Jan. 3--Westport National Bank on Friday sent a letter to its staff and customers stating it acted only as a custodian for clients investing in Bernard Madoff Investment Securities.

The bank sent the letter after the Wall Street Journal and The New York Times on Wednesday reported that investors in Florida had retained lawyers to investigate claims that the bank had steered their funds to Madoff.

"First, be assured that the Bank has not invested any of its own funds or the funds of its depositors with Madoff, and the Bank has not advised any customer or anybody else to invest with Madoff," Richard Cummings, president of Westport National Bank, said in the letter.

The bank is one of five divisions of Connecticut Community Bank, which formed in 2004 with the merger of Westport National Bank and Greenwich Bank & Trust, which were founded in 1998.

The bank's other divisions include Stamford Bank & Trust, Darien Bank & Trust and Norwalk Bank & Trust.

William Berkley, the owner of Greenwich-based insurance company W.R. Berkley Corp. and Westport National Bank's primary shareholder, was unable to be reached for comment Friday.

In 1999, at the request of an unidentified local company, Westport National Bank replaced another financial institution as the custodian for a number of individuals and entities that were investing with Bernard L. Madoff Securities, Cummings said.

"Nearly all of these individuals and entities had been investing with Madoff long before the

Bank was founded in 1998," Cummings said.

The custodial agreement "reflected the fact that each custodial client directed the Bank to give Madoff 'full discretionary authority' to invest the custodial client's funds," he said.

"Each custodial client specifically acknowledged in writing that the client had not relied on the Bank in choosing to invest with Madoff," he said.

The law firms representing clients are Boca Raton, Fla.-based Stein, Stein & Pinsky and McCabe Rabin PA of West Palm Beach, Fla.

"We are getting new calls daily," Adam Rabin, a lead attorney investigating the Madoff fallout, said Wednesday in a statement, adding his firm heard investors were required to invest a minimum of $10 million.

"Today, we're receiving calls that investors had pooled from several hundred thousand to several million dollars together with other investors," he said.

Certain banks and security firms did not perform sufficient due diligence on Madoff before investing their clients' money with him, said Ryon MCabe, co-lead counsel with McCabe Rabin.

"Beyond suitability issues, this is the worst securities fraud we have seen in a long time," he said.

Individuals and nonprofit foundations across Palm Beach County, Fla., have been impacted by the Madoff scheme, McCabe said.

Bernard Madoff Investment Securities collapsed after Madoff, 70, was arrested Dec. 11 and charged by federal prosecutors with securities fraud for orchestrating an alleged $50 billion Ponzi, or pyramid, scheme.

Westport National Bank sent a letter to its clients Dec. 12 notifying them that the agreement requires the bank to follow "written reasonable directions," including requests to return their money.

"Our role here is clearly ministerial," Cummings said Friday. "In light of the Madoff events, we asked our clients, 'How would you like to proceed?' "

It is unusual for a local community bank to act as an investment vehicle for a private investment fund, said John Carusone, president of the Hartford-based Bank Analysis Center.

"I think it'd be prudent to make sure all of the facts are known," he said. "I think this is going to be very interesting to see how this plays out."

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