Madoff trustee readies amended JPMorgan lawsuit

Reuters News
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Posted: Jun 16, 2011 5:29 PM
Madoff trustee readies amended JPMorgan lawsuit

By Jonathan Stempel

NEW YORK (Reuters) - The trustee seeking money for Bernard Madoff's victims plans to amend by June 24 his $6.4 billion lawsuit against JPMorgan Chase & Co, once the imprisoned Ponzi schemer's main bank.

In a June 14 letter to U.S. District Judge Colleen McMahon in Manhattan, the trustee Irving Picard did not identify the planned changes, but said they will make the current complaint "a nullity."

JPMorgan asked on June 3 to dismiss that complaint.

Picard also asked for an extended timetable to pursue his case, prompting a sharp response from the judge.

"Why must I wait until June 24 for a new complaint?" McMahon handwrote on the letter on Thursday. "I set an expedited schedule for a reason. I will OK this schedule, but will not add ONE day to it in the future."

JPMorgan spokeswoman Jennifer Zuccarelli declined to comment. A spokeswoman for Picard was not immediately available for comment.

In a complaint made public in February, Picard accused the second-largest U.S. bank of being "thoroughly complicit" in Madoff's fraud and ignoring red flags.

JPMorgan countered that Picard never alleged facts to show the bank knew a Ponzi scheme was taking place.

Madoff was arrested on December 11, 2008, and after pleading guilty is serving a 150-year prison sentence.

McMahon had scheduled a July 28 hearing to consider JPMorgan's motion to dismiss the case. The new schedule suggests the hearing will be delayed at least into September.

The case is one of at least three that has been moved to federal district court, where juries can hear cases, from bankruptcy court, where Picard had originally sued.

U.S. District Judge Jed Rakoff is reviewing some issues in Picard's $9 billion case against HSBC Holdings Plc.

He is also considering whether the trustee can invoke racketeering law in a $58.8 billion lawsuit against Italy's UniCredit SpA, Austria's Bank Medici AG and its founder Sonja Kohn, and other defendants.

The case is Picard v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 11-00913.

(Reporting by Jonathan Stempel in New York; editing by Andre Grenon)