Credit Suisse discouraged Madoff investments
NEW YORK - Credit Suisse Group AG, whose clients lost almost $1 billion in Bernard Madoff's alleged swindle, urged customers more than eight years ago to withdraw cash from his firm because the bank couldn't determine how he made money, said three people familiar with the matter.
Oswald Gruebel, who headed the private-banking unit of Switzerland's number two lender at the time, made the recommendation after meeting Madoff in New York in June 2000, the people said, speaking anonymously because the details were private. Credit Suisse customers proceeded to redeem about $250 million from Madoff-run funds, half the total held at the time by the bank's clients, the people said.
Credit Suisse, based in Zurich, risked alienating clients who were reaping annual returns from Madoff of about 11 percent a year, said two of the people at the meeting, which included executives from Fairfield Greenwich Group, a so-called feeder fund for Madoff. The bank couldn't force clients to pull out their money.
"Some investors allowed greed to overrule the advice of their advisers," said Ron Geffner, a lawyer at New York-based Sadis & Goldberg LLP.
Corene Sullivan, a spokeswoman for Credit Suisse, said Credit Suisse didn't actively sell stakes in funds that fed into Madoff's firm, and that the funds offered by the marketers weren't on the bank's recommended list.
Madoff's lawyer, Ira Sorkin, declined to comment. David Sheehan, an attorney at Baker Hostetler who represents Irving Picard, the trustee overseeing the liquidation of Madoff's brokerage, didn't reply to calls and e-mails seeking comment.
Meanwhile, Sorkin said in a court filing Madoff should remain free on bail because he didn't intentionally violate a judge's order when he mailed jewelry and watches to relatives and friends.
Prosecutors asked US Magistrate Judge Ronald Ellis to jail Madoff since he mailed the items in violation of a court-ordered asset freeze. In a letter to Ellis filed yesterday, Sorkin said his client didn't know the order from a related case applied to personal items.
The letter elaborates on arguments Sorkin made at a Monday hearing in which prosecutors requested that Madoff's $10 million bail be revoked. Sorkin said Madoff made an innocent mistake in mailing the items and was seeking to retrieve them.
Prosecutors have until noon today to respond to Sorkin's letter. The judge hasn't said when he will rule. 