The New York Times reports that the trustee seeking to recover funds for defrauded investors, Irving H. Picard, asked the Supreme Court to overturn a lower court decision barring him from pursuing banks for their role in helping perpetuate the fraud.
Meanwhile, the prosecution of five former employees of Madoff’s firm began last week. The criminal trial is likely to expose more tidbits about the operation of the long-running fraud, including lurid details about sexual liaisons among staff members involving perhaps even Madoff himself. Yet, despite the titillating aspects of the case, it is really more of a footnote to his scheme.
The more important case concerns Picard’s efforts to recover funds from a number of banks, including JPMorgan Chase, UBS, HSBC and UniCredit. He accused them of aiding in the Madoff scheme by ignoring warning signs about the fraud that allowed it to grow. As time went on, the scheme cost investors about $17bn, and wiped out billions more, as they were led to believe the money was safely in their accounts.
The trustee’s claim against JPMorgan alone seeks nearly $19bn, so recovering even a portion of that amount could add significantly to the $9bn Picard has already gathered to compensate investors.
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