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

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.