(Updated) Attorney General Richard Blumenthal said Monday that he’s suing Westport National Bank and an investment advisor whose firm invested money for the banks clients’ in Bernard Madoff‘s Ponzi Scheme.

The lawsuit seeking to recover $16 million was filed on behalf of the state Banking Department against Westport National Bank, PSCC Services Inc. and Robert Silverman, a Wilton pension consultant.

According to Blumenthal the bank allegedly collected $2.4 million in fees between 2000 and 2007 for performing various duties as a custodian for its clients’ funds, but most of the responsibilities were handed over the PSCC and Silverman. The investment firm earned $13.8 million in fees, “so much that Madoff himself complained, causing them to be lowered,” a press release from Blumenthal’s office said.

Blumenthal estimated that of the 200 clients involved in the mishandling of the funds about 100 were Connecticut residents. He said there were no municipalities and most of the pension funds involved were individual retirement accounts.

“These investors were betrayed twice, first by Madoff and then by their advisors who charged them millions and then hurled them into the abyss,” said Blumenthal. “Not only did they mislead investors, but miscalculated fees to enrich themselves.”

Blumenthal said the investigation is ongoing and depending on what he finds he may consider referring it to the Chief States Attorney for criminal prosecution.

Westport National Bank President Richard Cummings, Jr. said in an emailed statement that the bank denies the allegations and will vigorous defend the lawsuit.

“The Attorney General’s inflammatory press release contains numerous inaccuracies and fabrications with respect to our role and conduct,” Cummings said. “We never introduced anybody to Madoff or recommended that anybody invest with Madoff. We are shocked and disappointed by the actions of the Attorney General.”

The investment firm’s answering machine was full, but several calls were placed throughout the day seeking comment.