Pioneer and wealthy investors hit by Medici-Madoff link

Pioneer and wealthy investors hit by Medici-Madoff link
Mon Jan 12, 2009 6:39pm GMT Email | Print | Share| Single Page[-] Text [+]
By Sylvia Westall

VIENNA (Reuters) - UniCredit's Pioneer Investments and a small pool of private investors are among those who were hit by Bernard Madoff's alleged $50 billion (33 billion pound) fraud through one of his biggest victims, Austria's Bank Medici.

The small Vienna-based Medici was placed under state supervision earlier this month after it sold over $3 billion of Madoff-exposed funds to investors, drawing them into what Madoff has called "a giant Ponzi scheme."

UniCredit's Pioneer Investments was one of its top clients -- its total Madoff exposure is 805 million euros (724 million pounds) and most of this was invested through the Medici-run Herald USA Fund, Pioneer Investments spokesman Andreas Nurscher said.

He added it was mainly international institutional investors in Pioneer Alternative Investments' Primeo Select and Primeo Executive funds who had suffered the damage.

But wealthy private investors have also been hit through Medici-run funds. The bank, which revamped its management last week after CEO Peter Scheithauer resigned, said on Monday eight of its private customers had invested directly in Herald Funds.

A spokeswoman for the bank could not give details on how much they had invested or in which countries they are based.

The bank's lawyer Andreas Theiss said no one so far had notified Medici that they planned to bring proceedings against the bank. "There is no legal basis for them to do so," he said.

A U.S. judge will rule on Monday on whether or not to send Madoff to jail while investigators continue to probe the worldwide investment fraud they said he confessed to last month. Continued...