Call Now For a Free Consultation:
(614) 502-6165

J.P. Morgan Chase Sued for Petters Ponzi Scheme

The latest lawsuit in a string of several seeking more than $300 million was filed Wednesday, December 29, 2010, in federal court by Douglas A. Kelley, the court-appointed trustee for Mr. Petters's companies. The suit is based on claims that J.P. Morgan Chase knew or should have known that the funds seized from Petters's J.P. Morgan accounts after his arrest were fraudulently obtained.

Mr. Petters allegedly ran a Ponzi scheme with profits upwards of $3.5 billion. Arrested early in October 2008, he was found guilty in December 2009 of 20 counts of wire fraud, mail fraud, money laundering, and conspiracy, and is currently serving a 50-year prison sentence.

The lawsuit goes on to say that when Mr. Petters was seeking to buy Polaroid, J.P. Morgan acted as adviser to Polaroid and provided a $185 million credit line, receiving $40 million in fees for its work. Polaroid was auctioned off from the now bankrupt Petters and Co holdings for $88 million following the scheme collapse.

The suit seeks the $25 million that the bank received from liquidating Mr. Petters's holdings after he was arrested. "We saw this as J.P. Morgan trying to get a step ahead of the victims," Mr. Kelley stated.

"During the course of its due diligence, [J.P. Morgan] uncovered or should have uncovered numerous red flags that should have put [J.P. Morgan] on notice of the Petters Ponzi scheme," Kelley asserts. "However, the windfall that [J.P. Morgan] would earn on the transaction gave [J.P. Morgan] an incentive to ignore red flags that would have revealed the massive Ponzi scheme that Petters used to fund the Polaroid purchase."

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation

Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
6140 Parkland Blvd.,
Suite 330
Mayfield Heights, OH 44124
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
Follow Us
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram