Irving Picard has another bank in his sights as he continues to track down all ill-gotten gains from the Bernard Madoff ponzi Scheme. He has sued Citigroup, charging that there were obvious red flags regarding Madoff's account as early as 2005 and that the bank did nothing.

He basically said Citigroup should have realized there was no way Madoff could be generating the kinds of returns he was reporting to clients. In fact, a Citigroup banker, who was responsible for making derivatives recommendations, "concluded" by June 2007 that returns reported by a Madoff feeder fund, Fairfield Sentry, couldn't have come from the stated strategy, according to the Guardian.

An effort was made to sell the accounts. "We're needing to terminate our Madoff trade. Do you have appetite for that risk over there?" an email said. The other bank responded, "don't think so, Madoff is not very popular here either."

Picard is seeking $423.5 million from the bank, which is much less than the $6.4 billion that he is seeking from JPMorgan Chase, who Picard has also sued.

Citigroup says it is innocent of any crime and will defend itself. But I expect this to be settled in both cases. It is quite embarrassing for such august banks, and any sort of hearing or trial presents the of risk of looking incompetent.

For more:
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