Baker & Hostetler LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Attorneys for Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION,

Plaintiff-Applicant,

v.

BERNARD L. MADOFF INVESTMENT SECURITIES LLC,

Defendant.

Adv. Pro. No. 08-01789 (BRL)

SIPA Liquidation

(Substantively Consolidated)

In re:

BERNARD L. MADOFF,

Debtor.

IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC,

Plaintiff, v.

REPEX VENTURES, S.A., on behalf of itself and those it purports to represent; DANA TREZZIOVA; SHMUEL CABILLY, on behalf of himself and those he purports to represent; KOREA EXCHANGE BANK, as Trustee of the Korea Global All Asset Trust I-1; and NEVILLE SEYMOUR DAVIS, on behalf of himself and those he purports to represent, Defendants.

Adv. Pro. No. 11-____ (BRL)

COMPLAINT

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Irving H. Picard, as trustee (the “Trustee”) for the liquidation of the business of Bernard

L. Madoff Investment Securities LLC (“BLMIS”), under the Securities Investor Protection Act,

15 U.S.C. §§ 78aaa, et seq. (“SIPA”),1 and the substantively consolidated estate of Bernard L.

Madoff (“Madoff”), by and through his undersigned counsel, for his Complaint, alleges as

follows against defendants Repex Ventures, S.A., Dana Trezziova, Shmuel Cabilly, Korea

Exchange Bank, and Neville Seymour Davis (collectively, the “Class Action Plaintiffs”) as

follows:

NATURE OF THE ACTION

1. The Trustee commences this adversary proceeding to prevent the Class Action

Plaintiffs from undermining this Court’s continuing jurisdiction over the consolidated estate of

BLMIS and its customers’ property.

2. On December 2, 2010, the Trustee commenced an adversary proceeding against

JPMorgan Chase and related parties (the “JPMorgan Action”), seeking to recover nearly $1

billion in fees and an additional $5.4 billion in damages in connection with the massive Ponzi

scheme orchestrated by Madoff.

3. On December 5, 2010, the Trustee filed an amended complaint (the “HSBC

Action) against, among others thirteen HSBC entities, UniCredit S.p.A. (“UniCredit”), Herald

Fund SPC-Herald USA Segregated Portfolio One and Herald (Lux) SICAV (collectively, the

“Herald funds”), Thema International Fund plc (“Thema”), and Primeo Fund (“Primeo”),

(collectively, the “HSBC Defendants”).

4. On December 10, 2010, the Trustee filed an adversary proceeding against Sonja

Kohn, Bank Medici, UniCredit, Bank Austria, and others (the “Kohn Action”), seeking billions

1 Future references to SIPA shall omit “15 U.S.C.”

3

of dollars in damages from defendants involved in a criminal enterprise to operate and conceal

an illegal scheme that fed over $9.1 billion of other people’s money into Madoff’s Ponzi scheme.

5. The three actions brought by the Class Action Plaintiffs (the “Class Actions”)

violate the automatic stay provisions of the United States Bankruptcy Code, 11 U.S.C. § 101 et

seq. (the “Bankruptcy Code”), section 78eee(b)(2)(B) of SIPA, and the other stay orders issued

in connection with these proceedings (the “Stay Orders”) to the extent the Class Actions seek to

obtain Customer Property and compete with the HSBC Action, the JPMorgan Action, and the

Kohn Action (collectively, the “Trustee’s Actions”). The Class Actions threaten the orderly

administration of the BLMIS estate and, ultimately, would diminish the pool of assets from

which the Trustee must make equitable and pro rata distributions to the victims of Madoff’s

fraud.

6. This Court’s jurisdiction over the administration of the BLMIS estate ensures that

customer property, as defined by SIPA § 78lll(4), will be distributed by the Trustee to the victims

of the Madoff Ponzi scheme in a fair and efficient manner consistent with SIPA and the

Bankruptcy Code.

7. The Trustee, pursuant to his duties under SIPA, is working to locate, marshal, and

preserve customer property to maximize recovery for BLMIS’s defrauded customers. Part of

this recovery process involves identifying those individuals and entities who received avoidable

transfers from BLMIS and attempting to recover these funds for the statutory pro rata

distribution to all customers.

