According to a press release put out by trustee Irving H. Picard, the complaint seeks to recover nearly $1 billion in fees and profits and an additional $5.4 billion in damages for JPMC’s decades-long role as BLMIS’s primary banker, aiding and abetting Madoff’s fraud. All recovered monies will be placed into the Customer Fund and distributed, pro rata, to BLMIS customers with valid claims.
The 114-page complaint, which includes quotations from internal emails at the bank, contains substantial detail supporting allegations that JPMC knew or should have known that Madoff was likely engaging in fraud. “Incredibly, the bank’s top executives were warned in blunt terms about speculation that Madoff was running a Ponzi scheme, yet the bank appears to have been concerned only with protecting its own investments in BLMIS feeder funds,” said Deborah Renner, a partner at Baker & Hostetler, law firm for the trustee, in the announcement.
The complaint alleges that JPMC had a palpable concern that Madoff was a fraud for years, but it was not until October 2008 that it reported Madoff to government officials. “Even then, JPMC executives did not restrict the BLMIS bank account, even though it was being used to launder money from the Ponzi scheme,” said Renner.
The complaint says JPMC repeatedly allowed suspicious transactions for high dollar amounts to occur in the BLMIS account. In addition, JPMC had financial reports in its possession that clearly evidenced fraud.
Picard initially filed the complaint under seal because JPMC had contended that information it had provided to the Trustee in the course of his investigation was confidential.“We have reached an agreement with opposing counsel to unseal a large majority of the complaint, with the exception of several allegations as well as the identities of the bank’s employees and customers,” Renner said in the announcement. “There is much more to come, in the way of documents and testimony, as we enter the discovery phase of the litigation. We will push for more information from JPMC in the course of the litigation so that the public can learn the full role of the bank in aiding and abetting Madoff’s Ponzi scheme.”
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