Madoff trustee wants billions more from JPMorgan

@CNNMoney June 25, 2011: 3:14 PM ET

NEW YORK (CNNMoney) -- The trustee in the Bernie Madoff case filed an amended complaint against JPMorgan Chase on Friday, upping the damages sought from $5.4 billion to $19 billion for the bank's alleged role in the Ponzi scheme.

Irving Picard, the trustee, had previously filed a complaint that sought to recover nearly $1 billion in fees and profits and an additional $5.4 billion in damages stemming from the bank's long stint as Madoff's banker.

But now Picard is alleging that JPMorgan Chase (JPM, Fortune 500) bankers played a larger role, and knowingly watched the fraud unfold without taking action.

"As alleged in the amended complaint, [JPMorgan Chase] not only should have known that a fraud was being perpetrated, they did know," David Sheehan, Picard's lawyer and a partner at Baker & Hostetler, said in a statement.

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.

In February, JPMorgan responded to Picard's initial complaint, accusing the trustee of overstepping his bounds.

"JPMorgan believes that the Trustee is entirely wrong in asserting that JPMorgan violated any federal statutes or regulations," the bank's lawyer John Savarese said in a court filing.

In a statement to CNNMoney, a JPMorgan spokesperson said, "The complaint publicly released by the trustee for the Madoff estate is meritless and is based on distortions of both the relevant facts and the governing law. Contrary to the trustee's allegations, JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff. "

Picard's team now says the bank's wrongdoing goes beyond what they alleged in the initial complaint. Bankers could see that Madoff was not using his fund to sell or buy securities, or transfer money to other accounts for legitimate purposes, they say.

"Ponzi schemes can't survive without cash, and JPMC's banking activities on behalf of Madoff included the provision of loans which proved essential to Madoff and directly contributed to the ongoing success of his fraud," said Keith Murphy, a partner at Baker & Hostetler.  To top of page

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