Corporate & Securities Law

JPMorgan Chase Being Sued Over Madoff Fraud

By Keith Griffin

JP Morgan Chase, the main banker for the now-jailed Bernie Madoff, is being sued for $6.4 billion by the trustee charged with liquidating the former financier?s business. According to a statement made earlier this week by trustee Irving H. Picard, the lawsuit is based on claims that JP Morgan aided and abetted Madoff?s fraud.

?JPMorgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff,? David J. Sheehan,? counsel to Picard, said in the statement. ?JPMC was at the very center of that fraud, and thoroughly complicit in it.?

Any money recovered from JPMorgan will be returned to Madoff?s victims on a pro rata basis, Picard said.

As reported Dec. 2 by Investment News, the lawsuit is the second-biggest filed by Picard in the Madoff bankruptcy. In May 2009, Picard filed a $7.2 billion claim against investor Jeffry Picower, who later died in October 2009.

Last month, Picard sued UBS AG for at least $2 billion, claiming the company also helped Madoff in his fraud.

Madoff currently is serving a 150-year prison sentence after admitting his guilt in the biggest Ponzi scheme - $65 billion - in U.S. history. Meanwhile, investors who were defrauded by Madoff lost some $20 billion in principal.

Full post as published by Representing Investors on December 03, 2010 (boomark / email).