Doctors sue bank over Madoff scam : Westport National Bank

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Doctors sue bank over Madoff scam
By Michael C. Juliano
Posted: 02/25/2009 11:42:19 AM EST


Westport National Bank is facing a lawsuit from two doctors who say they lost most of their retirement money investing with Bernard Madoff, a once-revered money manager whose alleged Ponzi scheme bilked investors out of $50 billion.
The bank failed to recognize "numerous red flags" it should have seen as custodian of funds for Stephen Levinson of Easton and Richard Layton of Baltimore, which Madoff invested in bonds and an "ultra-conservative" fund managed by Bernard L. Madoff Investment Securities, according to the lawsuit.

The doctors also are suing Westport-based PSCC Services Inc., the pension consulting firm that recommended Madoff's fund to them, according to the lawsuit filed Feb. 13 in U.S. District Court in Hartford.

Levinson and Layton declined to comment on the lawsuit. Efforts to reach their lawyers at Whatley, Drake & Kallas in New York City were unsuccessful.

Westport National Bank is one of six area banks operated by Connecticut Community Bank, which is based in Greenwich. The financial institution also owns banks in Darien, Fairfield, Greenwich, Norwalk and Stamford.

"We will vigorously defend ourselves," said Richard Cummings, president of Connecticut Community Bank.

The bank sent a letter to its staff


after customers in early January saying it acted only as a custodian for investments with Madoff, after investors in Florida retained lawyers to investigate claims that the bank had steered their money to Madoff.
The bank said in the letter that it never introduced any of its clients to Madoff and that it does not provide any investment advice to its clients, except on its products such as checking accounts, savings accounts and certificates of deposit.

It also said the bank did not invest any of its funds with Madoff, and the clients entered into an agreement whereby Madoff was given "full discretionary authority" to invest their funds.

It is up to the courts to decide whether the bank is liable for their clients' losses as a result of the Madoff scheme, said John Carusone, president of the Hartford-based Bank Analysis Center.

"Just because the bank had a vendor relationship, it does not mean they have a legal liability," he said.


Michael C. Juliano is a staff writer for the Stamford Advocate, a sister paper of the Westport News.