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$20 billion sought from JPMorgan in Madoff scandal

25 june 2011, 12:02

Irving Picard, the Securities Investor Protection Act (SIPA )Trustee. ©Reuters
Irving Picard, the Securities Investor Protection Act (SIPA )Trustee. ©Reuters
A court-appointed trustee seeking to recover funds bilked by Bernard Madoff said Friday he will seek $20 billion from JPMorgan Chase, accusing it of being an active enabler of the massive fraud, AFP reports.

Irving Picard, the trustee, raised the amount being sought from $6.4 billion in an amended complaint against the Wall Street giant, his lawyers said.

"The trustee's amended complaint adds new evidence and expands our previous allegations that JPMC was an active enabler of the Madoff Ponzi scheme," said David Sheehan, a lawyer for Picard.

"As alleged in the amended complaint, JPMC not only should have known that a fraud was being perpetrated, they did know."

Madoff, 72, is serving a 150-year prison term after being found guilty of what is considered one of the biggest pyramid schemes ever, which by his account took in $65 billion dollars before it was uncovered in December 2008.

His victims, who invested with him over more than two decades, included charities, major banks, Hollywood moguls and savvy financial players.

Deborah Renner, another lawyer for Picard, charged that JPMorgan Chase's bankers "literally watched the fraud unfold before their very eyes," and did nothing to stop it.

She said they could see that money deposited into the main account of Madoff's investment firm, BLMIS, "was not used to buy or sell securities."

Instead, the funds were "merely transferred to other customers, in patterns serving no legitimate business purpose. They could see millions of dollars routinely bouncing back and forth between Madoff and JPMC Private Banking customers," Renner added.

"They could see that Madoff's regulatory filings were materially inconsistent with BLMIS's actual finances. Yet, as alleged, they allowed the fraud to continue."

JPMorgan denied the allegations when the suit was first brought in December, insisting they had no merit and were based on distortions of the facts and the law.

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