The liquidators of a London business owned by American conman Bernie Madoff have lost a High Court claim to recover money paid to a leading Jewish businesswoman.

Mr Justice Popplewell found that Sonja Kohn, from Austria, had acted “in good faith” and had had no reason to suspect Madoff’s crooked dealings.

Madoff is now in the fifth year of a 150-year jail term in the United States after defrauding clients of his American investment arm of billions of dollars .

From 1992 to 2007, Mrs Kohn received payments of around £16,750,000 for services given to Madoff Securities International Limited (MSIL), a legitimate business which Madoff had set up in London.

She also earned nearly £20 million for introducing potential clients to his American investment business over the years.

Mrs Kohn was paid by the London company for introducing important individuals and institutions, providing financial advice and research reports.

But liquidators acting for MSIL claimed the London payments had been a cover for her supplying investors to Madoff’s American operation.

The judge rejected the argument that the arrangement had been a sham. Mrs Kohn, he said, “was providing legitimate services for which she was not overcharging”.

Until late 2008, she had had “no reason to question the integrity of Bernard Madoff”, the judge said.

He noted that she and her family had also invested around £7.5 million of their own money in Madoff’s US business.

“One striking feature of the Madoff debacle is that none of the entities she introduced to Madoff’s investment advisory business have brought claims against her.

For all their losses, none of them has suggested any fault or inappropriate behaviour on her part,” he said.

Mrs Kohn, who was born shortly after the War in Vienna as the only child of Holocaust survivors, had led a “remarkable life”, he said.

After starting a jewellery business before she was 20, she raised five children and in the mid-80s switched to finance.

The judge also rejected MSIL’s claims against several of its former directors, including Madoff’s surviving son Andrew.

Israeli-based lawyer Trevor Asserson, whose firm acted for Mrs Kohn, said that “this was a bad claim which should never have been brought. It has been crushingly and overwhelmingly defeated.”