The sewer system of Jefferson County, Alabama continues to cause problems for JPMorgan Chase.
Earlier this month, in a settlement with the SEC, JPMorgan agreed to forfeit $647 million in fees, pay a $25 million penalty and pay the county $50 million over an alleged scheme to win business involving municipal bond offerings and credit default swap transactions relating to the county’s sewer projects.
Now the county, which is the home of Birmingham, is suing the bank and alleging fraud in relation to the same interest rate and bond swaps. The deals contributed to multibillion dollar sewer debt that has left the county on the verge of bankruptcy.
JP Morgan said the county’s suit is “meritless,” according to Reuters.
Reuters: “We are suing for fraud because they conspired to profit with interest rate swaps to the detriment of the county,” said Assistant County Attorney Charles Wagner.
“They caused us to spend more money and enter into ill-advised bond swaps for unjust enrichment of themselves. They suppressed material facts and fraudulently charged the money back to the county,” he said.
Jefferson County is struggling to stave off what would be the largest municipal bankruptcy in U.S. history over a multibillion dollar sewer debt accumulated in part because of the transactions, which have triggered multiple lawsuits.
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The county has also sued Birmingham’s former mayor, a lobbyist, an investment banker, and 50 others, the report says.
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