JPMorgan sued for $6.4B over Madoff fraud

JPMorgan Chase & Co., Bernard Madoff’s “primary banker,” was sued for $6.4 billion by the trustee liquidating the imprisoned con man’s former firm. Irving H. Picard, the lawyer appointed as trustee by a New York bankruptcy court, said in a statement that he sued JPMorgan today over claims the bank aided and abetted Madoff’s fraud. Picard said his suit seeks $1 billion in fees and $5.4 billion in damages. “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. “JPMorgan did not know about or in any way assist in the fraud orchestrated by Bernard Madoff,” the bank said today in a statement. JPMorgan, the second-biggest U.S. bank, called Picard’s claims “irresponsible and over-reaching.” The bank, based in New York, said it has assisted Picard in his investigation of Madoff’s firm. The lawsuit was filed under seal in U.S. Bankruptcy Court in Manhattan, according to Picard’s statement. JPMorgan “has designated virtually all of their information as confidential,” Picard said. “We intend to move to have the complaint made public as soon as possible.” Second-Biggest The suit is the second-biggest filed by Picard in the Madoff bankruptcy, after a $7.2 billion claim he filed against investor Jeffry Picower in May 2009. Picower died in October 2009. On Nov. 23, Picard sued UBS AG for at least $2 billion, claiming the Swiss wealth-management firm also helped Madoff in his fraud. UBS said it bears no responsibility for Madoff’s crimes. Madoff, 72, is serving a 150-year sentence after admitting he directed the biggest Ponzi scheme in history. At the time of his arrest in December 2002, Madoff’s account statements reflected 4,900 accounts with $65 billion in nonexistent investments. Investors lost about $20 billion in principal. --Bloomberg