Madoff Trustee Ups Damages Claimed From JPMorgan To $19B

Jun 27 2011 | 8:49am ET

Irving Picard, the court-appointed trustee for Bernard L. Madoff Investment Securities, has tripled the damages he’s seeking from JPMorgan Chase to at least $19 billion.

Picard filed an amended complaint against JPMorgan on Friday in the U.S. District court for the Southern District of New York.

The amended complaint builds on the trustee’s original allegations that JPMC enabled Madoff’s $65 billion Ponzi scheme while the higher damages reflect "life-to-date damages," or what the trustee considers the minimum losses over the entire lifespan of Madoff's Ponzi scheme.

“Our amended complaint shows that JPMC’s bankers literally watched the fraud unfold before their very eyes,” said Deborah H. Renner, a partner at Baker & Hostetler, the court-appointed counsel for the trustee. “They could see that money customers deposited into BLMIS’s main account was not used to buy or sell securities. They could see that it was merely transferred to other customers, in patterns serving no legitimate business purpose. They could see millions of dollars routinely bouncing back and forth between Madoff and JPMC Private Banking customers. They could see that Madoff’s regulatory filings were materially inconsistent with BLMIS’s actual finances. Yet, as alleged, they allowed the fraud to continue.”

The amended complaint draws on information from two former employees of an unnamed financial institution which also had dealings with Madoff. In 1997, that institution grew suspicious of Madoff’s “nearly daily circular transactions” between his account at the unnamed institution and his JPMC account (then The Chase Manhattan Bank). An investigation followed and the institution subsequently closed Madoff’s account.

The original complaint, filed against JPMC on December 2, 2010, sought $6.4 billion, including $5.4 billion of damages and $1 billion for fraudulent transfers and claims.

Responding to questions about the amended complaint, JPMorgan spokeswoman Tasha Pelio told Reuters: "JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff. At all times, JPMorgan complied fully with all laws and regulations governing bank accounts."

JPMorgan has until August 1, 2011 to respond to Picard’s amended complaint.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of