Russian Oligarchs Also Duped by Madoff: Report

With an aggressive style that stood out in the staid world of Austrian banking even more than her bouffant red wig, Sonja Kohn made few friends gathering billions for Bernard L. Madoff from wealthy investors in Russia and across Europe.

Now, she has even fewer.

Mrs. Kohn has dropped out of sight, leaving the firm she founded, Bank Medici, in the hands of Austrian regulators, who took it over last week.

Embarrassment from investing heavily with Mr. Madoff could explain wanting to disappear from public view. But another theory widely repeated by those who know Mrs. Kohn is that she may be afraid of some particularly displeased investors: Russian oligarchs whose money made up a chunk of the $2.1 billion that Bank Medici invested with Mr. Madoff.

“With Russian oligarchs as clients,” said a Viennese banker who knew Mrs. Kohn and her husband socially, “she might have reason to be afraid.” It was a view shared in interviews with Mrs. Kohn’s fellow bankers, former employees and other associates — from Vienna to London to Geneva to Monsey, N.Y. Few of those who know her were willing to be quoted by name because they feared being linked to the scandal surrounding Mr. Madoff as well as the investigations into his alleged fraud.

But several people with knowledge of her personal and professional dealings say she became concerned about retribution by Russian investors after Mr. Madoff’s arrest last month. (Russia’s richest men have been especially strapped as commodity prices and their stock market have collapsed.) A spokeswoman for Bank Medici, Nicole Back-Knäpp of the public relations firm Ecker & Partner in Vienna, said Mrs. Kohn did not want to speak to the press.

“She is a victim and the Bank Medici as well,” Ms. Back-Knäpp said. She declined to comment on whether Mrs. Kohn was in hiding.

CNBC.com Bernie Madoff

It is a stunning reversal for the 60-year-old Mrs. Kohn. The daughter of Jewish refugees from Eastern Europe who moved to Vienna after World War II, she came to New York in the 1980s and was one of the rare women to found and head a small brokerage firm.

At that time, she started a decades-long friendship with Mr. Madoff. Once known here as “Austria’s woman on Wall Street,” she became one of Mr. Madoff’s international conduits for securing billions of dollars from the global rich. With her husband, Erwin, a former banker, Mrs. Kohn was able to draw interest from wealthy Russians, Ukrainians and Israelis.

And though she migrated from a more traditional Jewish background to ultra-Orthodox practice — which is why she covered her hair with the wig — Mrs. Kohn and her husband even managed to secure meetings with deep-pocketed Arab investors.

“He was the door opener, she was the go-getter,” said the Viennese acquaintance of the Kohns who insisted on anonymity because of the publicity surrounding the Madoff case, both in Europe and the United States. “She’s not somebody for small talk.”

Curtis J. Hoxter, a veteran New York-based communications adviser who has worked with Bank Austria and met Mrs. Kohn frequently in Manhattan said, “She has a very aggressive personality and wouldn’t take no for an answer.” He added, “She was overwhelming.”

Mrs. Kohn owns 75 percent of Bank Medici, with Bank Austria holding the rest. Mrs. Kohn’s background could not have been more different than that of Rene-Thierry Magon de la Villehuchet, the French aristocrat who committed suicide in New York last month after his firm, Access International, lost $1.4 billion.

While Mr. Villehuchet attracted elite investors like Philippe Junot, the former husband of Princess Caroline of Monaco, and Liliane Bettencourt, daughter of the founder of the French cosmetics giant L’Oréal, Mrs. Kohn’s Madoff-linked funds were more often marketed to individuals through banks like UniCredit and its subsidiary, Pioneer Alternative Investments.

In other cases, Mrs. Kohn appealed directly to investors during her frequent trips around Europe. Like Mr. Madoff himself, she used the promise of entree to an otherwise unavailable investment as her key selling point.

“She said she was a very close friend of Bernie, and had good connections,” said one top Geneva banker who met with her in Vienna several years ago. “She said it was hard to get into, but she could give me access.”

CONTINUED : "Our History Is a Very Conservative One"

---

1 | 2 | Next >