Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

JPMorgan to Madoff trustee: Back off!

By Aaron Smith, staff writer


NEW YORK (CNNMoney) -- JPMorgan Chase accused the court-appointed trustee in the Bernard Madoff Ponzi case of overstepping his bounds with his $6 billion lawsuit against the financial services company.

"JPMorgan believes that the Trustee is entirely wrong in asserting that JPMorgan violated any federal statutes or regulations," said the bank's lawyer John Savarese, in a document filed in U.S. Bankruptcy Court in New York.

"JPMorgan, moreover, has the right to demand a jury trial with respect to most of the trustee's claims, which could not be conducted in the bankruptcy court," the lawyer said.

Irving Picard, appointed as trustee by New York bankruptcy court to lead the recovery of assets stolen by Madoff's firm, has sued JPMorgan for allegedly profiting from the largest Ponzi scheme in history.

The suit is seeking to recover nearly $1 billion in fees and profits and an additional $5.4 billion in damages from JPMorgan (JPM, Fortune 500), which acted as Madoff's banker from 1986 until 2008, when his scam collapsed. Picard has also accused JPMorgan executives of knowing that Madoff's firm was a front for a Ponzi scheme, but doing nothing to stop it.

JPMorgan, through its lawyer, responded by saying the trustee is "trying to pursue an enormous backdoor class action to recoup damages" of the Madoff victims, for which JPMorgan is not responsible.

A spokesman for the trustee did not respond to CNNMoney's request for a response.

The trustee has sued hundreds of Madoff investors, including firms, individuals and the owners of the New York Mets baseball team, for profiting from their investments in his firm.

As part of this effort, the trustee reached a $7.2 billion settlement in December with Barbara Picower, widow of investor Jeffry Picower, who had withdrawn $7.8 billion from Madoff's firm since the 1970s, even though he only invested $619 million.

Many of these investors portray themselves as victims who were wiped out by the Ponzi scheme and claim they knew nothing about it prior to its collapse.

In March 2009, Madoff pleaded guilty to a federal judge for orchestrating the longest-running Ponzi scheme in history, snagging thousands of victims in his net, and stealing billions of dollars.

Madoff used his Manhattan investment firm as a front for the pyramid-style scam. He took money from investors, making a bogus claim of better-than-average returns from his market investments. Some of the money would go to his more mature investors as part of the ruse to draw in more funds.

Madoff is serving a 150-year sentence in a medium security federal prison in Butner, N.C. To top of page

Index Last Change % Change
Dow 17,400.75 -610.32 -3.39%
Nasdaq 4,707.98 -202.06 -4.12%
S&P 500 2,037.41 -75.91 -3.59%
Treasuries 1.58 -0.16 -9.20%
Data as of 6:51pm ET
Company Price Change % Change
Bank of America Corp... 13.00 -1.04 -7.41%
Microsoft Corp 49.83 -2.08 -4.01%
Ford Motor Co 12.52 -0.88 -6.57%
General Electric Co 29.82 -1.37 -4.39%
Micron Technology In... 13.21 -0.84 -5.98%
Data as of 3:51pm ET
Sponsors

Sections

Barnes and Noble announced plans to start selling alcohol in some of its stores. And shares of the bookstore chain rallied on the news while the rest of the market was down on Brexit fears. More

The U.K. voted to leave the European Union on Thursday. The vote could affect Americans in a litany of ways. More

Startup Spark examined the effects that political candidates had on the human brain and nervous system using a device called BrainWave. Here's what it found. More