JPMorgan Chase Bank has been accused in a lawsuit of allowing swindler Bernard Madoff to continue running his massive fraud after uncovering evidence that he was running a Ponzi scheme. In a complaint filed late Thursday in federal court in Manhattan by a Florida investment partnership, JPMorgan Chase Bank and its parent, JPMorgan Chase & Co., were also accused of being involved in the withdrawal of $250 million they had invested in a feeder fund linked to Madoff a few months before his operation collapsed. In its 33-page complaint, which invokes the civil federal racketeering laws for damages, MLSMK Investments Co. of Palm Beach claimed that even though Chase discovered from its own investigation that Madoff was a fraud, it gave him legitimacy by trading with his market making business. By receiving and depositing cash from unsuspecting victims of Madoff, Chase also allowed him to continue operating the Ponzi scheme, which officials say benefited Madoff's family and close associates, according to the complaint. The basic claim of MLSMK's case is that by helping Madoff, Chase was an "accomplice" to his crime of racketeering, said Howard Kleinhendler, the Manhattan attorney for the partnership. The withdrawal of $250 million in September that Chase had invested with the Sentry Fund - owned and managed with the Fairfield Greenwich Group, a Madoff feeder fund - was an indicator the bank knew Madoff was running a scam, the lawsuit stated. "They pulled this one [investment] at the time they knew it [Madoff] was a phony," said Kleinhendler. A JPMorgan Chase spokeswoman declined to comment Friday. MLSMK is suing to recover $12.8 million lost in the Madoff Ponzi scheme, an amount it wants tripled under the racketeering law. The partnership has sued Chase, alleging negligence and commercial bad faith.