The trustee seeking to recover funds lost in the multibillion Ponzi scheme run by Bernard Madoff Thursday sued JP Morgan Chase & Co. for $6.4 billion.

The trustee, Irving H. Picard, cited JP Morgan Chase's "decades-long role" as the primary banker for Bernard L. Madoff Investment Securities LLC.

The suit, filed in the United States Bankruptcy Court for the Southern District of New York, seeks to recover nearly $1 billion in fees and profits and pull in an additional $5.4 billion in damages for JP Morgan Chase's alleged "aiding and abetting" of Madoff's fraud.

“The complaint filed today by the trustee for the Madoff estate blatantly distorts both the facts and the law in an attempt to grab headlines,'' said JP Morgan Chase vice president of Americas media relations Jennifer R. Zuccarelli. “JPMorgan intends to defend itself vigorously against the meritless and unfounded claims brought by the trustee.”

The trustee's attorney said JP Morgan failed to properly investigate Madoff's activities. “JP Morgan was willfully blind to the fraud, even after learning about numerous red flags surrounding Madoff,” David J. Sheehan, counsel for the trustee, said in a statement. “While many financial institutions enabled Madoff's fraud, JPMC was at the very center of that fraud, and thoroughly complicit in it.''

The trustee said any money recovered from Chase would be distributed pro rate to Madoff customers with valid claims.

Madoff committed his fraud by manufacturing trades in batches in an IBM computer and assigning the fictitious transactions to customer accounts ("How Bernie Made Basket Cases of His Customers' Accounts").

Chase "had only to review its internal account records to determine whether there was a legitimate explanation for the cash moving in and out of the BLMIS accounts. And when there ultimately was suspicion of illegal activity, JPMC had a duty to take action. It failed to do so,” Sheehan said.

Contrary to the trustee’s allegations, Zuccarelli said, "JPMorgan did not know about or in any way assist in the fraud orchestrated by Bernard Madoff.  As a provider of regular commercial banking services to Madoff’s brokerage firm, JPMorgan complied fully with all applicable laws and regulations governing customer accounts.

"Any suggestion that JPMorgan supported Madoff’s fraud is utterly baseless and demonstrably false,'' she said.

The trustee said Chase was Madoff's "primary banker for more than 20 years, and was responsible for knowing the business of its customers – in this case, a very large customer. Madoff would not have been able to commit this massive Ponzi scheme without this bank. JPMC should pay the price for its central role in enabling Madoff’s fraud.”

On the banking side, the complaint charges, JPMC should have been more vigilant in seeing illegal cash flows. Instead, “JPMC was willing to ignore decades of suspicious and inexplicable activity,” said Deborah Renner, also representing the Trustee.

“The trustee’s irresponsible and over-reaching allegations are especially disappointing in light of the significant effort that JPMorgan has made to assist the trustee in investigating the Madoff fraud,'' said Zuccarelli.

Meanwhile, in more fallout from the credit crunch of 2008, JP Morgan Chase countersued Lehman Brothers Holdings.

J.P. Morgan Chase, which served as Lehman's main clearing bank before Lehman failed, said Lehman used "collusion and deception" to persuade the bank to lend more than $70 billion in the days after it filed for Chapter 11 bankruptcy protection two years ago.