June 24, 2011 / 10:45 PM / 6 years ago

Madoff trustee seeks $19 billion from JPMorgan

NEW YORK (Reuters) - The trustee seeking money for Bernard Madoff’s victims is now seeking $19 billion from JPMorgan Chase & Co, tripling the amount he hopes to recover from what was once the imprisoned Ponzi schemer’s main bank.

The amended complaint was filed by the trustee Irving Picard just three days after the second-largest U.S. bank agreed to pay $153.6 million to settle U.S. Securities and Exchange Commission fraud charges.

Picard previously sought to recover $6.4 billion from JPMorgan, including $1 billion representing fraudulent transfers and claims, and $5.4 billion of damages.

“JPMorgan Chase’s bankers literally watched the fraud unfold before their very eyes,” Deborah Renner, a lawyer representing Picard, said in a statement.

Tasha Pelio, a JPMorgan spokeswoman, repeated in an email the bank’s earlier statement that Picard’s lawsuit is meritless and distorts the facts and law.

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

Picard said the complaint includes additional allegations, including that two former employees of an unnamed financial institution had seen in 1997 “nearly daily circular transactions” between accounts at their employer and at Chase. That employer then closed its account for Madoff, Picard said.

The amended complaint also includes a demand that the case be heard before a jury.

In a complaint made public in February, Picard accused JPMorgan of being “thoroughly complicit” in Madoff’s fraud and ignoring red flags.

Madoff, 73, was arrested on December 11, 2008, and after pleading guilty is serving a 150-year prison sentence.

Picard has filed roughly 1,050 lawsuits seeking more than $100 billion for former Madoff investors.

JPMorgan now has until August 1 to respond to the amended complaint, Picard said.

JPMorgan shares fell 19 cents in after-hours trading, after closing Friday’s session down 58 cents at $39.49. Picard disclosed the amended complaint after U.S. markets closed.

The cases are Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932; and Picard v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 11-00913.

Reporting by Jonathan Stempel in New York and Jochelle Mendonca in Bangalore; editing by Andre Grenon

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