8. The Class Actions threaten to thwart the Trustee’s efforts, as the Class Action

Plaintiffs seek to recover Customer Property, including avoidable transfers, directly from the

same defendants sued by the Trustee. Allowing the Class Actions to proceed would frustrate the

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claims administration process established by this Court, and allow the Class Action Plaintiffs the

opportunity to recover at the expense of other BLMIS customers, while at the same time,

usurping the Trustee’s authority and divesting him of his power to marshal customer property for

equitable distribution. The Class Actions are an affront to this Court’s jurisdiction and should be

enjoined.

JURISDICTION AND VENUE

9. This is an adversary proceeding brought in the Court in which the main SIPA

proceeding, No. 08-01789 (BRL) (Substantively Consolidated) is pending. The SIPA

proceeding is a combined proceeding with the Securities and Exchange Commission (the “SEC”)

and was originally brought in the United States District Court for the Southern District of New

York as Securities Exchange Commission v. Bernard L. Madoff Investment Securities LLC, No.

08-CV-10791 (LLS), prior to its removal to this Court. This Court has jurisdiction over this

adversary proceeding under 28 U.S.C. § 1334(b) and sections 78eee(b)(2)(A) and (b)(4) of SIPA.

10. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (B), and (O).

11. Venue in this district is proper under 28 U.S.C. § 1409.

BACKGROUND, THE TRUSTEE, AND STANDING

12. On December 11, 2008 (the “Filing Date”), Madoff was arrested by federal agents

and criminally charged with a multi-billion dollar securities fraud scheme in violation of

15 U.S.C. §§ 78j(b), 78ff, and 17 C.F.R. 240.10b-5 in the United States District Court for the

Southern District of New York (the “District Court”), captioned United States v. Madoff, No. 08-

MAG-2735.2 Contemporaneously, the SEC filed a complaint in the District Court against,

among others, Madoff and BLMIS, No. 08-CV-10791. The SEC complaint alleged that Madoff

2 On March 10, 2009, the criminal case was transferred to Judge Denny Chin in the District Court and was assigned a new docket number, No. 09-CR-213 (DC).

5

and BLMIS engaged in fraud through the investment advisory business at BLMIS (the “IA

Business”).

13. On December 15, 2008, pursuant to section 78eee(a)(4)(A) of SIPA, the SEC

consented to a combination of its own action with an application of SIPC. Thereafter, pursuant

to section 78eee(a)(4)(B) of SIPA, SIPC filed an application in the District Court alleging, inter

alia, that BLMIS was not able to meet its obligations to securities customers as they came due

and, accordingly, its customers needed the protections afforded by SIPA.

14. Also on December 15, 2008, the District Court granted the SIPC application and

entered a Protective Decree, to which BLMIS consented. The Decree, in pertinent part: (i)

appointed the Trustee for the liquidation of the business of BLMIS pursuant to section

78eee(b)(3) of SIPA; (ii) appointed Baker & Hostetler LLP as counsel to the Trustee pursuant to

section 78eee(b)(3) of SIPA; and (iii) removed the case to this Court pursuant to section

78eee(b)(4) of SIPA.

15. On December 15, 2008, the District Court entered an order declaring that “all

persons and entities are stayed, enjoined and restrained from directly or indirectly . . . interfering

with any assets or property owned, controlled or in the possession of [BLMIS].” No. 08-CV-

10791, ECF No. 4 ¶ IV (reinforcing automatic stay); see also Order on Consent Imposing

Preliminary Injunction Freezing, Assets and Granting Other Relief Against Defendants, Dec. 18,

2008, ECF No. 8 at ¶ IX (“no creditor or claimant against [BLMIS], or any person acting on

behalf of such creditor or claimant, shall take any action to interfere with the control, possession

or management of the assets subject to the receivership.”); Partial Judgment on Consent

Imposing Permanent Injunction and Continuing Other Relief, Feb. 9, 2009, ECF. No. 18 at ¶ IV

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(incorporating and making the December 18, 2008 stay order permanent) (collectively, the “Stay

Orders”).

16. By orders dated December 23, 2008 and February 4, 2009, respectively, this

Court approved the Trustee’s bond and found that the Trustee was a disinterested person.

