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Ponzi Scheme Collusion

Kelley v. JPMorgan Chase & Co et al. 10-cv-04999 (D. Minn) Minneapolis

Summary:

Similar to Picard/Madoff action, the case was filed by Douglas Kelley, trustee in bankruptcy for convicted Ponzi schemer Tom Petters and his former companies. The action seeks approximately $300 million, and alleges among other things that JP Morgan, Petters’ former bank, “knew or should have known that the money in Petters’ investment accounts was derived from fraud” and ignored “red flags” in order to profit from participation in the proposed acquisition of Polaroid by Petters. The actions also names individuals employed by JP Morgan or it subsidiary Equity One Partners, some of whom also served on the board of Polaroid, e.g. Rick Lazio, Jacques Nasser and Charles Auster; and names individual Polaroid officers and directors e.g. William Flaherty and J. Michael Pocock. Plaintiff claims that JP Morgan liquidated funds after Petters’ arrest and improperly transferred funds derived from Petters’ Ponzi scheme to the other defendants.

Status:

Filed 29 December 2010. JP Morgan has moved in the bankruptcy court action to withdraw the reference (to have the case moved from bankruptcy to federal district court) due to alleged similarity of the District Court action to the bankruptcy action; see cases nos. 11-cv-193, 11-cv-194, 11-cv-196, 11-cv-197 (all D. Minn). Defendants have until April 29 2011 to respond to the complaint in the district court action.

News:

  1. http://online.wsj.com/article/SB10001424052748703909904576051740808855946.html
  2. http://www.businessweek.com/news/2010-10-11/petters-trustee-sues-jpmorgan-chase-ritchie-capital.html
  3. http://online.wsj.com/article/SB10001424052748703909904576051740808855946.html

Documents:

  1. http://www.businessweek.com/news/2010-10-11/petters-trustee-sues-jpmorgan-chase-ritchie-capital.html
  2. http://jpmorgan-watch.com/files/2_kelley_v_jpm_complaint.pdf