UBS "tricked" victims of Bernard Madoff's $65 billion Ponzi scheme by sponsoring a Luxembourg-registered fund that for four years fed assets directly to the fraudster without saying so in its prospectus, a Paris court has been told, according to a report by Reuters.

The "Luxalpha" fund was considered safe by investors because of the link to the Swiss bank, which was presented in the prospectus as sole custodian of the assets, said Jean-Pierre Martel, a lawyer representing 78 French investors who invested €28 million ($39.69 million) in total in Luxalpha.

UBS denies the charge. The bank did not comment on the case when contacted by WealthBriefing.

The case highlights how Madoff’s huge fraud, which has hit a number of wealth management firms and high net worth individuals, continues to affect the industry more than a year after the man was jailed for 150 years after admitting his crimes. The case has prompted soul-searching in the wealth industry about the level of due diligence checks that were done about Madoff’s investments.

In the Paris court, Martel was quoted as saying of the Luxalpha fund: "The prospectus was saying: 'this product is 100 percent UBS, you can go for it'."

"Here we have investors who were shamefully cheated by one bank...with information that was wrong and dishonest."

A verdict date has been set for 9 June.

UBS is also contesting a $2 billion lawsuit from the trustee liquidating Madoff's companies, Irving Picard, over its involvement in Luxalpha.

Picard has said UBS' involvement lent the funds "an aura of legitimacy" while shielding the bank from liability through secret side agreements.

"UBS considers it has not committed any error. It is also a victim in this affair," the Swiss bank's lawyer, Denis Chemla, was quoted as saying.