NEW YORK (Reuters) - Two senior officials at JPMorgan Chase & Co and predecessor companies repeatedly confronted Bernard Madoff over irregularities in his business, a new lawsuit said, suggesting that bank leaders had “direct knowledge” of his Ponzi scheme.

Bernard Madoff exits the Manhattan federal court house in New York in this January 14, 2009 file photo. REUTERS/Brendan McDermid/Files

The lawsuit filed in federal court in Manhattan on Wednesday on behalf of shareholders against Chief Executive Jamie Dimon and 12 other current and former executives and directors was based in part by statements made by Madoff himself during a series of interviews.

“JPMorgan was uniquely positioned for 20 years to see Madoff’s crimes and put a stop to them,” the lawsuit said.

“But faced with the prospect of shutting down Madoff’s account and losing lucrative profits,” it added, “JPMorgan - at its highest level - chose to turn a blind eye.”

JPMorgan spokeswoman Tasha Pelio declined to comment on the lawsuit, one of several seeking to hold bank officials responsible for failing to uncover the fraud before it surfaced publicly in December 2008. Madoff, 75, is serving a 150-year prison term after pleading guilty to fraud in March 2009.

TRUSTING MADOFF

The revelations came 1-1/2 months after JPMorgan agreed to pay $2.6 billion to settle lawsuits over its Madoff dealings.

Those lawsuits were brought by the U.S. government; Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC; and other shareholders. Picard has estimated that Madoff customers lost $17.3 billion.

The accords included a “deferred prosecution agreement,” or DPA, to resolve criminal charges, under which JPMorgan acknowledged its responsibility for failing to stop Madoff, who was an important client of the bank for two decades.

Upper management was not implicated in that agreement.

But David Rosenfeld, a lawyer who filed the new lawsuit, said “many hours” of interviews with Madoff, including in person on October 28 at the federal prison in Butner, North Carolina, suggested that top officials knew of the fraud.

“The DPA did not disclose how senior executives at JPMorgan knew that he was engaged in some kind of fraud, and that he should have been shut down years earlier,” Rosenfeld, a partner at Robbins Geller Rudman & Dowd, said in a phone interview.

Asked if Madoff could be trusted, Rosenfeld said: “I think he can. He certainly sounded credible to us, and there is no reason for him to lie at this point. He is remorseful, and he does feel compelled now to do what he can to help his victims. The things he said are also easily verifiable.”

Amanda Remus, a spokeswoman for Picard, declined to comment. James Margolin, a spokesman for U.S. Attorney Preet Bharara in Manhattan, declined to comment.

DINING WITH MADOFF

The lawsuit was filed on behalf of the Steamfitters Local 449 Pension Fund in Pittsburgh and Central Laborers’ Pension Fund in Jacksonville, Illinois, both shareholders of JPMorgan.

According to the complaint, senior bank officials who dealt with Madoff included Walter Shipley, a former chief executive of Chemical Bank and Chase Manhattan Bank; and Robert Lipp, a former JPMorgan senior adviser and director.

Shipley and Lipp, the complaint said, repeatedly confronted Madoff with “significant concerns about irregularities” in his regulatory filings.

The lawsuit said JPMorgan examined reports that Madoff was required to produce on the late Norman Levy, a former client of JPMorgan and Madoff, and that the reports gave the impression that Madoff was not investing Levy’s money or lending him money on margin.

Shipley and Lipp would meet Madoff for lunch from the 1990s through the 2000s, frequently along with Levy, and raise their concerns, the complaint said.

But in the end, the bank was “petrified” of losing business from Levy, “an extremely important, preferred top-tier client” of its private banking unit, the complaint added.

Shipley and Lipp did not immediately return calls seeking comment. Lawyers for both could not immediately be identified.

The case is Central Laborers’ Pension Fund et al v. Dimon et al, U.S. District Court, Southern District of New York, No 14-01041.