Accordingly, the Trustee is duly qualified to serve and act on behalf of the estate of BLMIS.

17. On March 12, 2009, Madoff pled guilty to an 11-count criminal information. At

the Plea Hearing, Madoff admitted that he “operated a Ponzi scheme through the investment

advisory side of [BLMIS].” See United States v. Madoff, No. 09-CR-213 (DC), ECF No. 57,

Plea Hr’g Tr. at 23:14–17.

18. On April 13, 2009, an involuntary bankruptcy petition was filed against Madoff,

and on June 9, 2009, this Court entered an order substantively consolidating the Chapter 7 estate

of Madoff into the SIPA Proceeding.

19. Appointed under SIPA, the Trustee is charged with recovering and distributing

customer property to BLMIS’s customers, assessing claims, and liquidating any other assets of

the firm for the benefit of the estate and its creditors. Consistent with his duties, the Trustee is

marshalling BLMIS’s assets, and is well underway in that process.

20. The assets recovered to date, however, will not be sufficient to reimburse the

customers of BLMIS for the billions of dollars they invested with BLMIS over the years.

Consequently, the Trustee must use his authority under SIPA and the Bankruptcy Code to pursue

recovery from, among others, those who enabled the Ponzi scheme to operate. Absent these

recovery actions, the Trustee will be unable to satisfy the claims described in subparagraphs (A)

through (D) of 15 U.S.C. § 78fff-2(c)(1).

7

21. Pursuant to section 78fff-1(a) of SIPA, the Trustee has the general powers of a

bankruptcy trustee in a case under the Bankruptcy Code. Chapters 1, 3, 5 and subchapters I and

II of chapter 7 of the Bankruptcy Code are applicable to this case, to the extent consistent with

SIPA.

22. In addition to the powers of bankruptcy trustee, the Trustee has broader powers

granted by SIPA.

23. The Trustee is a real party in interest and has standing to bring these claims

pursuant to SIPA 78fff-1 and the Bankruptcy Code, including sections 323(b) and 704(a)(1),

because, among other reasons:

a. The Class Action Plaintiffs request relief that will affect “customer property” as

defined in SIPA § 78lll(4).

b. The Class Action Plaintiffs request relief that may affect the distribution of

customer property and the orderly administration of the estate.

c. BLMIS’s customers could be injured in the absence of the Trustee’s filing of this

Complaint.

d. The Trustee will not be able to fully satisfy all claims.

THE FRAUDULENT PONZI SCHEME

24. Madoff founded BLMIS in 1960. Until his arrest, Madoff was the sole member

and chairman of BLMIS. BLMIS had its principal place of business in New York and engaged

in three primary types of business: market making, proprietary trading, and IA Business. BLMIS

was registered with the SEC as a broker-dealer and then registered in 2006 as an investment

adviser. Pursuant to its registration as a broker-dealer, BLMIS was a member of SIPC.

8

25. Madoff solicited billions of dollars under false pretenses and failed to invest

investors’ money as promised. Instead, he deposited investors’ money in a bank account at

JPMorgan Chase Bank, N.A. Madoff represented to clients and prospective clients that he would

invest their money in shares of common stock, options, and other securities and would, at their

request, return profit and principal. As the world is now aware, virtually no securities were

purchased by Madoff for his customers.

26. By early December 2008, BLMIS generated statements for its approximately

4,900 active customer accounts. When added together, these statements erroneously showed that

the customers of BLMIS had approximately $64.8 billion invested with BLMIS. In reality,

BLMIS had assets on hand worth only a small fraction of that amount. Madoff’s massive Ponzi

scheme came to an end on December 11, 2008, the date on which he was arrested.

THE COURT-ORDERED CLAIMS ADMINISTRATION PROCESS AND NET EQUITY DETERMINATIONS

27. On December 21, 2008 (ECF No. 8), this Court entered the Claims Procedures

Order (ECF No. 12), which directed, among other things, that on or before January 9, 2009: (a) a

notice of the commencement of this SIPA Proceeding be published; (b) a notice of the

liquidation proceeding and claims procedure be given to persons who appear to have been

customers of BLMIS; and (c) notice of the liquidation proceeding and a claim form be mailed to

all known general creditors of BLMIS.

