Justia Banking Opinion Summaries

This case arose from the infamous Ponzi scheme perpetrated by Bernard Madoff. Between October and December 2008, Plaintiff MLSMK Investment Company invested $12.8 million with Madoff's investment company. Defendants JP Morgan Chase & Co. (JPMC) and JP Morgan Chase Bank (Chase) were trading partners in Madoff's legitimate market-making business and the bank with which Madoff maintained his accounts. MLSMK lost its money when Madoff was arrested and his assets seized. MLSMK subsequently filed suit, alleging that Defendants had conspired with Madoff to "fleece" his victims in violation of federal racketeering laws. Furthermore, MLSMK alleged that Defendants knew of Madoff's fraudulent scheme, and "eagerly" continued to receive the substantial fees derived from Madoff's market-making and banking activities. The district court dismissed MLSMK's petition in its entirety, concluding that the complaint did not adequately plead any of the claims purportedly contained therein. The Second Circuit previously upheld the district court's decision to dismiss MLSMK's petition on its state-law claims, but the federal racketeering issue was one of first impression for the Court. Upon review of the submitted briefs and the applicable legal authority, the Court concluded that the racketeering claim must also be dismissed because it was barred by a section of the Private Securities Litigation Reform Act (PSLRA). Accordingly, the court affirmed that portion of the district court's judgment pertaining to federal law.

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation.

Plaintiff, a plastics manufacturer, dealt with a container company that filed for bankruptcy in 2002, filed a creditor's claim for more than $7 million, and objected to the sale of assets and lien priorities. The debtor had pledged all of its assets as security for a line of credit with ANB, its primary lender. Plaintiff claimed that there was a fraudulent scheme under which the debtor would produce containers and not pay for them, so that that they would be part of inventory when a successor company, let by insiders, purchased the assets in bankruptcy. After its claims were rejected in the bankruptcy proceedings, plaintiff sued ANB and Gateway alleging violation of RICO (18 U.S.C. 1961) and common-law fraud. The district court dismissed as "res judicata" but denied Rule 11 sanctions. The Seventh Circuit affirmed the dismissal, citing collateral estoppel, issue preclusion. The court did not find that the claims were frivolous or designed to harass.

Petitioners appealed from a Memorandum and Order and Final Order of Forfeiture entered by the district court dismissing their petition for an ancillary hearing and rejecting their claim as beneficiaries of a putative constructive trust in defendant's forfeiture assets. At issue was whether the remission provision of 21 U.S.C. 853(i) precluded the imposition of a constructive trust in petitioners' favor and whether imposing a constructive trust would be consistent with a forfeiture statutory scheme provided by section 853. Because the court concluded that section 853(i) did not preclude, as a matter of law, recognizing a constructive trust and because a constructive trust was not inconsistent with the forfeiture statute, the court vacated the Final Order of Forfeiture and remanded the case to the district court to consider whether, pursuant to Vermont law, a constructive trust should be recognized in favor of petitioners.