Trustee Irving Picard filed suit in U.S. Bankruptcy Court in Manhattan against UBS AG and affiliates, accusing them of enabling Bernie Madoff's Ponzi scheme.  The lawsuit says that Luxalpha, Groupement Financier and other European feeder funds withdrew $796 million from Bernard L. Madoff Investment Securities ("BLMIS" or "Bernie & Co.") in the 90 days before the firm filed for bankruptcy in December 2008.  They withdrew $1.12 billion in the previous six years, the complaint contends.

According to NYT Dealbook, the complaint says that UBS served as custodian for Luxalpha and sponsored its formation - and, the defendants earned fees of at least $80mn by raising money from investors and pooling it to invest with Bernie Madoff. 

“The ‘fees’ they received in their various roles were nothing more than ‘fees’ for looking the other way, and lending their prestigious name to legitimize and attract money” to the Ponzi scheme.

The lawsuit alleges 23 counts of fraud and breaches of fiduciary duty, and says that UBS and the other defendants are liable for at least $2 billion.   Wow!   [NYT Dealbook, 11/24]