28. More than 16,000 potential customers, general creditors, and broker-dealer

claimants were included in the mailing of the notice. Under the Claims Procedures Order,

claimants were directed to mail their claims to the Trustee. All customers and creditors were

notified of the mandatory statutory bar date for filing of claims under section 78fff-2(a)(3) of

9

SIPA, which was July 2, 2009 (the “Bar Date”). The Trustee also provided several reminder

notices.

29. By the Bar Date, the Trustee had received 16,239 customer claims. Among these

claims are those filed by Herald, Herald (Lux), and Thema, which are defendants in the Trustee’s

actions, as well as in one of more of the Class Actions.

30. In accordance with the Claims Procedures Order, the Trustee developed a

comprehensive claims administration process for the intake, reconciliation, and resolution of the

customer claims.

THE TRUSTEE’S ACTIONS

31. On or about July 14 and July 15, 2009, the Trustee commenced separate actions

against Herald Fund,3 Primeo Fund,4 and Alpha Prime Fund Limited5 in the Bankruptcy Court;

the common defendants amongst these three actions were HSBC Bank plc and HSBC Securities

Services (Luxembourg) S.A. (“HSSL”). Those complaints sought the recovery of $809 million

under SIPA §§ 78fff(b), 78fff-1(a), and 78fff-2(c)(3), §§ 105(a), 502(d), 541, 542, 544, 547,

548(a), 550(a), and 551 of the Bankruptcy Code, the New York Fraudulent Conveyance Act,

N.Y. Debt. & Cred. § 270 et seq., and other applicable law for turnover, accounting, preferences,

fraudulent conveyances, and damages.

32. The Trustee filed an Amended Complaint in the Alpha Prime Fund Limited action

on December 5, 2011—now the HSBC Action—that names sixty-one individuals, feeder funds,

and financial institutions that facilitated and furthered Madoff’s fraud. The HSBC Action

identifies the transfers of funds constituting customer property, the indicia of fraud surrounding

3 Picard v. Herald Fund SPC, Adv. Pro. No. 09-1359 (BRL). 4 Picard v. Primeo Fund, Adv. Pro. No. 09-1366 (BRL). 5 Picard v. Alpha Prime Fund Limited, Adv. Pro. No. 09-1364 (BRL).

10

the IA Business of which the defendants in the HSBC Action were aware, yet ignored, and the

hundreds of millions of dollars in fees received by the Defendants.

33. On or about February 4, 2011, the HSBC entities and UniCredit filed motions to

withdraw the reference of the HSBC Action to the District Court. Although these defendants

designated the Trustee’s HSBC Action as related to the Class Actions, the Honorable Richard M.

Berman, U.S.D.J., declined the designation.

34. On or about February 8, 2011, JPMorgan Chase & Co., JPMorgan Chase Bank,

N.A., J.P. Morgan Securities LLC, and J.P. Morgan Securities Ltd. filed a motion to withdraw

the reference of the JPMorgan Action to the District Court.

35. On or about February 17, 2011, UniCredit, S.p.A. filed a motion to withdraw the

reference of the Kohn Action to the District Court.

36. The Honorable Jed S. Rakoff, U.S.D.J., is presiding over the motions in the

HSBC and Kohn Actions. The Honorable Colleen McMahon, U.S.D.J., is presiding over the

motion in the Kohn Action.

37. On or about March 18, 2011, the Trustee and SIPC filed oppositions to the

motions to withdraw the reference in the HSBC Action. The HSBC Defendants filed a reply on

April 1, 2011, and UniCredit and Pioneer filed a reply on April 6, 2011. A hearing is scheduled

before Judge Rakoff on April 12, 2011.

38. The Trustee and SIPC filed opposition to the motions to withdraw the reference in

the JPMorgan and Kohn Actions on March 31, 2011 and April 5, 2011, respectively. Hearings

are scheduled for these motions on May 3, 2011 (Kohn Action) and May 4, 2011 (JPMorgan

Action).

