UPDATE 1-JPMorgan sued by Ponzi schemer Petters' receiver

Wed Dec 29, 2010 7:15pm EST

* Receiver says JPMorgan, others missed red flags

* Defendants alleged to receive more than $300 mln

* Petters sentenced to 50 years in prison

NEW YORK, Dec 29 (Reuters) - JPMorgan Chase & Co (JPM.N) and several other defendants were sued by the receiver for Minnesota businessman Tom Petters, who accused them of missing clues that would have alerted them to the convicted Ponzi schemer's $3.65 billion fraud.

The receiver, Douglas Kelley, said the defendants received more than $300 million from Petters' scheme.

Kelley said this sum included more than $240 million from the sale of camera maker Polaroid Holding Co by JPMorgan's private equity affiliate One Equity Partners LP to Petters' company, Petters Group Worldwide Inc.

"The windfall that JPMorgan would earn on the transaction gave JPMorgan an incentive to ignore red flags that would have revealed the massive Ponzi scheme that Petters used to fund the Polaroid purchase," Kelley wrote in a complaint filed Wednesday in a Minnesota federal court.

Other defendants in the case include several former executives at Polaroid who were also directors at One Equity.

Kelley is seeking to recover money the defendants got from the Polaroid sale, plus assets the bank seized from Petters' accounts when the Ponzi scheme unraveled. He said Petters had held "numerous" accounts at JPMorgan from 2001 to 2008.

JPMorgan did not immediately return requests for comment.

Petters was sentenced in April to 50 years in prison after a federal jury convicted him on 20 criminal counts including wire fraud, mail fraud and money laundering.

The Ponzi scheme is one of the largest ever uncovered.

Petters, 53, is serving his term in a federal prison in Leavenworth, Kansas, and is not expected to be released until April 2052, Federal Bureau of Prison records show.

The case is Kelley v. JPMorgan Chase & Co et al, U.S. District Court, District of Minnesota, No. 10-04999. (Reporting by Jonathan Stempel and Elinor Comlay in New York; Editing by Gary Hill)