Bernie Madoff bank J.P. Morgan Chase accused in $6.4B lawsuit of ignoring his Ponzi scheme

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J.P. Morgan Chase are accused of turning a blind eye to the fraudulent activities of Bernie Madoff.

The overseer trying to recover funds for Bernie Madoff's victims slapped J.P. Morgan Chase with a $6.4 billion suit Thursday, claiming the bank turned a blind eye to the mega-fraudster's swindling.

Trustee Irving Picard says officials at J.P. Morgan, Madoff's longtime banker, should have spotted red flags alerting them to the Ponzi scheme.

"Justas in the children's fable, they knew the 'Emperor had no clothes,' butlooked the other way, allowing the fraud to continue," Picard's lawyer,Deborah Renner, said Thursday.

Thebank "admitted in the months before Madoff's arrest that ... returnswere too good - especially in down markets - to be believable, but foryears they pretended that was not the case."

The suit, which isstill sealed, seeks nearly $1 billion in fees and profits and another$5.4 billion in damages for "willfully blind to the fraud," according toanother Picard lawyer, David Sheehan.

Picard earlier this month sued giant Swiss bank UBSfor $2 billion for sending clients to Madoff, as well as suing morethan 40 former employees that worked for the uber-swindler, includinghis wife and other relatives.

Madoff, 72, is serving a 150-year sentence in federal prison in North Carolina after admitting ripping off thousands of investors.

The estimated $20 billion Ponzi scheme came to light in the December 2008 after Madoff came clean to federal investigators.