Home/ Companies / News/  Deutsche Bank settles suit over $1.6 billion Madoff claims

Deutsche Bank AG is settling a US lawsuit it filed against a pair of offshore feeder funds that backed out of an alleged deal to sell the German lender $1.6 billion in claims against Bernard Madoff’s bankrupt investment advisory business.

Lawyers for Deutsche Bank and the funds — Kingate Global Fund Ltd. and Kingate Euro Fund Ltd. — filed a joint letter Thursday in New York federal court saying they’d struck a deal but didn’t disclose any terms. The deal still needs court approval in “multiple jurisdictions," the parties said.

The funds, founded in the British Virgin Islands in 1994, funneled $1.7 billion of client money to Madoff’s firm before his $20 billion Ponzi scheme collapsed in 2008. They agreed to sell their claims against Madoff’s firm to Deutsche Bank for 66 cents on the dollar in 2011, but backed out after getting “sellers’ remorse" when the value of the claims increased, Deutsche Bank alleged.

Deutsche Bank spokesman Dylan Riddle declined to comment. Andrew W. Hammond, a lawyer for the Kingate funds, which have been in liquidation for more than a decade, didn’t respond to a call for comment.

Deutsche Bank filed the suit in 2019 on behalf of a syndicate of investors. The case was heading toward a trial after US District Judge Edgardo Ramos in March 2021 denied the funds’ motion to dismiss the case. The judge had ordered the parties to complete depositions of experts by June.

The bank and the funds asked Ramos in their letter to put all deadlines on hold while they seek approval of the settlement.

The trustee liquidating Madoff’s business reached a separate $860 million settlement in 2019 with the Kingate funds, which he had accused of reaping hundreds of millions of dollars in fees while on “actual notice" of Madoff’s fraudulent activity. That arrangement essentially forced the funds to use their recoveries from the Madoff bankruptcy case to finance the agreement.

Madoff was sentenced to 150 years behind bars after pleading guilty in March 2009 to fraud, money laundering, perjury and theft. He died in prison in April 2021 at the age of 82.

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Updated: 26 Mar 2023, 08:23 PM IST
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