Bloomberg News

Primeo Fund to Take Madoff Trustee Suit to District Court

June 03, 2011

(Updates with Picard suit in second paragraph.)

June 3 (Bloomberg) -- Primeo Fund, sued along with HSBC Holdings Plc by the trustee liquidating Bernard Madoff’s firm, will ask a district judge to remove the case from bankruptcy court.

Trustee Irving Picard sued HSBC and a dozen so-called feeder funds including Primeo for $9 billion in December, saying they should have known of the fraud. Primeo, based in the Cayman Islands, will follow HSBC, Europe’s biggest lender, in asking a higher court to review Picard’s claims against it, according to a court filing yesterday.

Primeo, which is being liquidated, was a fund tied to Bank Medici AG and its founder Sonja Kohn that invested in Madoff’s firm and other feeders such as Alpha Prime, according to Picard’s suit. Primeo took $145 million, mostly its principal, out of the Madoff firm in the six years before the 2008 bankruptcy, which Picard is seeking to recover, he said in the suit. Its profit was a scant $27,942, according to Picard.

The trustee put total six-year withdrawals by funds he named in the HSBC suit at $2 billion.

HSBC has asked U.S. District Judge Jed Rakoff in New York to dismiss Picard’s suit, saying it didn’t know of the fraud and lost $1 billion of its own money investing in funds that in turn put money with Madoff.

Madoff is serving a 150-year sentence in federal prison in North Carolina.

Amanda Remus, a Picard spokeswoman, declined to comment.

The HSBC appeal is Irving H. Picard v. HSBC Bank Plc, 11- cv-0763, U.S. District Court, Southern District of New York (Manhattan).

--Editors: Stephen Farr, Glenn Holdcraft

To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net


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