Ritchie Spec. Cred. Investments v. JPMorgan Chase & Co., No. 21-2707 (8th Cir. 2022)Annotate this Case
Plaintiff fell victim to a massive Ponzi scheme. Plaintiff sued JP Morgan and Richter Consulting. Plaintiff’s principal theory is that these firms aided and abetted fraud. And even if they did not, the complaint alleges that the transfers to JP Morgan were fraudulent.
The Eighth Circuit affirmed the district court’s dismissal of Plaintiff's complaint. The court explained that early on, JP Morgan agreed to pay over $30 million to settle a group of claims filed by the trustees. To protect the settlement, two courts issued bar orders preventing creditors like Plaintiff from asserting any claims that belong or belonged to one or more of the bankruptcy trustees. Those orders, along with general bankruptcy-standing doctrine, prevent Plaintiff from pursuing JP Morgan separately. The same goes for the fraudulent-transfer claims against JP Morgan.
Further, Plaintiff’s aiding-and-abetting claim against Richter Consulting under New York law cannot move forward either, but for a different reason. The court explained that viewed in the light most favorable to Plaintiff, the allegations in the complaint describe no more than constructive knowledge of the fraud.