Madoff Trustee Can Appeal $19 Billion JPMorgan Ruling, Federal Judge Says
Irving Picard
Peter Foley/Bloomberg
Irving Picard, the trustee liquidating the firm of Bernard Madoff.
Irving Picard, the trustee liquidating the firm of Bernard Madoff. Photographer: Peter Foley/Bloomberg
The liquidator of Bernard L. Madoff’s firm, who lost the right to demand $19 billion in damages from JPMorgan Chase & Co. (JPM), can appeal the ruling to a higher court, a judge said.
JPMorgan last month won dismissal of trustee Irving Picard’s damage claims in his lawsuit alleging the biggest U.S. bank aided Madoff’s fraud. Picard can’t sue for common-law damages on behalf of the defunct Madoff firm’s customers, U.S. District Judge Colleen McMahon ruled in New York.
The judge directed a clerk to enter a final judgment dismissing eight claims from Picard’s complaint and said he can appeal the ruling under a deal struck with JPMorgan, according to court papers. Her decision followed a telephone conference yesterday, she said.
Picard agreed to put his remaining claims against JPMorgan on hold while he appeals. He told McMahon in a filing last month he has “no choice but to appeal the order.”
“Permitting an immediate appeal would provide much-needed finality for the trustee and the BLMIS estate as to the viability of these claims,” he said. BLMIS refers to Madoff’s firm.
Rulings by district judges McMahon and Jed Rakoff have knocked more than $28 billion off of Picard’s claims against banks and may cost him as much as $11 billion in recoveries from other cases to benefit investors who lost money in the Ponzi scheme, according to the trustee’s estimates.
Money Sought
The amount sought from JPMorgan, Madoff’s primary banker, represented Picard’s estimate of principal lost by all Madoff investors by the time the Ponzi scheme collapsed in December 2008, according to a complaint filed in June. The bank could have stopped the fraud if it had passed on its suspicions to regulators, he alleged.
JPMorgan said it didn’t know about or in any way become a party to the fraud and couldn’t be held responsible for a scheme orchestrated by Madoff alone.
Madoff pleaded guilty and is serving a 150-year prison term. Picard and his firm have made about $224 million in fees since Madoff’s 2008 arrest.
The McMahon cases are Picard v. JPMorgan Chase & Co., 11- cv-913; Picard v. UBS Fund Services (Luxembourg) SA, 11-cv-4212, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
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