(Bloomberg News) JPMorgan Chase & Co., Citigroup Inc. and other banks asked a judge to dismiss a lawsuit by defunct Thornburg Mortgage Inc., saying the complaint didn't adequately show that fraud occurred.

Trustee Joel Sher sued the banks for $2 billion in April, alleging they helped push Thornburg, now called TMST Inc., into a "free-fall" bankruptcy. Making "unjustified" margin calls, the banks extracted more than $700 million of margin and interest payments from Thornburg, then sold their collateral and left the company to file for Chapter 11 protection during the credit crisis in May 2009, Sher claimed.

The banks, including Credit Suisse Group AG, Royal Bank of Scotland Plc and UBS AG, or their affiliates, were trading partners of Thornburg's in repurchase and swap transactions used to finance its mortgage business, the banks said in yesterday's filing in U.S. Bankruptcy Court in Baltimore. Under the repo agreements, they could make margin calls at any time if the counterparty had a margin deficit, they said.

Sher didn't immediately return a phone call seeking comment on the banks' filing. He has updated the suit since it was initially filed.

Banks are sometimes targeted by bankrupt companies that are trying to recover money for creditors. Lehman Brothers Holdings Inc. sued JPMorgan for $8.6 billion, saying the bank helped to cause its downfall. The trustee liquidating Bernard Madoff's defunct firm is demanding $19 billion from JPMorgan, accusing it of assisting Madoff's Ponzi scheme. New York-based JPMorgan is fighting both lawsuits.