A federal appeals court dismissed a lawsuit seeking to hold JPMorgan Chase & Co. responsible for services allegedly provided by the former Washington Mutual Inc. ("WaMu") to advance a Ponzi scheme at Caribbean-based Millennium Bank. The 9th U.S. Circuit Court of Appeals said last month that investors who bought fraudulent CD's from Millennium did not pursue all remedies with the FDIC as required by federal law or show that JPMorgan did anything to advance the alleged fraud. The decision by a 3-judge panel upheld an October 2010 lower court ruling.  Niall McCarthy, a lawyer for the investors, was not immediately available for comment. Washington Mutual was seized on 9/25/08, by the FDIC, which immediately sold the largest U.S. savings and loan's banking operations to JPMorgan for nearly $2 billion. Last month, a San Francisco federal grand jury returned a 23-count indictment charging William Wise and Jacquline Hoegel with fraud and conspiracy over the sale of $130 million of CDs by their companies Millennium, United Trust of Switzerland, and Sterling Bank and Trust, resulting in $75 million of losses. Prosecutors alleged that Millennium, United Trust and Sterling had promised CD investors high rates of return, sometimes over 16%, based on earnings from overseas investments - but that Wise and Hoegel instead used investors' funds to enrich themselves and pay off earlier investors. Their activities were shut down in March 2009 when the SEC filed related civil fraud charges. Wise, a Canadian lawyer, is believed to be in Canada and a warrant for his arrest has been issued by the U.S. Attorney's office.  Hoegel, a resident of American Canyon, CA, was released on bond. The CD investors sought to hold JPMorgan liable for WaMu's having provided banking services to Millennium.  These investors claimed that WaMu knew about the fraud at Millennium, which was based in St. Vincent and the Grenadines, while it was providing these services. But the appeals court said the investors did not fully present their claims to the FDIC before suing the purchaser, in this case, JPMorgan, of a failed bank.  It added that investors did not show a single specific wrongful act by JPMorgan, relying instead on assertions that the bank's general "practices" caused their losses.  Judge Carlos Lucero writing for the appeals court, had this to say: "The plaintiffs' conclusory allegations regarding JPMorgan fall short." The case is: Benson et al v. JPMorgan Chase Bank NA, 9th U.S. Circuit Court of Appeals, Nos. 10-17402 and 10-17404. Click for the referenced story:  [Reuters, 3/20/12].