Once a revered Wall Street trader, Madoff is now behind the bars for running a Ponzi scheme -- under which money taken from new investors is used to pay-off the existing clients.
Investors in Madoff's scheme lost about $50 billion. J P Morgan was the primary banker for Madoff's former company Bernard L Madoff Investment Securities LLC (BLMIS).
"The complaint seeks to recover nearly $1 billion in fees and profits and an additional USD 5.4 billion in damages for J P Morgan Chase & Co's decades-long role as BLMIS' primary banker, aiding and abetting Madoff's fraud," Irving H Picard, the trustee for the liquidation of Madoff's assets, said on Thursday.
The lawsuit has been filed against J P Morgan Chase & Co, J P Morgan Chase Bank, N A, J P Morgan Securities LLC and J P Morgan Securities Ltd. According to Picard, the money recovered would be distributed to Madoff's customers with valid claims. So far, the trustee has recovered about $1.5 billion.
"J P Morgan was wilfully blind to the fraud, even after learning about numerous red flags surrounding Madoff," the trustee's counsel David J Sheehan said. Sheehan is also partner at Baker & Hostetler LLP, the court-appointed counsel for the trustee.
Last month, Picard had filed an over $2 billion lawsuit against Swiss banking major UBS for allegedly concealing details regarding Madoff's ponzi scheme.
The 72-year-old Madoff is serving a jail term for 150 years for committing one of the biggest frauds in American history.
He cheated others and made billions!
Madoff spent nearly $1 mn on lobbying