First the government wheedled his company into buying Bear Stearns; then the government sued his company over the misdeeds of Bear Stearns – that’s JPMorgan Chase CEO Jamie Dimon’s hard-luck story.

Don’t buy it – that’s the message of an AFR letter to the co-chairs of the federal task force that has sued JPMorgan over alleged fraud by Bear in the packaging and promotion of mortgage-backed securities between 2005 and 2007. JPMorgan, as the letter and related memo point out, assumed liabilities as well as assets when it purchased Bear, and paid a price that took both into account. The company insisted, moreover, on several provisions that contradict Dimon’s recent efforts to characterize the deal as an act of altruism.

The March 2008 contract terms, according to AFR, included “‘no shop’ provisions prohibiting Bear from actively soliciting other proposals…” and the right to buy Bear’s New York City headquarters building at a bargain price even if the merger fell through, giving JPM “an extraordinary 25% ‘breakup fee’ if another higher bidder won the deal.” In late March 2008, JPM renegotiated the deal in order to secure 39.5% of Bear’s shares prior to the shareholder vote.

“In addition to these measures to make sure that it – and no one else – would be the successful buyer,” the letter continues, “JPMorgan purchased 10% of Bear Stearns stock on the open market in order to increase the certainty that the deal would close.”

Dimon’s complaint recently won a nod of sympathy from Representative Barney Frank, the ranking member and former chairman of the House Financial Services Committee, who described the government’s action as an example of “allowing no good deed to go unpunished.”

JPM “saw an opportunity to acquire Bear Stearns on fire sale terms, and did not want to let it get away,” the AFR letter countered. JPM was “an eager buyer,” taking “extraordinary steps to protect its offer, and to prevent any other buyers from stepping in.” Now, four years later, the company “is trying to get away with enjoying the profits from Bear’s activities, while leaving defrauded investors and the public to pay the costs,” the letter said.

AFR urged prosecutors not to be swayed, and to “push forward with efforts to seek accountability and redress for borrowers and investors, from the Wall Street and other firms whose actions led to the financial crisis and the foreclosure crisis.”