Irving Picard, the trustee for the liquidation of Bernard L Madoff Investment Securities, is now seeking to recover at least $19 billion in damages from JP Morgan Chase & Co, up from the $5.4 billion in damages previously sought.

Picard has filed an amended complaint in the United States District Court for the Southern District of New York, based on expanded allegations. The complaint includes a jury demand and seeks life-to-date damages, with the aim of recovering a minimum of $19 billion in damages and approximately $1 billion in fraudulent transfers and equitable claims.

All recovered assets will be placed in the BLMIS Customer Fund and distributed pro rata to BLMIS customers with allowed claims.

“The trustee’s amended complaint adds new evidence and expands our previous allegations that JPMC was an active enabler of the Madoff Ponzi scheme,” said David Sheehan, counsel for the trustee and a partner at Baker & Hostetler, the court-appointed counsel for the trustee. 

“As alleged in the amended complaint, JPMC not only should have known that a fraud was being perpetrated, they did know,” Sheehan added.

The statement alleges JP Morgan bankers watched the scheme unfold: “They could see that money customers deposited into BLMIS’s main account was not used to buy or sell securities. They could see that it was merely transferred to other customers, in patterns serving no legitimate business purpose,” said Deborah Renner, a partner at Baker & Hostetler.

The amended complaint also alleges “further suspicious banking activity which evidenced a fraud,” based on information from two former employees of an unnamed financial institution who, in 1997, observed and investigated circular transactions between accounts controlled by Madoff at that particular institution and JP Morgan Chase (at that time The Chase Manhattan Bank). After questioning Madoff’s staff on the matter and receiving no satisfactory explanation, the unnamed institution closed the fraudster’s account, the complaint says.

The amended complaint follows an original one filed under seal on 2 December 2010 in the United States Bankruptcy Court for the Southern District of New York. That complaint was unsealed on 3 February 2011 and JP Morgan filed a motion in June to dismiss it. With an amended complaint now filed, the financial services firm has until 1 August to respond.