The Madoff liquidator has filed a joint complaint in the UK High Court against individuals and entities related to MSIL, gaoled fraudster Bernard Madoff’s London operation.

Named are all the former directors of MSIL, including Madoff’s brother Peter, sons Mark and Andrew, lead director Stephen Raven, Leon Flax, Christopher Dale, Philip Toop and Malcolm Stevenson. The complaint also names Sonja Kohn, who has been charged separately in relation to BLMIS-related fraud and Kohn-related entities.

The UK case comes hard on the heels of a number of legal actions brought in connection to Madoff in recent days. Earlier this week, the trustee acting for victims of Madoff struck an agreement with Union Bancaire Privee, and a related Caymans entity, M-Invest Ltd, involving a payment to his clients of up at least $470 million, and possibly $500 million in total. The trustee has also sued HSBC, UBS and JP Morgan in relation to Madoff's activities.

The complaint seeks aggregate recoveries of at least $80 million, which include personal claims brought against the directors and officers for breaching their duties to MSIL, in part by making fraudulent payments to various Madoff-related entities, including payments for luxury goods and services enjoyed by Bernard Madoff and the Madoff family.

It is alleged that more than $27 million was channelled through MSIL to corporate vehicles used by Sonja Kohn in sham transactions purported to be payments for research and other services but which were actually kickbacks paid out of BLMIS.

“The London operation was a critical piece of the façade of legitimacy that Madoff constructed to conceal BLMIS’s lack of actual trading activity. Madoff represented to his customers that BLMIS conducted trades on the over-the-counter market, after hours, and substantiated this misrepresentation by periodically transferring tens of millions of dollars to MSIL. In reality, however, MSIL never used such funds to purchase securities,” said Picard.

The complaint asserts that the directors knew that MSIL’s trading activities were insufficient justification for its existence and that the directors breached their duties as fiduciaries and/or trustees.

“Madoff recruited highly reputable senior members of the London financial community to join his board,” said David Sheehan, counsel for the trustee and a partner at Baker & Hostetler, the court-appointed counsel for Picard. “All were experienced and sophisticated enough to understand what was happening. In addition, his staff included employees with accounting and trading experience, who clearly had the knowledge to see through the fraud. Yet, all complied with Madoff’s schemes and deceptions.”

Between MSIL’s incorporation in 1983 and the public revelation of Bernard Madoff’s fraud in December 2008, at least $600 million was paid into MSIL from BLMIS and from other sources controlled by him. During that same period, substantial payments were made out of MSIL for the benefit of Bernard Madoff, members of his family, Sonja Kohn and other third parties. More than $310 million were transferred from BLMIS to MSIL, then back to BLMIS, where the transactions were falsely recorded as trading commissions from London.