JPMorgan ignored suspicions about Madoff: lawsuit

NEW YORK (Reuters) – JPMorgan Chase & Co executives stood ~ dint of. silently as their client Bernard Madoff ran his epic Ponzi scheme, hoping to protect the bank’s investments and continue doing walk of life with him, a newly released .4 billion lawsuit claims.

Irving Picard, a court-appointed trustee seeking to recover money for former Madoff clients, made the charge. in his complaint against the second-largest U.S. bank, each edited version of which was made public on Thursday.

“While large financial institutions enabled Madoff’s fraud, JPMorgan Chase was at the self-same center of that fraud, and thoroughly complicit in it,” the information filed with the U.S. bankruptcy court in Manhattan said.

The distemper shows for the first time how Picard believes JPMorgan put its confess interests in preserving a decades-long relationship with Madoff ahead of trying to stop his long-suspected fraud, which was revealed on December 11, 2008.

“For whatever it’s worth, I am sitting at lunch with (a bank employee) who accurate told me that there is a well-known cloud over the summit of Madoff and that his returns are speculated to be side of a (P)onzi scheme,” the complaint quotes from a June 15, 2007 email ~ means of an investment bank risk officer.

JPMORGAN CALLS TRUSTEE CLAIMS “UNFOUNDED”

The lamentation also quoted a JPMorgan employee who had in February 2006 urged that JPMorgan “assess capacity and detail” of reports from Madoff’s firm, noting in posse “significant” penalties if statements proved “fraudulent or incorrect.”

Jennifer Zuccarelli, a JPMorgan spokeswoman, in an emailed statement related the New York-based bank will defend against Picard’s “false” claims.

“JPMorgan did not know about or in somewhat way become a party to the fraud orchestrated by Bernard Madoff,” she declared.

“Madoff’s firm was not an important or eminently expressive customer in the context of JPMorgan’s commercial banking avocation, and the revenues earned from Madoff’s bank account were chaste and entirely consistent with conventional market rates and fees.

“The trustee makes no attempt to substantiate or support his unfounded claim that JPMorgan earned more than common sums from the Madoff account, and that claim is demonstrably forged,” she added.

“PALPABLE CONCERN”

Picard originally filed his ailment under seal. The edited version leaves out the names of manifold employees believed to have been suspicious of Madoff’s activities.

JPMorgan was the essential banker for Madoff’s firm, Bernard L. Madoff Investment Securities LLC, according to more than 20 years. Picard has been liquidating the firm inasmuch as Madoff’s estimated billion Ponzi scheme was uncovered.

“The bank’s uppermost executives were warned in blunt terms about speculation that Madoff was running a Ponzi plan, yet the bank appears to have been concerned only with protecting its have a title to investments” in Madoff feeder funds, Deborah Renner, one of Picard’s lawyers, before-mentioned in a statement.