Former customers of the massive Madoff Ponzi scheme have now filed their own class action lawsuit seeking to recover $19 billion from JPMorgan Chase & Co. It was claimed in this suit that the bank willfully ignored signs of fraud. The lawsuit, filed in federal court in Manhattan, claims the bank was ”thoroughly complicit” in concealing Madoff’s fraud.
This lawsuit comes less than a week after the Picard lawsuit mentioned above was dismissed for a lack of standing. Since that ruling said only victims of the fraudulent scheme can pursue such claims, it appears this lawsuit will meet that test and will go forward. The class action lawsuit asserts that even a cursory examination of the finances of Bernard L. Madoff Investment Securities LLC would have revealed that the money was not used to follow an investment strategy but simply flowed between Madoff and his customers.
It was alleged in the lawsuit:
JPMC chose to enable Madoff’s fraud, not just through the various ways it participated in his activity, but by helping to cover Madoff’s naked theft with the imprimatur of a globally recognized financial institution.
I anticipate the response to this lawsuit will be similar to that made in the Picard’s lawsuit. In that case the bank argued that the trustee failed to show that anyone at the bank knew of Madoff’s scheme or deliberately worked with him in order to earn more fees. It will be interesting to see how this case develops.
Source: Claims Journal
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