New York State Attorney General Eric Schneiderman filed a lawsuit Monday against J.P. Morgan Chase & Co., accusing the country’s largest bank of defrauding investors with defective mortgage-backed securities.

The complaint accuses Bear Stearns & Co., which JPMorgan Chase acquired in 2008, of pooling and selling mortgage loans without fully investigating their quality. According to the civil suit, JPMorgan “systematically failed to fully evaluate the loans, largely ignored the defects that their limited review did uncover, and kept investors in the dark about both the inadequacy of their review procedures and the defects in the underlying loans.”

When Bear Stearns did uncover defective loans, the claim alleges, it settled with the loans’ originators, and then pocketed the money while leaving the loans in the pools. The complaint estimates that losses totaling roughly $22.5 billion resulted from securitized mortgages that Bear Stearns sponsored and underwrote in 2006 and 2007. Schneiderman is seeking unspecified damages and a disgorgement of all earnings resulting from the alleged fraud.

The lawsuit is the first to come out of the Residential Mortgage Backed Securities Fraud Working Group, which President Obama formed to investigate the pooling and sale of risky mortgages before the 2008 financial crisis. Schneiderman serves as co-chairman of the group.

“We believe that this is a workable template for future actions against issuers of residential mortgage-backed securities that defrauded investors and cost millions of Americans their homes,” the attorney general said in a statement. “We need real accountability for the illegal and deceptive conduct in the creation of the housing bubble in order to bring justice for New York’s homeowners and investors.”

A spokesman for JPMorgan criticized the Schneiderman for filing the suit “without ever offering [the bank] an opportunity to rebut the claims and without developing a full record.”

Read more at the New York Times and Bloomberg.

For more InsideCounsel coverage of the financial crisis, see:

Bank of America pays $243 billion in shareholder suit

Lehman Brothers to pay another $10.5 billion to creditors

Citigroup will pay $590 million in settlement related to financial crisis

DOJ drops Goldman criminal investigation

DOJ to pursue more corporate fraud cases

Citigroup-SEC settlement rejected