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39. Also on or about March 18, 2011, defendant Repex Ventures, S.A. (“Repex”)

filed a memorandum of law in support of withdrawing the reference of the HSBC Action. Repex

is neither a party to nor an intervenor in any lawsuit filed by the Trustee.

THE DEFENDANTS

40. Upon information and belief, Repex is a corporation organized and existing under

the laws of the Brittish Virgin Islands, invested in Herald, and is the lead plaintiff in Repex

Ventures, S.A. v. Madoff, No. 09-CV-289 (S.D.N.Y.) (RMB) (HBP) (the “Repex Action”).

41. Upon information and belief, defendant Dana Trezziova (“Trezziova”) is an

individual that invested in Herald, and is a plaintiff in the Repex Action.

42. Upon information and belief, defendant Dr. Shmuel Cabilly (“Cabilly”) is a

resident of Israel, invested in Primeo, and is the lead plaintiff in Leonhardt v. Madoff, No. 09-

CV-2032 (S.D.N.Y.) (RMB) (HBP) (the “Leonhardt Action”).

43. Upon information and belief, defendant Korea Exchange Bank (“KEB”) is a

resident of Korea, invested in Primeo, and is a plaintiff in the Leonhardt Action.

44. Upon information and belief, defendant Neville Seymour Davis (“Davis”) is a

resident of United Kingdom, invested in Thema, and is a lead plaintiff in Perrone v. Benbassat,

No. 09-CV-2558 (S.D.N.Y.) (RMB) (HBP) (the “Perrone Action”).

45. Upon information and belief, Repx, Trezziova, Cabilly, KEB and Davis

(previously defined as the “Class Action Plaintiffs”) are the only named plaintiffs in the Class

Actions.

12

THE CLASS ACTIONS VIOLATE THE EXISTING STAYS AS THEY ARE DUPLICATIVE OR DERIVATIVE OF THE TRUSTEE’S COMPLAINTS AND SEEK

CUSTOMER PROPERTY

46. The Trustee seeks to enjoin the three pending class actions that have been

consolidated for pre-trial purposes under the caption In re Herald, Primeo, and Thema Funds

Securities Litigation, No. 09-CV-289 (RMB) (consolidated with 09-CV-2032 and 09-CV-2558).

47. As the Class Action Plaintiffs concede, they are attempting to duplicate the

Trustee’s actions. Having begun as class actions under federal securities laws, the Class Action

Plaintiffs have amended their complaints to copy, verbatim, allegations made by the Trustee in

various pleadings, and have dismissed the federal securities law claims.

48. Repex requested additional time to file a Proposed Third Amended Complaint so

that it could duplicate the Trustee’s allegations against various parties.

49. Counsel for Dr. Shmuel Cabilly, lead plaintiff in the Perrone Class Action, asked

the Trustee for the evidence underlying the allegations asserted in the HSBC Action.

50. On April 1, 2011, the Class Action Plaintiffs jointly moved to amend their

complaints to add the same allegations and parties as the Trustee. The Class Action Plaintiffs

support their request to amend their Complaints opening with the comment that they “add new

facts learned . . ., in particular from complaints filed by the [Trustee].”

THE CLASS ACTIONS

The Repex Action

51. On or about January 12, 2009, Repex, a purported investor in the Herald funds,

commenced a class action seeking damages and other remedies for “claims [that] arise from the

massive Ponzi scheme perpetrated by Madoff [sic] through his investment firm B[L]MIS.”

13

52. On or about October 5, 2009, Judge Berman named Repex as lead plaintiff of the

Repex Action, and limited the Repex Action to representing investors in the various Herald

funds.

53. On or about February 11, 2010, Repex filed a Second Amended Complaint.

54. On or about March 17, 2011, Repex requested an extension of time to file a

Proposed Third Amended Complaint, explaining, “[t]he extension is necessitated by the ongoing

release of substantial information concerning the Madoff fraud which is related to the plaintiff’s

allegations,” citing “a variety of complaints filed by Irving H. Picard. . . in this district,”

including the HSBC Action, the Kohn Action and the JPMorgan Action.

55. Repex also stated:“[I]t is Repex’s intent to file the strongest complaint possible.

This includes adding some of the defendants in the various Trustee actions . . . . The extensive

list highlights Repex’s need for the requested extension.”

