UPDATE Two Florida law firms said today they have been retained by Florida investors to investigate claims against various third parties in connection with the Bernard Madoff alleged Ponzi scheme, including Westport National Bank on Post Road East.
Two Florida law firms said they are investigating claims made against the Westport National Bank at 1495 Post Road in connection with Bernard Madoff. The bank denied any wrongdoing. (CLICK TO ENLARGE) Dave Matlow for WestportNow.com/file
In a statement, West Palm Beach-based McCabe Rabin and Boca Raton-based Stein, Stein & Pinsky said they had learned that investors in Florida and other states were solicited by a promoter to invest with Westport National Bank, a division of Connecticut Community Bank, N.A.
Both the promoter and Westport National Bank charged fees to investors who were placed with Bernard L. Madoff Investment Securities, the statement said.
“When the news broke that Madoff’s operation was a Ponzi Scheme, the investors were devastated to learn that their millions ‘on paper’ did not exist,” the law firms said.
The bank disputes the allegation, The New York Times reported. It said that its only role had been to maintain “a custodial account for a number of individuals and entities” who invested with Madoff.
It did not say how many customers were affected, or how much money was involved.
“As custodian, Westport National Bank served in a ministerial capacity only,” said its president, Richard T. Cummings Jr., in a statement. Cummings, a Fairfield resident, became president of the bank in 2003 and has been with it since its inception in 1998.
The bank gave no investment advice to its custodial customers and did not invest any of its own money with Madoff, the statement said.
The law firms’ statement quoted a lead attorney investigating the Madoff fallout, Adam Rabin, as saying, “We are getting new calls daily.
“When the news first broke, we were hearing that investors needed a minimum of $10 million dollars to invest with Madoff.
“Today we’re receiving calls that investors had pooled from several hundred thousand to several million dollars together with other investors.”
The Times quoted lawyers handling the Florida investigation as saying that their clients include a middle-aged professional couple in South Florida who had dealt with Westport National since at least 1996—even though the bank was only formed in 1998.
In Westport, an entity with a similar name in 1996 was Westport Bancorp, Inc., the holding company for Westport Bank and Trust Company, which operated Westport Bank & Trust Co. until it was acquired by Lafayette American in late 1996.
The couple had been solicited to open an account at the bank by a promoter, whom the lawyers also declined to name, the newspaper said.
Bloomberg reported that Westport National’s general counsel, Bill Mahone, also declined to discuss the promoter.
The couple told their lawyers that they had always believed their money was being held and invested by the bank, the Times said.
They received regular statements from the bank showing deductions for “custodial fees” and “record-keeping fees” that totaled 4 percent a year, according to Rabin.
Craig Stein, his co-counsel and a partner in Stein, Stein & Pinsky, said that a bank statement from January 2005 showed that the custodial fee had been paid through the sale of “5.3 shares of BLM,” while the record-keeping fee, paid to the promoter, had required the sale of “31.26 shares of BLM,” the Times said.
Madoff’s firm does not have any publicly traded shares, and the couple thought these transactions involved investments the bank had made on their behalf, Stein said, according to the newwspaper.
“The couple told us that they had seen the terrible news about the Madoff victims and said ‘Oh, those poor people,’ ” he added. “They had no idea that they were among those victims.”
Then, a few days after Madoff’s arrest, the couple came home to find a Federal Express envelope at their door. It contained a letter from Westport National Bank—which Bloomberg reported was signed by Vice President Dennis Clark—a copy of which the newspaper said was provided to The New York Times.
The letter, dated Dec. 12, opened: “Dear Custodial Services Customer.” It stated that the couple had given “full discretionary authority” over their custodial account at the bank to the Madoff firm.
“You may have learned of the recent allegations involving Bernard Madoff and his firm,” the letter continued.
It then asked the couple to notify the bank if they wanted it to request that Madoff’s firm “return assets of yours to the bank,” the Times said.
The bank is one of five divisions of Connecticut Community Bank, formed in 2004 by the merger of Greenwich Bank & Trust Company and Westport National.
Cummings joined Westport National as executive vice president, chief lending officer and chief operating officer at its inception in 1998.
Prior to that, Cummings was executive vice president and regional president in the Westport office of Lafayette American Bank.
Prior to that, he was a senior vice president and chief lending officer at Westport Bank & Trust Co., which, as noted, was subsequently acquired by Lafayette American.
Cummings holds a bachelor’s degree in finance from Georgetown University. He is also a graduate of the New England School of Banking at Williams College.
