Madoff Trustee Seeks $19 Billion From JPMorgan


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Whistleblower document warned SEC in Nov. 2005 about Madoff’s Ponzi scheme

Madoff trustee seeks $19 billion from JPMorgan (Reuters, June 24, 2011):

* Trustee Irving Picard triples lawsuit to $19 billion

* JPMorgan, Madoff’s main bank, calls lawsuit meritless (Adds details from lawsuit, JPMorgan comment, background, dateline, bylines)

NEW YORK, June 24 (Reuters) – The trustee seeking money for Bernard Madoff’s victims is now seeking $19 billion from JPMorgan Chase & Co (JPM.N), tripling the amount he hopes to recover from what was once the imprisoned Ponzi schemer’s main bank.

The amended complaint was filed by the trustee Irving Picard just three days after the second-largest U.S. bank agreed to pay $153.6 million to settle U.S. Securities and Exchange Commission fraud charges.

Picard previously sought to recover $6.4 billion from JPMorgan, including $1 billion representing fraudulent transfers and claims, and $5.4 billion of damages.

“JPMorgan Chase’s bankers literally watched the fraud unfold before their very eyes,” Deborah Renner, a lawyer representing Picard, said in a statement.

Tasha Pelio, a JPMorgan spokeswoman, repeated in an email the bank’s earlier statement that Picard’s lawsuit is meritless and distorts the facts and law.

“JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff,” she added.

Picard said the complaint includes additional allegations, including that two former employees of an unnamed financial institution had seen in 1997 “nearly daily circular transactions” between accounts at their employer and at Chase. That employer then closed its account for Madoff, Picard said.

The amended complaint also includes a demand that the case be heard before a jury.

In a complaint made public in February, Picard accused JPMorgan of being “thoroughly complicit” in Madoff’s fraud and ignoring red flags. [ID:nN16236764]

Madoff, 73, was arrested on Dec. 11, 2008, and after pleading guilty is serving a 150-year prison sentence.

Picard has filed roughly 1,050 lawsuits seeking more than $100 billion for former Madoff investors.

JPMorgan now has until Aug. 1 to respond to the amended complaint, Picard said.

JPMorgan shares fell 19 cents in after-hours trading, after closing Friday’s session down 58 cents at $39.49. Picard disclosed the amended complaint after U.S. markets closed.

The cases are Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932; and Picard v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 11-00913.

More info:

Matt Taibbi: The People vs. Goldman Sachs (Rolling Stone)

Bernard Madoff claims ‘the whole government is a Ponzi scheme’, accuses his investors of greed

Matt Taibbi: Why Isn’t Wall Street in Jail? (Rolling Stone)

Over drinks at a bar on a dreary, snowy night in Washington this past month, a former Senate investigator laughed as he polished off his beer.

“Everything’s fucked up, and nobody goes to jail,” he said. “That’s your whole story right there. Hell, you don’t even have to write the rest of it. Just write that.”

I put down my notebook. “Just that?”

“That’s right,” he said, signaling to the waitress for the check. “Everything’s fucked up, and nobody goes to jail. You can end the piece right there.”

Nouriel Roubini: “When Governments Reach the Point Where They Are Borrowing to Pay the Interest on Their Borrowing They Are … Running a Ponzi Scheme”

Markopolos: Bernie Madoff’s Ponzi Scheme ‘Will look Like Small-Time’

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