Madoff victims file class action suit against JP Morgan

[JURIST] Two former Bernard Madoff [JURIST news archive] investors filed a proposed class-action lawsuit against JP Morgan Chase & Co (JPMC) [corporate website] Monday seeking recovery of $19 billion for allegedly aiding Madoff in orchestrating his Ponzi scheme. The suit, filed in the US District Court for the Southern District of New York [official website], claimed JPMC willfully ignored signs of fraud [Reuters report] and was complicit in concealing Madoff's activities. The lawsuit further alleges that even a cursory examination of Madoff's funds would have revealed that there was no investment strategy and the money was simply flowing between Madoff and customers. It notes that JPMC had plenty of opportunities to question the legitimacy. Steve Berman, managing partner of Hagens Berman [official website] and attorney for the plaintiffs, stated that JP Morgan was, in effect, the banking back-office for the Madoff Ponzi scheme, shuffling piles of money from one account to another at Madoff's request. The bank, in response to a similar lawsuit which was dismissed last week, stated that the plaintiff had failed to show that anyone at the bank knew of Madoff's scheme or deliberately worked with him in order to earn more fees. The court dismissed the previous suit [decision, PDF] because Irving Picard, appointed trustee [official website], did not have standing [JURIST report] to seek money from the bank. Picard plans to appeal.

Another case from earlier this year was dismissed [opinion] against HSBC Holdings [corporate website] because the trustee had "no personal stake in the outcome of the controversy." Picard also plans to appeal this decision. The first payouts to Madoff's victims were approved [JURIST report] by the court in July. Picard filed almost 60 lawsuits [JURIST report] for victims of Madoff's fraud in December 2010 after being appointed trustee [order] in 2008. Madoff pleaded guilty [JURIST report] to 11 counts of securities fraud stemming from his Ponzi scheme in March 2009, and was sentenced [JURIST report] in June 2009 to 150 years in prison.

 

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