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JP Morgan Chase Sued For "Abetting" Madoff Fraud

JPMorgan Chase's profit soared 77 percent in the second quarter on the back of a slowdown in losses from failed loans.
AP Photo/Richard Drew
When disgraced financier Bernie Madoff's massive ponzi scheme was brought to light, one of the few people or institutions close to him to escape the affair relatively unscathed was JP Morgan Chase Bank.

Many at the time, however, wondered how Chase, Madoff's bank, could not have known something was amiss.

Now, almost two years after the scandal broke, the trustee trying to recover money for investors cheated by Bernard Madoff is suing JP Morgan Chase for $6.4 billion, saying the bank had a central role in abetting the disgraced financier as he carried out his fraud, the Associated Press reports.

Trustee Irving Picard announced Thursday the filing of the lawsuit in U.S. Bankruptcy Court in New York.

Picard alleges the bank ignored the fraud and collected fees and profits, even though it had well-documented suspicions about the scam.

"JP Morgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff," said David Sheehan, Picard's lawyer, in a statement, reports

Sheehan also said that JPMorgan "was at the very center of that fraud, and thoroughly complicit in it."

The lawsuit seeks to recover at least $1 billion in fees and profits and $5.4 billion in damages to be distributed to Madoff victims. The victims lost billions after Madoff revealed in December 2008 that his investment company was a gigantic fraud.