AG Sues Westport National Bank, Wilton Man in Madoff Case

Attorney General Richard Blumenthal today sued Westport National Bank, a Wilton money manager and his company seeking to recover $16.2 million for investors in Bernie Madoff's Ponzi scheme, according to a news release.

The lawsuit, filed in cooperation with Department of Banking Commissioner Howard F. Pitkin, charges the bank, Robert L. Silverman and his company PSCC, Inc. with multiple violations of state banking laws. The action alleges that they:

• Ignored repeated and obvious indications of fraud;
• Failed to fulfill their duty to verify Madoff's claimed investments;
• Miscalculated fees, resulting in millions of dollars in overcharges;
• Provided no written information on fund risks and strategies;
• Acted as investment advisors without the necessary state license.

The suit stems from Silverman and Westport National Bank's involvement in "aiding and abetting" convicted Ponzi scheme operator Bernard Madoff.

Westport National Bank allegedly collected $2.4 million in fees between 2000 and 2007 for performing various duties as custodian of its clients' funds, but actually did little, handing over most responsibilities to Silverman and his company, according to the release. The Wall Street Journal is reporting that Silverman's firm earned $13.8 million, much of which came from miscalculating fees and operating as investment advisers without the proper license to do so.

"Silverman's fees were so high even Madoff complained," the Journal quotes Blumenthal as saying.

Blumenthal is seeking all $16.2 million in fees paid to the defendants as restitution for investors wiped out when Madoff's Ponzi scheme collapsed.

Read the full story: Conn AG Sues Westport National Bank, Conn Investment Adviser.

Wilton Patch Editor Christian Camerota contributed to this report.