56. On or about April 1, 2011, Repex filed its proposed Third Amended Complaint as

an exhibit to its motion to amend. The proposed Third Amended Complaint adds several more

defendants also named in the Trustee’s actions, withdraws all claims asserted under the

Exchange Act, and adds, amongst others, a claim for damages based on the Racketeer Influenced

and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq. (“RICO”), identical to the claim

asserted in the Kohn Action.

57. The Repex Action defines the purported class as “all persons or entities who, (i)

owned shares of Herald Funds on December 10, 2008, or (ii) purchased shares of Herald Funds

from January 14, 2004 to December 10, 2008.”

58. The gravamen of the Repex Action is that various individuals and entities—

particularly the Herald funds—funneled investors’ money into BLMIS despite numerous signs of

14

fraud without engaging in its promised due diligence, while pocketing millions of dollars in fees

for doing so.

59. The similarities between the Repex Action and the Trustee’s Pleadings are set

forth in “Appendix A.”

60. In its memorandum in support of the motions to withdraw the reference, filed in

the HSBC Action, Kohn Action and JPMorgan Action, Repex states: “[T]he Trustee Actions

compete with the [Class Actions] for recovery of the same loss and are based upon the same set

of facts.”

61. Although Repex itself has not filed a customer claim with the Trustee, the Herald

funds, have submitted customer claims that have not yet been determined.

62. The Repex Class includes investors in the Herald funds who filed customer claims

with the Trustee.

The Leonhardt Action

63. On or about March 5, 2009, Horst Leonhardt, a resident of Austria and purported

investor in the Primeo Select Fund, commenced a class action seeking damages and other

remedies arising “from the massive Ponzi scheme perpetrated by Madoff and his investment firm

BLMIS.”

64. On or about October 5, 2009, Judge Berman named Cabilly, a purported investor

in Primeo funds, as lead plaintiff of the Leonhardt Action, and limited the Leonhardt Action to

representing investors in the various Primeo funds.

65. Cabilly and co-plaintiff KEB filed an amended complaint on or about February

11, 2010.

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66. In a letter dated March 17, 2011, counsel for Cabilly wrote to counsel for the

Trustee, “seek[ing] clarity on certain allegations against HSBC Defendants in the Trustee’s

December 5 complaint,” and requesting evidence that supports allegations made in the HSBC

Action.

67. On or about April 1, 2011, Cabilly and KEB filed a Proposed Second Amended

Complaint adding several defendants named in the Trustee’s Actions, as well as common law

claims for breach of contract, fraud, and negligent misrepresentation.

68. The Joint Motion that attached the Leonhardt Proposed Second Amended

Complaint states that the Leonhardt Action could not survive a motion to dismiss without

duplicating the Trustee’s Action:

Indeed, because Dr. Cabilly must plead his fraud claims with particularity, see Fed. R. Civ. P. 9(b), the additional evidence of defendants’ scienter which he seeks to add in his proposed Second Amended Complaints is critical to his claims. Much of this evidence, particularly as to certain of the HSBC entities, only recently came to light with the filing of, and removal of redactions in, the complaints in the Trustee actions.

69. The Leonhardt Action defines the purported class as “all persons or entities who

(i) owned shares of the Primeo Funds on December 10, 2008, or (ii) purchased shares of the

Primeo Funds from January 12, 2004 to December 10, 2008 (the “Class Period”), and were

damaged thereby due to the wrongful conduct alleged in this Complaint.”

70. The gravamen of the Leonhardt Action is that the “[D]efendants (i) were

obligated to perform due diligence on Madoff and safeguard Plaintiffs’ and Class members’

investments, but (ii) failed to fulfill those duties.”

16

71. Primeo did not file a customer claim with the Trustee. However, upon

information and belief, Primeo was fully invested in other Madoff feeder funds, notably Herald,

all of whom tiled customer claims.

72. The similarities between the Leonhardt Action and the Trustee’s Pleadings are set

forth in “Appendix B.”

