– Jewish Trust Sues Deutsche Bank For $3 Billion:
Just when it seemed that no more lawsuits are possible for Germany’s largest lender, which over the past two years has settled or otherwise paid billions to set aside a barrage of allegations of wrongdoing leading to the bank’s suspension of bonuses for most senior bankers, today we learn that Deutsche Bank was sued by a Jewish charitable trust in Florida, alleging that the bank wrongly withheld as much as $3 billion from the heirs to a wealthy German family.
According to Bloomberg, the lawsuit claims the bank refuses to return the funds initially deposited by the Wertheim family in accounts opened at what is now Credit Suisse Group AG before the rise of the Nazis in Germany. Those accounts were later transferred to Deutsche Bank, according to the complaint filed Wednesday in federal court by Wertheim Jewish Education Trust LLC.
Deutsche Bank has “refused to cooperate with the heirs of the Wertheim family fortune in the recovery and return of the monies that they are withholding from the rightful heirs,” and preventing the use of the funds for charitable and other purposes, according to the complaint filed in Fort Lauderdale.
While on the surface, the case looks mindane, the details are interesting.
The charitable trust is an heir to the descendants of Joseph Wertheim, a family that amassed a fortune by building the KaDeWe department store in Berlin and a textile and manufacturing empire in Frankfurt, according to the complaint. One of those descendants, Karl Wertheim, feared the German rise of anti-Semitism in the 1920s, moved his businesses to Spain and opened an account at Credit Suisse in 1931.
The Swiss bank protected the family assets through the rise of the Nazis in the 1930s and during World War II, using secret numbered accounts, pseudonyms and trust accounts, according to the complaint.
When Karl Wertheim died in 1945, the estate passed to his wife, Maria, who managed the fortune until the early 1970s, according to the lawsuit. The fortune included the sewing machine and office-machine business of Hispano Olivetti SA, accounts and investment portfolios in Swiss banks, land in Europe and the U.S. and art collections, it said. As the health of Maria Wertheim deteriorated, she turned to Ambrosius Wolfgang Bauml to help manage the assets. After she died in 1976, Bauml managed the Wertheim family fortune until his death in 1990, when control passed to the family of Rudolf Sutor.
This is where Deutsche bank comes in: “through a complex series of events, the assets were transferred in 1993 to Deutsche Bank, which misled the Wertheim heirs for many years about the accounts, according to the complaint.” The lawsuit thus seeks return of $3 billion and an accounting of the assets in dispute.
Understandably, being quietly accused of antisemitism did not strike Deutsche Bank as proper and it responded that is “taking the matter very seriously,” according spokesman Tim-Oliver Ambrosius. “The accusations are completely unfounded, and Deutsche Bank denies them,” he said. “All proceedings initiated against Deutsche Bank in this matter have been decided in favor of Deutsche Bank.”
To be sure, Deutsche Bank has had “sensitive” exposure in the past. Back in 1998, Deutsche Bank acknowledged that it had dealt in Nazi gold during World War II and said it ”regrets most deeply injustices that occurred.” The publication of a historian’s report commissioned by the bank, and the bank’s response to it expanded a class-action suit brought by lawyers in New York on behalf of Holocaust survivors against Deutsche Bank which had long been regarded by other historians as having played key roles in the financing of the Nazi war effort.
”Of course these transactions took place,” said Ronald Weichert, a Deutsche Bank spokesman, referring to the report’s conclusion that the bank had bought more than 4.4 tons of gold from the Reichsbank, the onetime central bank. ”This gold business was normal business during the war.” At wartime values and exchange rates, the gold was worth some $5 million, about one ninth of its estimated worth today.
The bank commissioned historians from Israel, the United States, Britain and Germany to produce an independent report on its wartime gold dealings — part of a wave of inquiries inspired by developments in Switzerland. The Swiss central bank was the biggest single purchaser of looted gold acquired by Nazi Germany from countries it occupied and from individual Jews robbed as they faced death in extermination camps.
The report said Deutsche Bank channeled gold transactions with the Reichsbank through branches in occupied Austria and Turkey, then a self-avowed neutral power. Of purchases totaling 4,446 kilograms of gold, the report concluded, 744 kilograms were dental gold taken from Jews’ teeth, wedding bands and personal jewelry amassed in Berlin by an SS officer named Bruno Melmer.
It is unclear whether DB’s Nazi war effort” roots will be unearthed as part of this lawsuit. However, with Deutsche Bank rolling over on virtually every other lawsuit it has been handed in recent years, it would not be surprising if the plaintiff’s case emerged as strong. Ultimately, should a court find in favor of the Trust, Deutsche Bank may just need to get that refinancing that it avoided when the DOJ slashed its “ask” on the US RMBS settlement by more than half.
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