Skip to comments.Madoff trustee sues JPMorgan for $6.4 billion
Posted on 12/04/2010 5:58:38 AM PST by TigerLikesRooster
Madoff trustee sues JPMorgan for $6.4 billion
By Jonathan Stempel Thu Dec 2, 3:23 pm ET
NEW YORK (Reuters) The trustee seeking money for defrauded former clients of Bernard Madoff said he filed a $6.4 billion lawsuit accusing JPMorgan Chase & Co of aiding the imprisoned Ponzi schemer's fraud as his main banker.
The lawsuit is the second largest that trustee Irving Picard has filed against former Madoff clients or others he believes assisted in the estimated $65 billion Ponzi scheme.
JPMorgan, the No. 2 U.S. bank, was for more than 20 years the main banker for Bernard L. Madoff Investment Securities LLC, which the trustee is liquidating following its December 11, 2008 collapse. Picard must file "clawback" lawsuits to recover money lost in the fraud by the two-year anniversary of the Madoff firm's demise.
"JPMorgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff," said David Sheehan, a lawyer representing the trustee.
"While many financial institutions enabled Madoff's fraud, JPMorgan was at the very center of that fraud, and thoroughly complicit in it," Sheehan said.
(Excerpt) Read more at news.yahoo.com ...
I wouldn’t doubt this for a minute.
Thanks. I’ll be following this one closely. I wish there was something on Lehman’s...
“The LOVE of MONEY is the root of all evil.”
No question-----tax evasion and money laundering was the name of the game for these wealthy investors--funneling income to Madoff to avoid US taxes. These wealthy "philanthropists" had hundreds of millions they had to hide.
Keep in mind Madoff was running several scams simultaneously:
(1) a Ponzi fraud that made him and his family personally wealthy;
(2) laundering tax-free money for phony "charities,"
(3) IRS fraud facilitation;
(4) a protection racket (shielding investors from L/E);
(5) laundering tax-free money destined for big buck campaign contributions (campaign fraud).
Lehman Brothers managed Florida's public assets, sold securities, underwrote bond deals and handled residential and commercial mortgages. Local Fla governments are stuck with about $556M in tainted securities they can't redeem.
Counties, cities and school districts face $300M losses for roads, sewers and schools; $290M less to pay for hurricane claims, health care, community colleges, disabled infant care.
Biggest casualty is Fla's giant pension fund. More than $440M disappeared for 1 million retirees and public employees. The fund holds another $53M in Lehman bonds that lost most of their value; there's $323M tied up in worthless mortgage-backes securities from Lehman (if sold today, the pension fund would be out $188M more).
That's just for one state.
In another state, 75% of then-NJ Gov Corzine's (a Goldman Sachser) appointees to the shady govt agency investing pension billions were Lehman types.
The NJ EDA gave Lehman $123M tax dollars FOR DOING NOTHING.... thats right.....for nothing-----simply to cancel an earlier deal.
Too bad for JPMorgan. The whole financial industry did the same thing, but it was “Too Big For Fraud”. Morgan has the misfortune of being attached to one famous crime that can’t be slipped by the Sheeple.
Maybe a little off topic. But I have never understood why Madoff didn’t skip the country. With the kind of money he had I would have thought he would have had an escape plan. There must be somewhere nice that has no (or easy to defend) extradition laws.
I’m just amazed that he’s in jail.
The suit alleges that they allowed Madoff to open a checking account, and deposit and withdraw money.
A similar suit has already been thrown out in Florida. JPM has 10,000 lawyers among its employees. I don’t think this is going to go very far.
Have a legitimate source for that?
Is it good public policy to allow the courts to eliminate risk from the risk premium?
They were sophisticated investors who had a lock on beating the market.
They sought out Madoff for his secret strategy that no one else could come up with.
Sure, this way everyone will become wealthy beyond their wildest dreams. What is not to like?
“While many financial institutions enabled Madoff’s fraud, JPMorgan was at the very center of that fraud, and thoroughly complicit in it,”
Guess what won’t be in the news for long.