Madoff Securities v Stephen Raven & Ors

Madoff Securities International Ltd v (1) Stephen Ernest John Raven; (2) Leon Flax; (3) Christopher Dale; (4) Philip John Toop; (5) Malcolm Stevenson; (6) Peter Madoff; (7) Mark Madoff; (8) Andrew Madoff; (9) Sonja Kohn; (10) Erko Incorporated; and (11) Tecno Development & Research Ltd

June, 30 days, Commercial Court

For the claimant MSIL:

Blackstone Chambers’ Pushpinder Saini QC leading Robert Weekes, Tom Richards and Shane Sibbel, all of the same set, instructed by Taylor Wessing partners David de Ferrars and Shane Gleghorn

For the defendant (1) Stephen Raven:

Chancery Lane’s Nicholas Yell, instructed by EMW LLP’s Trevor Jenkin and Jodi Tierney

For the defendant (2) Leon Flax:

Serle Court’s Philip Jones QC and Jonathan Adkin, instructed by Radcliffes LeBrasseur’s Nigel West and Julie Cheater

The defendants (3) Christopher Dale; (4) Philip John Toop; (5) Malcolm Stevenson; (6) Peter Madoff will all appear as litigants in person

For the defendant (7) Andrew Madoff and (8) the estate of Mark Madoff:

One Essex Court’s Clare Reffin, instructed by Pitmans partner David Archer

For the defendants (9) Sonja Kohn; (10) Erko Incorporated; and (11) Tecno:

4 Stone Buildings’ Jonathan Crow QC, instructed by Asserson Law partner Trevor Asserson.

Bernard Madoff
Bernard Madoff

The collapse of Bernard L Madoff Investment Securities (BLMIS) in Manhattan sent shockwaves through the world’s financial centres.

This mammoth Ponzi scheme had been founded and run by the Bernard Madoff, a one-time chairman of Nasdaq. In December 2008 Madoff confessed to one of the biggest financial frauds in history.

In June the High Court will examine the relationship between the New York operations and UK-incorporated Madoff 
Securities International Limited (MSIL).

The directors of MSIL, including former chief executive Stephen Raven and Madoff’s son Andrew and brother Peter, face claims of more than £75m for an array of breaches of duty in connection with the fraud.

When Madoff pleaded guilty to running the Ponzi scheme in 2009 he acknowledged that the US operations had routinely sent investor money to London. This funded his family expenses or, instead, the money was sent to New York to fund the rest of the firm’s operations.

It is claimed that $600m was moved to London and $310m sent back to the US where it was falsely recorded as commissions.

Also being pursued is Sonja Kohn, an Austrian national who lived and conducted her affairs through a series of corporate vehicles. Kohn and her companies received nearly $50m from Madoff and MSIL, which were proceeds of the fraud. BLMIS made the relevant payments through MSIL. Kohn described the payments as ‘commission’ but the invoices rendered by her companies referred instead to such things as research, analysis and consulting. MSIL’s case was that the payments were illegitimate and that the invoices were shams.

In November 2011 the High Court granted the claimant a proprietary injunction against Kohn and said it was also entitled to a freezing injunction and related relief including disclosure orders against Kohn and her company.

Irving H Picard, a lawyer appointed by the New York court to represent victims of the fraud, is leading the case against the UK directors.

This case will be followed closely by litigators and the press.