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Banks (Finance)

Court Grants Motions to Dismiss in Ritchie v. JPMorgan Chase & Co. Case

Strategic Insights

— 2 min read

The US District Court for the District of Minnesota has issued a memo opinion and order granting motions to dismiss in the high-profile case of Ritchie Special Credit Investments, Ltd. et al v. JPMorgan Chase & Co. et al. The lawsuit, one of many filed by Ritchie, alleged that JPMorgan Chase & Co. and other defendants aided and abetted the Ponzi scheme operated by Thomas Petters.

Plaintiffs Ritchie Special Credit Investments, Ltd., Rhone Holdings II, Ltd., and Ritchie Capital Management SEZC, Ltd. had filed the Third Amended Complaint (TAC) against JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., J.P. Morgan Private Bank, Richter Consulting, Inc., and J.P. Morgan Europe Ltd. The defendants had filed motions to dismiss the TAC, which the court granted.

The court noted that the primary fraud in the case involved Polaroid Corporation, which was sold to Petters for approximately $426 million in 2005. The plaintiffs alleged that JPMC and other defendants had knowingly and recklessly participated in the Ponzi scheme, allowing Petters to indulge in extravagant spending and luxury items.

Key Takeaways:

  • The court granted motions to dismiss filed by JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., J.P. Morgan Private Bank, Richter Consulting, Inc., and J.P. Morgan Europe Ltd.
  • The court noted that the primary fraud in the case involved the sale of Polaroid Corporation to Petters for approximately $426 million in 2005.
  • The plaintiffs alleged that JPMC and other defendants had knowingly and recklessly participated in the Ponzi scheme.
  • The court did not consider the alternative grounds for dismissal proposed by the defendants.

Statistics:

  • 200+ million: The amount in dollars transferred by Ritchie to Petters through a series of transactions in January and February 2008.
  • 10: The number of adversary proceedings filed by the debtors' bankruptcy trustees and Petters's receiver seeking to recover allegedly fraudulent transfers and damages.
  • 5: The number of years under Illinois's statute of limitations.
  • 2: The number of remaining plaintiffs that the Eighth Circuit Court of Appeals remanded to the district court for further consideration.
  • 8: The number of causes of action asserted by the remaining plaintiffs in the Third Amended Complaint.
  • 1: The number of settlements approved by the court between JPMC and the bankruptcy trustees and receiver in May 2018.
  • $6.5 million: The amount repaid by Petters to JPMC in March 2008.
  • 3: The number of grounds for dismissal considered by the court in its previous order dated December 14, 2017.

Sources:

  • US District Court for the District of Minnesota, Memorandum Opinion and Order (Doc. No. 259, June 30, 2021)
  • Ritchie Capital Mgmt., L.L.C. v. J.P. Morgan Chase & Co., 960 F.3d 1037 (8th Cir. 2020)
  • In re Petters Co., Inc., et al., 08-45257 (Bankr. D. Minn.)
  • United States v. Petters, Civ. No. 08-5348 (D. Minn.)

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