Pioneer and wealthy investors hit by Medici-Madoff link

VIENNA Mon Jan 12, 2009 6:39pm GMT

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VIENNA (Reuters) - UniCredit's Pioneer Investments and a small pool of private investors are among those who were hit by Bernard Madoff's alleged $50 billion (33 billion pound) fraud through one of his biggest victims, Austria's Bank Medici.

The small Vienna-based Medici was placed under state supervision earlier this month after it sold over $3 billion of Madoff-exposed funds to investors, drawing them into what Madoff has called "a giant Ponzi scheme."

UniCredit's Pioneer Investments was one of its top clients -- its total Madoff exposure is 805 million euros (724 million pounds) and most of this was invested through the Medici-run Herald USA Fund, Pioneer Investments spokesman Andreas Nurscher said.

He added it was mainly international institutional investors in Pioneer Alternative Investments' Primeo Select and Primeo Executive funds who had suffered the damage.

But wealthy private investors have also been hit through Medici-run funds. The bank, which revamped its management last week after CEO Peter Scheithauer resigned, said on Monday eight of its private customers had invested directly in Herald Funds.

A spokeswoman for the bank could not give details on how much they had invested or in which countries they are based.

The bank's lawyer Andreas Theiss said no one so far had notified Medici that they planned to bring proceedings against the bank. "There is no legal basis for them to do so," he said.

A U.S. judge will rule on Monday on whether or not to send Madoff to jail while investigators continue to probe the worldwide investment fraud they said he confessed to last month.

In Germany at least two institutions said they had also been hit by the Medici-run funds.

Ampega-Gerling, the financial services provider of German insurer Talanx, said roughly 9 million euros in its Gerling Portfolio Total Return fund were exposed to Madoff.

The money had been invested in the Madoff-exposed Thema International Fund, which was also managed by Medici. Ampega-Gerling said three more of its funds were also exposed to the fraud but only to a small extent and that its Total Return fund had been the most involved.

Frankfurt-based Universal Investment said four of its small funds had been affected via Medici-run Herald USA and Thema to the total of a "few hundred thousand euros."

"For those who are invested in it, it is of course not something to be very happy about. We have devalued those stakes to several (euro) cents," spokesman Henning Stegmayer said.

(Additional reporting by Boris Groendahl, Christian Gutlederer in Vienna and Kirsti Knolle in Frankfurt; Editing by Sharon Lindores)

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