Assured Guaranty last week filed a civil suit in New York alleging that JPMorgan, along with Jefferson County, "fraudulently induced" it to provide more than $378 million in insurance coverage for the county's nearly $3.2 billion of variable- and auction-rate sewer warrants.
The suit does not name Jefferson County as a defendant.
The 34-page complaint said that Assured would not have insured the warrants if it had known about bribes that JPMorgan paid to Jefferson County commissioners to become lead underwriter for the sale of the warrants and counterparty to "lucrative swap agreements."
Assured said it has paid more than $4 million on a surety bond and that it has additional exposure on other policies.
The insurer said it was seeking to recover rescissory damages, including all amounts it has paid to date and amounts it may be called on to pay in the future, as well as compensatory and punitive damages.
"Assured, however, does not seek to rescind the policies," the suit said. "Rather, Assured intends to continue making required payments under the policies for the benefit of the holders of the warrants."
Assured's suit reads very much like a civil case filed by Syncora Guarantee in late April and uses some of the same phrases.
Both say their claims arise "out of one of the biggest cases of municipal corruption in United States history and a massive fraud perpetrated by JPMorgan and Jefferson County."
Syncora's suit differs in that it names JPMorgan and Jefferson County as defendants. It is seeking more than $400 million in rescissory damages for amounts paid, or amounts it anticipates paying, and it seeks unspecified compensatory and punitive damages.
