JPMorgan sued for ‘abetting’ Madoff

By Agence France-Presse
Thursday, December 2, 2010 22:13 EDT
google plus icon
  • Print Friendly and PDF
  • Email this page

NEW YORK — The trustee charged with recouping assets for victims of Wall Street fraudster Bernard Madoff said Thursday he was seeking $6.4 billion from JPMorgan Chase for supporting the scam.

In a statement, Irving Picard said a suit was filed in a New York federal bankruptcy court seeking to recover nearly $1 billion in fees and profits and $5.4 billion in damages for JPMorgan’s role as Madoff’s primary banker, “aiding and abetting Madoff’s fraud.”

“While many financial institutions enabled Madoff’s fraud, JPMC was at the very center of that fraud, and thoroughly complicit in it,” David Sheehan, counsel for the Madoff trustee, said in the statement.

JPMorgan Chase (JPMC), was Madoff’s primary banker for more than 20 years, he said, adding, “Madoff would not have been able to commit this massive Ponzi scheme without this bank.”

All recovered monies from the liquidation of the Bernard L. Madoff Investment Securities LLC — Madoff’s Ponzi scheme — were to be distributed to customers with valid claims.

JPMorgan Chase denied the allegations and vowed “to defend itself vigorously.”

“The trustee’s irresponsible and over-reaching allegations are especially disappointing in light of the significant effort that JPMorgan has made to assist the trustee in investigating the Madoff fraud,” Jennifer Zuccarelli, a JPMorgan spokeswoman, said in a statement.

“Any suggestion that JPMorgan supported Madoff’s fraud is utterly baseless and demonstrably false,” she added.

Picard, the government-appointed trustee, filed a suit against Swiss bank UBS on February 24, seeking $2 billion dollars in damages for its part in the massive fraud.

Madoff, who touted himself as one of New York’s most successful money managers, was arrested in early December 2008 for running a pyramid scheme, which he said totalled $65 billion.

He was sentenced in June 2009 to 150 years in prison.

Madoff’s victims, including charities, major banks, Hollywood moguls and savvy financial players, handed him tens of billions of dollars over more than two decades.

The crime rocked Wall Street, where Madoff was a former chairman of the Nasdaq stock market and pillar of the New York and Florida Jewish communities.

Madoff’s right hand man, Frank DiPascali, and his accountant, David Friehling, have since pleaded guilty in an investigation that has yet to fully unravel the crime or compensate the approximately 16,000 direct victims.

Even the amount of money stolen remains elusive: Madoff originally claimed to have been managing $65 billion, but in October the court-appointed liquidator said the real bottom line was $21.2 billion.

Madoff has insisted he acted alone, but a handful of others, including an assistant, two executives, computer experts and a bookkeeper have also been arrested.

Madoff, who rose from a humble start as a lifeguard in New York to become one of Wall Street’s most trusted and powerful money managers, is incarcerated in North Carolina.

His luxury watches, piano and other personal items were sold at auction to raise money for his fraud victims on November 13.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
By commenting, you agree to our terms of service
and to abide by our commenting policy.