored the warning signs betraying his fraudulent behaviour, a legal filing has claimed.

According to Irving Picard, the trustee responsible for the liquidation of Madoff’s estate, a Citigroup executive was aware that a trading strategy adopted by Bernard L Madoff Investment Securities (BLMS) was not capable of generating the promised returns.

Picard alleged that an executive contacted a financial analyst to discuss the fraud, the trustee said.

The complaint, which was quoted by Bloomberg, said: “Citi knew, and was on notice of, irregularities and problems concerning the trades reported by BLMS, and strategically chose to ignore these concerns in order to continue to enrich themselves.”

However, in a statement the bank said: “Citi will vigorously defend against these claims by the trustee as they are entirely without merit and completely false.”

Meanwhile, another filing from Irving Picard claimed that the family of David M Becker, a Securities and Exchange Commission (SEC) lawyer, earned $1.5 million from investments made with Madoff’s firm.

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