Madoff Trustee Appeals to U.S. Supreme Court in Bank Suit
The trustee liquidating Bernard Madoff’s firm appealed to the U.S. Supreme Court, aiming to revive lawsuits that seek billions of dollars from banks including JPMorgan Chase & Co. (JPM) and HSBC Holdings Plc. (HSBA)
Irving Picard contends in his suits that the banks ignored Madoff’s fraud for the sake of millions of dollars in fees. A federal appeals court in New York threw out the suits in June. The fraud, the biggest Ponzi scheme in U.S. history, cost thousands of investors $17 billion in lost principal and billions more in imaginary profit.
Picard argues in his Supreme Court appeal, filed today in Washington, that the appeals court improperly limited the power of trustees and the protections for customers under the U.S. Securities Investor Protection Act.
The banks “are as responsible as Madoff for the enormous magnitude of customer losses,” Picard argued in court papers.
High court review would potentially give defrauded investors a bigger pot from which to recover their claims.
Picard so far has collected $9.5 billion, mostly by settling earlier lawsuits against individuals alleged to have known about the fraud. He has distributed $4.8 billion to customers, according to his website. The Securities Investor Protection Corp. has paid customers another $707 million.
Joe Evangelisti, a JPMorgan spokesman, and Juanita Gutierrez, an HSBC spokeswoman, declined to comment on the court filing.
Madoff, 75, is serving a 150-year prison sentence. His scheme collapsed in 2008 when he could no longer attract enough new money to fund withdrawals.
The case is Picard v. JPMorgan Chase & Co., 13-448.
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