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Thu, Feb 05, 2009 - Page 10 News List

Madoff scandal may affect 3 million: lawyer

‘GLOBAL RESPONSE’ A lawyer in Spain estimates the legal battle over the case will involve 300 law firms, 45,000 lawyers and 15,000 legal complaints


An alleged fraud by US broker Bernard Madoff has claimed up to 3 million victims worldwide, a Spanish law firm that has filed a US lawsuit in the name of some of the victims said on Tuesday.

The total amount of money involved in Madoff’s pyramid scheme could turn out to be much higher then the US$50 billion reported so far, the president of law firm Cremades & Calvo-Sotelo, Javier Cremades, told a Madrid news conference.

“Our calculations are that at least 3 million people were affected by the Madoff affair, 3 million people who could be directly or indirectly affected by the case,” he said.

The estimate is based on information collected from more than 30 law firms around the world that are representing the 2,900 people or institutions in 25 nations that have so far taken legal action over the scheme.

Madoff, a 70-year-old former chairman of the NASDAQ stock market, was arrested in December and charged with using billions of dollars from new investors to pay off older ones in a so-called Ponzi or pyramid scheme.

About 30 percent of those who have been touched by the affair still do not know it because their exposure is through pension funds or other indirect financial products like hedge funds, Cremades said.

Last week the law firm, which has offices in Argentina, Brazil, Colombia and Portugal as well as Spain, filed a class action lawsuit in Florida in the name of people who invested in Madoff through a fund run by Santander, Spain’s largest bank.

Shortly after the lawsuit was filed, Santander offered to reimburse the 1.38 billion euros (US$1.8 billion) that its private banking clients lost by investing in the company’s Optimal fund — the first offer of its kind by a bank involved in the case.

Santander, the largest bank in the eurozone by market capitalization, said in December that it had a total of 2.33 billion euros in client funds exposed to Madoff. It has so far not offered to reimburse its institutional investors.

Cremades estimated that the legal battle over the Madoff affair will involve 300 law firms and more than 45,000 lawyers and some 15,000 formal legal complaints.

He said he would like to organize a “global response” to the scandal that is coordinated by several law firms around the world because “people want to recover their money.”

In Latin America there are more than 1,500 people affected, mainly in Argentina, Brazil, Bolivia, Chile, Colombia, Mexico, Peru and Uruguay, Cremades said.

The remaining victims were mainly in Austria, Britain, France, Germany, Ireland, Israel, Italy, Luxembourg, South Africa, Switzerland, Taiwan and the US, he said.

Fortis Bank, Barclays, Caisse de Depots et Consignations, Fairfield Greenwich Group and Credit Swiss were among the institutions affected by the pyramid scheme, Cremades & Calvo-Sotelo said.

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