The Perrone Action

73. On or about March 19, 2009, Fabian Perrone, a resident of Argentina, and Chia-

Hung Kao, a resident of Taiwan, and purported investors in various Thema, Primeo, and other

funds, commenced a class action seeking damages and other remedies for “wrongful conduct in

connection with the fraud and Ponzi scheme run by Madoff through his investment firm

B[L]MIS.”

74. On or about October 5, 2009, Judge Berman named Davis as lead plaintiff of the

Perrone Action, and limited the Perrone Action to representing investors in the various Thema

funds.

75. On or about February 11, 2009, Davis filed an amended complaint.

76. On or about April 1, 2011, Davis filed a Proposed Second Amended Complaint

adding several defendants named in the Trustee’s Actions and withdrawing all claims asserted

under the Exchange Act.

77. The Davis Action defines the purported class as “all persons and entities who

either owned shares of Thema . . . on December 10, 2008, or purchased shares of Thema between

January 12, 2004 and December 14, 2008 inclusive, and suffered damages thereby due to the

wrongful conduct alleged in this Amended Complaint.” (the “Perrone Class”)

17

78. The gravamen of the Perrone Action is that various individuals and entities—

particularly the Thema funds—funneled investors’ money into BLMIS despite numerous signs

of fraud without engaging in promised due diligence, and pocketed millions in fees for doing so.

79. The Thema Funds have submitted to the Trustee customer claims that have not

yet been determined.

80. The Perrone Class includes investors in the Herald funds who filed customer

claims with the Trustee.

81. The similarities between the Perrone Action and the Trustee’s Pleadings are set

forth in “Appendix C.”

THE CLASS ACTIONS THREATEN THIS COURT’S JURISDICTION AND THE

ADMINISTRATION OF THE ESTATE AND AN INJUNCTION IS NECESSARY TO PRESERVE AND PROTECT THE ESTATE

82. The Class Actions are each active and pending before Judge Berman in the

Southern District of New York.

83. Both the Trustee and the Class Action Plaintiffs allege that the Defendants owe

them money damages for losses related to Madoff’s fraud. Both the Trustee and the Class

Action Plaintiffs base their allegations on the same aspects of the Defendants’ conduct in

contributing to and enabling the fraud. The Class Actions are duplicative and derivative of the

Trustee’s complaints against the various defendants.

84. The Class Action Plaintiffs seek to take for themselves Customer Property that

otherwise would be recoverable by the Trustee and equitably distributed to customers of BLMIS

in accordance with this Court’s March 1, 2010 Net Equity Decision and its March 8, 2010 Net

Equity Order.

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COUNT ONE DECLARATORY RELIEF

85. The Trustee incorporates by reference the allegations contained in the foregoing

paragraphs of this Complaint as if fully set forth herein.

86. This is a claim for declaratory relief under 28 U.S.C. §§ 2201, et seq.

87. Each of the Class Action Plaintiffs has alleged that it is entitled to a judgment

against individuals and entities named as defendants by the Trustee.

88. The Class Actions violate the automatic stay provisions under 11 U.S.C. § 362(a),

section 78eee(b)(2)(B) of SIPA, and the Stay Orders. This Court should therefore declare them

void ab initio.

89. Declaratory relief is warranted for, without limitation, the following reasons:

a. By seeking to recover damages from the defendants, the Class Actions improperly

circumvent the claims administration process in the SIPA proceeding and

interfere with the Trustee’s exclusive right to seek recovery of fraudulently

transferred property in direct violation of 11 U.S.C. § 362(a)(1) and (6).

b. Additionally, the Class Actions improperly seek to recover on a claim against

debtors in violation of 11 U.S.C. § 362(a)(1) and seek to obtain possession of

customer property in direct violation of 11 U.S.C. § 362(a)(3), section

78eee(b)(2)(B) of SIPA, and the Stay Orders.

90. The Court has authority pursuant to sections 105(a) and 362(a) of the Bankruptcy

Code to issue declaratory relief because this controversy is actual and justiciable, and the Court

has jurisdiction over matters affecting BLMIS property and the effective and equitable

administration of the debtors’ estate.

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COUNT TWO INJUNCTIVE RELIEF

91. The Trustee incorporates by reference the allegations contained in the foregoing

paragraphs of this Complaint as if fully set forth herein.

