JPMorgan Faces Lawsuit Over Madoff Fraud
Dec 2nd 2010 6:30PM
Updated Dec 2nd 2010 7:22PM
JPMorgan Chase (JPM), which for 20 years was the primary bank of convicted financial manager Bernard Madoff, is taking some heat from a court-appointed trustee representing victims of Madoff's multibillion-dollar Ponzi scheme. In a lawsuit filed Thursday, trustee Irving Picard alleges that the investment bank failed to act on suspicions about Madoff's scheme and instead collected fees and profits on the purported investments.
Picard is seeking $6.5 billion from JPMorgan, including at least $1 billion in returned fees and profits and $5.4 billion in damages, the Associated Press reported. The allegations echo those that Picard made last week, when he sued Swiss bank UBS (UBS) for $2 billion for its alleged role in the largest-ever U.S. Ponzi scheme.
JPMorgan Chase said it would contest the claim. "Contrary to the trustee's allegations, JPMorgan did not know about or in any way assist in the fraud orchestrated by Bernard Madoff," the company said in a statement Thursday. "Any suggestion that JPMorgan supported Madoff's fraud is utterly baseless and demonstrably false."
Madoff, who disclosed in late 2008 that his investment company was committing fraud, is serving a sentence of 150 years in federal prison.