The controversial legal battle against Bank Austria on behalf of investors that lost out when they were persuaded to invest in the pyramid scheme operated by convicted fraudster Bernard Madoff has taken a twist when a specimen case was settled in advance of a High Court ruling.
The case was carried out by one of the investors that lost a substantial amount of money when they invested in Madoff. They alleged that bank Austria was to blame for the loss, but according to media reports the bank has reached an out-of-court settlement.
The problem with that for the other investors is that this was a specimen case on which they were planning to base their claims, and now it has been settled before a High Court decision can be made – which means that the whole process may well need to be started again.
Madoff was sentenced to 150 years in jail for persuading people to invest in what turned out to be a complicated pyramid scheme. In Austria this was sold by Bank Austria as part of its “Primeo Fond” which provided the capital to Madoff.
But in the promotional material for “Primeo” Madoff is not mentioned and as a result investors want their money back. The total sum involved is around 130 million euros .
The allegation now in the latest case is that Bank Austria paid off the claimant whose case verdict was being eagerly awaited by other claimants. The claimant had already won in the first and second instance.
The other claimants had been waiting for the result when it was suddenly withdrawn just before the High Court was due to make a decision. The High Court has now been forced to cancel the judgements in the first and second instance.
Lawyer Gottfried Thiery said that it was probable that the bank had come to a deal to pay off the other claimant.
Bank Austria has rejected all allegations until now in relation to Madoff but has refused to discuss the current case and whether they paid any money to buy off the claimant.
A spokesman said: “Out of our duty to the banks client confidentiality and bank secrecy laws and the fact that there are still ongoing cases we cannot make any comment.”
But there is some hope for those that lost out. One lawyer that is refusing to back down is the former justice minister Dieter Böhmdorfer (FPÖ) who has also launched a claim and has won in the first and second instance against Bank Austria and who is expecting a High Court decision in spring 2013.
He has reportedly been made an offer but will not be swayed from getting a High Court judgement .
He said: “We will see this through to the end and we hope that the High Court will also ruled in favour of our clients.”
A victory could still be a breakthrough the other victims are hoping for.