92. This is a claim for injunctive relief.

93. Any further prosecution of the Class Actions should be enjoined pursuant to

section 105(a) of the Bankruptcy Code, made relevant to these proceedings by section 78fff(b)

of SIPA, pending the completion of the Trustee’s Action.

94. Specifically, the Trustee requests that this Court enjoin the prosecution of the

Class Actions for, without limitation, the following reasons:

a. To the extent that Class Action Plaintiffs are successful in the Class Actions,

section 78fff-2(c)(1)—which provides for the ratable distribution of customer

property to customers—would be violated because the Class Action Plaintiffs

would receive more than their proportionate share of customer property to the

detriment of other similarly situated customers.

b. There is an inadequate remedy at law to protect and preserve the assets that

constitute customer property. The Class Actions threaten the orderly

administration of the consolidated estate of BLMIS, and an injunction is

necessary to preserve and protect customer property and the Trustee’s efforts to

gather and collect customer property for the benefit of the victims who have filed

claims.

c. An injunction will prevent the substantial confusion of other investors and

potential plaintiffs with respect to whether they must file separate actions to

protect their interests.

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d. An injunction will maximize judicial economy. Instead of having a court in

another jurisdiction considering these issues, this Court, which is already familiar

with the relevant facts, can most expeditiously resolve the issues raised in the

Class Actions.

e. An injunction will avoid the possibility of inconsistent decisions.

f. An injunction will allow the Trustee to avoid appearing in the Class Actions and

incurring needless litigation costs.

g. The injunction will not harm the public interest, is in the best interest of BLMIS’s

customers, and serves best the orderly administration of the claims administration

process.

95. The injunction requested herein is necessary and appropriate to carry out the

Trustee’s duties in accordance with the provisions of SIPA and the Bankruptcy Code. Any

further prosecution of the Class Actions prior to the completion of the Trustee’s Action would

seriously impair and potentially defeat this Court’s ability to administer the BLMIS

proceedings. Alternatively, the Trustee seeks to enjoin enforcement by the Class Action

Plaintiffs of any judgment they may obtain against the Defendants.

WHEREFORE, the Trustee respectfully requests that this Court enter judgment in favor

of the Trustee and against the Class Action Plaintiffs:

i. declaring that the Class Actions violate the automatic stay provisions under

11 U.S.C. § 362(a), section 78eee(b)(2)(B)(i) of SIPA, and the Stay Orders and are therefore

void ab initio;

ii. issuing An injunction, pursuant to section 105(a) of the Bankruptcy Code,

prohibiting the Class Action Plaintiffs, and those acting in concert or participation with them or

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on their behalf, from pursuing the Class Actions against defendants named in the Trustee’s

Actions, until such time as the Trustee has completed the Trustee’s Actions and collected upon

any judgments obtained;

iii. in the alternative, issuing an injunction, pursuant to section 105(a) of the

Bankruptcy Code, prohibiting the Class Action Plaintiffs, and those acting in concert or

participation with them or on their behalf, from executing on any judgments obtained against any

defendants named in the Trustee’s Actions, until such time as the Trustee’s Actions have been

adjudicated or settled by any Court order and the Trustee has collected upon any judgments

obtained; and

iv. granting the Trustee such other relief as the Court deems just and proper.

Date: New York, New York April 7, 2011 Of Counsel: Jacqlyn R. Rovine Email: jrovine@bakerlaw.com Anthony M. Stark Email: astark@bakerlaw.com Jessie A. Schweller jschweller@bakerlaw.com Peter B. Shapiro pshapiro@bakerlaw.com Anat Maytal amaytal@bakerlaw.com

/s/ Oren J. Warshavsky Baker & Hostetler LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 Oren J. Warshavsky Email: owarshavsky@bakerlaw.com Eric R. Fish Email: efish@bakerlaw.com Adam B. Oppenheim Email: aoppenheim@bakerlaw.com Geoffrey A. North Email: gnorth@bakerlaw.com Natacha Carbajal Email: ncarbajal@bakerlaw.com Jacqlyn R. Rovine Email: jrovine@bakerlaw.com Attorneys for Irving H. Picard, Trustee for the Substantively Consolidated SIPA Liquidation of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff