Receiver: Citi Knew Madoff Was Up To No Good

Feb 23 2011 | 6:39am ET

A meeting with the whistleblower in the Bernard Madoff case convinced one top Citigroup executive that the Ponzi schemer was a fraud, a newly-unsealed lawsuit alleges. But as with most of Harry Markopolos' warnings, it was eventually ignored, court-appointed receiver Irving Picard said.

Citibank "knew, and was on notice of, irregularities and problems concerning the trades reported by BLMIS, and strategically chose to ignore these concerns in order to continue to enrich themselves," Picard alleged in the lawsuit, filed in December but only unsealed recently.

In particular, an unidentified Citi executive "concluded" that Madoff feeder fund Fairfield Greenwich Group's returns could not have been produced by Madoff's supposed strategy by June 2007, a year-and-a-half before the $65 billion Ponzi scheme collapsed. The executive even remained in touch with Markopolos, who for a decade sought to convince regulators and others that something was afoot at Madoff's firm.

Citi did eventually move on the "red flag information," but not until March of 2008, when it began to end its exposure to Madoff, Picard said. Citi called the claims against it "entirely without merit and completely false."

Picard is seeking $475 million from the bank.


In Depth

Royalties: The Alternative Assets of the Music Industry

Jul 8 2016 | 7:01pm ET

Recent market volatility has investors seeking greater insight into alternative...

Lifestyle

Vortic: Making Great American Watches Again

Jul 25 2016 | 6:29pm ET

If you are compelled by stories of entrepreneurial vision & drive, or simply...

Guest Contributor

MPI: Like Stellar Returns? Better Understand the Risks First

Jul 22 2016 | 8:44pm ET

When the press reports extraordinarily strong relative or risk-adjusted returns...