The Second Circuit Court of Appeals tossed out a conspiracy lawsuit against JPMorgan Chase & Co for violating RICO.
The case involved the notorious Bernard Madoff, a.k.a. "Bernie" Madoff. For those of you unfamiliar with the Bernie Madoff saga, Madoff was arrested several years back for running a ponzi scheme and swindling investors out of billions of dollars. Madoff now enjoys the walls and bars of his prison cell as fingers continue pointing to others who may have been involved in the scheme.
After all, people lost their life savings. And if they can’t get their money back from Madoff, someone had better cough up the loose change.
At least for now, JPMorgan Chase won’t have to bear that burden. The decision came out on Thursday and based on a claim brought by a Florida partnership that invested with Madoff. The partnership accused Chase of enabling Bernie Madoff’s fraud and of ignoring red flags, writes the Chicago Tribune.
The partnership, MLSMK Investment Co, invoked RICO, an argument which was rejected by the Second Circuit Court of Appeals. The partnership claims it lost $12.8 million and held the bank liable for aiding and abetting Madoff.
The Second Circuit’s three-judge panel rejected the RICO claim, stating that the federal ban on civil RICO claims that were based on securities fraud also extended to claims of aiding and abetting.
RICO claims bring the added bonus of treble damages, which is why the ban on such claims in securities fraud cases exists, explained Second Circuit Court of Appeals Judge Robert Sack.
But did this ruling let off other parties involved in the Madoff scandal, without any repercussions?