A look back at the gentle, comforting fraud of JPMorgan.
The trustee liquidating Bernard Madoff’s former investment firm sued JPMorgan Chase & Co. for $6.4 billion over claims the bank aided and abetted the imprisoned con man’s fraud. Irving H. Picard, the lawyer appointed as trustee by a New York bankruptcy court, said in a statement that he sued JPMorgan yesterday seeking $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, said Picard, who has so far recovered about $1.5 billion for Madoff creditors.
- Picard’s complaint “blatantly distorts both the facts and the law in an attempt to grab headlines,” JPMorgan, the second- biggest U.S. bank, said yesterday in a statement. “JPMorgan did not know about or in any way assist in the fraud orchestrated by Bernard Madoff.”
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. In addition to the Picower suit, Picard filed at least 18 other court claims seeking the return of $15.5 billion paid to Madoff friends and family, feeder funds, favored investors and others.
Over the past week, Picard has sued hundreds of so-called “net winners,” investors who withdrew more from their Madoff accounts than they invested. Picard, supported by a ruling in the case from U.S. Bankruptcy Judge Burton Lifland, claims such fictitious profits must be returned to the bankruptcy estate and paid out to all of Madoff’s victims with valid claims.
At the time of his arrest, Madoff’s account statements reflected 4,900 accounts with $65 billion in nonexistent balances. Investors lost about $20 billion in principal.
Song - Ballad of Bernie Madoff