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Madoff trustee sues JPMorgan for $6.4 billion

By Aaron Smith, staff writer


NEW YORK (CNNMoney.com) -- The court-appointed trustee for the liquidation of Bernard Madoff's estate is suing JPMorgan Chase for $6.4 billion for allegedly aiding the most massive Ponzi scheme in history.

The trustee, Irving Picard, is suing the banking company for "nearly $1 billion in fees and profits and an additional $5.4 billion in damages for [JPMorgan's] decades-long role as [Madoff's] primary banker, aiding and abetting Madoff's fraud," according to a statement.

Picard said the complaint was filed under seal in U.S. Bankruptcy Court in Manhattan.

"J.P. Morgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff," said David Sheehan, counsel for the trustee, in a prepared statement.

He accused JPMorgan (JPM, Fortune 500) of being "at the very center of that fraud, and thoroughly complicit in it."

JPMorgan officials were not immediately available for comment.

Just days before, on Nov. 24, the trustee announced a similar lawsuit against UBS AG for $2 billion. The trustee accused the Swiss financial firm of participating in Madoff's Ponzi scheme.

More recently, on Nov. 28, the trustee announced a wave of 40 lawsuits against Madoff family members and former workers in a bid for $69 million.

Madoff, 72, pleaded guilty in March 2009 to 11 counts related to running the Ponzi scheme and was sentenced to 150 years in prison. He is incarcerated at a federal medium security facility in Butner, N.C.

Using his investment firm as a front, Madoff claimed to be investing his clients' money. He kept the fraud going by using deposits from new clients to provide so-called returns to more mature clients. But in reality, he was stealing the money and there were no returns

In the most recent tally, on Nov. 26, the trustee said it had recognized 2,309 claims worth more than $5.8 billion. To top of page

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