A federal judge has dismissed a RICO suit against JPMorgan Chase brought by one of Bernard M. Madoff’s investors. MLSMK Investments, represented by Wachtel & Masyr, alleged that JPMorgan became aware of Madoff’s fraud in the summer of 2008 but continued to manage his Chase account and conduct trades with him. MLSMK, which lost $12.8 million deposited in Madoff’s Chase account, claimed that JPMorgan continued to work with Madoff because it earned commissions and fees from his Ponzi scheme. Along with the RICO claim, MLSMK alleged aiding and abetting, breach of fiduciary duty, commercial bad faith, and two counts of negligence.

But Southern District of New York Judge Barbara S. Jones ruled last week in MLSMK Investments Co. v. JPMorgan Chase & Co., 09 Civ. 4049, that MLSMK had failed to state a convincing motive for the alleged fraud. She cited case law from the 2nd U.S. Circuit Court of Appeals holding that routine benefits such as commissions and fees are not sufficient evidence of fraudulent intent.

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