BVI Offshore Business: Grey Area

Investors are continuing to seek for $150 million linked to Bernard Madoff. On April 9, 2009 a British Virgin Islands company and a European bank of Gibraltar were sued by a special trustee who claimed it should go to reimburse investors who lost money in Madoff’s Ponzi scheme, estimated at $65 billion.

In papers filed in Manhattan federal bankruptcy court, the trustee alleged that in October 2008 Bernard L. Madoff Investment Securities Llc., owned by Madoff, wired $150 million to Banque Jacob Safra Ltd. of Gibraltar, apparently for the benefit of BVI-registered international company Vizcaya Partners Ltd. The transfer took place about a month and a half before Madoff was arrested, after admitting he initiated a Ponzi scheme for nearly 20 years.

In the suit, the trustee said that from early 2002 and until the arrest of Madoff, Safra or its affiliates invested $327.2 million with him in New York through his account at JPMorgan Chase & Co. on behalf of the BVI company. Now he is asking the bankruptcy court to wipe out the transfer and add the $150 million to  the $1 billion in found customer assets to be used to repay Madoff victims, including the BVI-based Vizcaya.

The $150 million in Gibraltar is one of several transactions found by the staff of the trustee at the Manhattan law firm. Offshore money has been placed in Ireland, England, Luxembourg, Bermuda and the Cayman Islands, with potential cash on the Isle of Man.

It is known from the US legal source that BVI-registered Vizcaya sued Banque Jacob Safra in Gibraltar. The exact amount held in the Gibraltar account is still unclear.