Irving H. Picard, the trustee for the liquidation of Bernard Madoff’s asset management firm, has filed a complaint against JPMorgan Chase, claiming the bank had suspicions about Madoff’s Ponzi scheme going back to at least 2006, but waited until 2008 to alert authorities while it earned hundreds of millions of dollars from doing business with Madoff.

The complaint was filed under seal on Dec. 2, 2010 in the U.S. Bankruptcy Court for the Southern District of New York, but was unsealed Thursday and made available to the public.

The complaint seeks to recover nearly $1 billion in fees and profits, and an additional $5.4 billion in damages, for JPMorgan Chase’s decades-long role as the Bernard L. Madoff Investment Securities’ primary banker, allegedly aiding and abetting Madoff’s fraud.

“Incredibly, the bank’s top executives were warned in blunt terms about speculation that Madoff was running a Ponzi scheme, yet the bank appears to have been concerned only with protecting its own investments in BLMIS feeder funds,” said Deborah Renner, a partner at Picard’s law firm Baker & Hostetler. “As we allege in the complaint, JPMC had a palpable concern that Madoff was a fraud for years, but it was not until October 2008 that it reported Madoff to government officials. Even then, JPMC executives did not restrict the BLMIS bank account, even though it was being used to launder money from the Ponzi scheme.”

The trustee alleges that JPMorgan Chase ignored its anti-money laundering obligations and repeatedly allowed suspicious transactions for high dollar amounts to occur in the Madoff account. The complaint alleges that, as Madoff’s banker for over two decades, JPMorgan Chase had financial reports in its possession that provided clear evidence of fraud and led a prominent fund manager at the bank to conclude that fraudulent activity was highly likely.

Employees at Chase also had concerns about Friehling & Horowitz, the small three-employee accounting firm located in a suburban strip mall in New City, N.Y., that audited Madoff’s lucrative investment management business.

“Let's go see Friehling and Horowitz the next time we're in NY,” one of the bankers wrote,.” to see that the address isn't a car wash at least."

It was not until early 2006 that JPMorgan Chase performed even minimal due diligence on Friehling, according to the lawsuit. One JPMorgan Chase employee noted in an e-mail that “a quick check found that they [Friehling] are not registerred [sic] with the Public Company Accounting Oversight Board, nor are they subject to peer reviews from the American Institute of Certified Public Accountants. Additionally, they have no website to provide background on their organization.”

Another employee noted that the choice of Friehling & Horowitz was an “odd choice” and questioned whether such a small firm was even competent to conduct an audit of an investment firm with “$650m in shareholder capital.”

In 2007, another JPMorgan Chase said he heard from a co-worker at lunch that “there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme—he said if we google the guy we can see the articles for ourselves—Pls do that and let us know what you find."

JPMorgan Chase said in a statement that the lawsuit "is meritless and is based on distortions of both the relevant facts and the governing law," according to The Wall Street Journal, and claimed it "did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff."

In October 2008, JPMorgan Chase filed a suspicious activity report with British authorities to relay some of its concerns about Madoff, but not the U.S. Securities and Exchange Commission. It said in a filing with the U.K.’s Serious Organized Crime Agency that the claims for Madoff’s investments were “too good to be true—which means it probably is.” Two months later, Madoff confessed the Ponzi scheme to his two sons, calling it “one big lie,” and they alerted U.S. authorities. Madoff is currently serving a 150-year prison sentence.

Another lawsuit unsealed Friday by the Madoff trustee accused Mets owners Fred Wilpon and Saul Katz of gaining $300 million in fictitious profits from their investments with Madoff and withdrawing more than $90 million from their Madoff accounts.