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JPMorgan Chase Fires Back At Madoff Trustee

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(By Jonathan Stempel) JPMorgan Chase & Co accused the trustee seeking $6.4 billion for victims of Bernard Madoff's Ponzi scheme of doing an end run around the law in pursuing his case, and said it has a right to a jury trial.

The second-largest U.S. bank said court-appointed trustee Irving Picard is exceeding his power by suing in bankruptcy court, where a judge rather than a jury would decide the case.

"The trustee's massive damages action against JPMorgan bears no resemblance to a typical lawsuit commenced by a bankruptcy trustee," JPMorgan's lawyers said in a court filing late Tuesday.

"In substance," the bank said, "the trustee is trying to pursue an enormous back-door class action."

A spokesman for Picard did not immediately respond to a request for a comment.

JPMorgan asked U.S. Bankruptcy Judge Burton Lifland, who oversees the Madoff proceedings, to move Picard's lawsuit to federal district court, where it can demand a jury trial.

In court papers unsealed on February 3, Picard accused JPMorgan of having significant doubts about Madoff but silently acquiescing in his fraud, hoping to preserve its own investments and a more than 20-year business relationship.

JPMorgan has said it did not know about or assist in the estimated $65 billion Ponzi scheme.

Madoff, 72, pleaded guilty in March 2009 and is now serving a 150-year sentence in a North Carolina federal prison.

The case is Picard v. JPMorgan Chase & Co et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04932.

(Additional reporting by Santosh Nadgir in Bangalore, editing by Maureen Bavdek)

Copyright 2010 Thomson Reuters. Click for Restrictions.

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