Deutsche Bank AG (DBKGn.DE) has settled a lawsuit against two offshore funds, the Kingate Global Fund and Kingate Euro Fund, which it accused of failing to comply with an agreement to sell the bank $1.6 billion worth of claims in the bankruptcy of Bernard Madoff’s firm. The settlement was revealed in a letter filed in a federal court in Manhattan by lawyers for the bank and the funds. The terms of the agreement were not disclosed, and the accord will need court approvals in multiple jurisdictions.
The Kingate funds, incorporated in the British Virgin Islands, had channeled client funds to Madoff for several years before his Ponzi scheme collapsed in 2008. The funds sold their claims against the former Bernard L. Madoff Investment Securities LLC to Deutsche Bank for 66 cents on the dollar in 2011. The bank claims that the Kingate funds later had “sellers’ remorse” because the value of the claims had risen significantly.
In March 2021, U.S. District Judge Edgardo Ramos denied the Kingate funds’ request to dismiss Deutsche Bank’s case. Deutsche Bank had no immediate comment on the settlement, while lawyers for the Kingate funds did not respond immediately to requests for comment.
In June 2019, the Kingate funds agreed to return $860 million in a settlement with Irving Picard, the court-appointed trustee liquidating Madoff’s firm. Picard has recovered more than $14.5 billion overall.
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Bernard Madoff, who died in April 2021 at 82 while serving a 150-year prison term, was responsible for orchestrating one of the most notorious Ponzi schemes in history. His fraudulent scheme, which lasted for over two decades, defrauded thousands of investors of billions of dollars.
Deutsche Bank has faced several legal challenges in recent years, including investigations into its role in the 1MDB scandal and its involvement in manipulating benchmark interest rates. The bank has also faced criticism for handling money laundering controls and compliance with regulations.