A lawsuit was filed today against the owner of the Westport National Bank on behalf of retirement account holders who say they lost $60 million that the bank invested with convicted swindler Bernard Madoff. 
Suit was filed against Westport National Bank today in Stamford Superior Court. (CLICK TO ENLARGE) Dave Matlow for WestportNow.com/file
The lawsuit was filed in Stamford Superior Court against Connecticut Community Bank N.A., owner of Westport National Bank, 1495 Post Road East.
The lawsuit said that if Westport National Bank had not failed to perform its duties as custodians of the accounts, which would have required Madoff to deliver the securities he claimed to be buying, the plaintiffs would not have been victims.
“That was the protection the account holders had against fraud — you can’t run a Ponzi scheme if you have to deliver the securities you’re supposed to purchase,” David S. Golub, an attorney with Silver Golub & Teitell LLP representing the plaintiffs, said in a statement announcing the suit.
“The bank simply disregarded its obligation, and then outrageously charged false fees as if it were actually holding Madoff’s investments.”
The lawsuit alleges Westport National Bank charged false account fees amounting to millions of dollars.
The focus of the lawsuit is the custodian agreement that the bank required each account holder to sign before it accepted any money to be invested with Mr. Madoff.
The agreement, a copy of which was filed as an exhibit in the case, states that the customer “has not relied on the bank in choosing” the Madoff firm.
But it also indicates that the bank would take custody of whatever investments Madoff made on the customers’ behalf.
The bank did not immediately respond to requests for comment.
But when its customers first complained publicly in January about its role in their Madoff accounts, it released a statement saying it had acted “in a ministerial capacity only” and had not invested any of its money with Madoff. (See WestportNow Jan. 2, 2009)
