JPMorgan Chase, the bank where Bernard Madoff kept his clients’ money, said in a court filing on Tuesday that it had no legal obligation to figure out that the Ponzi king’s investment scheme was a fraud. The bank also challenged trustee Irving Picard’s legal standing to bring the case. JPMorgan said that as the trustee for Madoff’s company, Mr. Picard, of Baker & Hostetler, had no authority to bring what amounted to “an enormous backdoor class action” on behalf of Madoff’s customers. JPMorgan said the case should be tossed out of bankruptcy court and brought instead in federal district court, where the two sides could fight it out before a jury. The request to move the case is pending before Southern District Bankruptcy Judge Burton R. Lifland and is not likely to be acted on immediately.
The bank is defending itself against a $6.4 billion lawsuit filed this month by the court-appointed trustee trying to restore all of the money Mr. Madoff stole to its rightful owners. In the suit, Picard v. JPMorgan Chase, 10-4932, Mr. Picard claimed the bank had suspected for years that something was amiss with Mr. Madoff’s operation.
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