EagleTribune.com, North Andover, MA

World/National News

January 8, 2014

JPMorgan to pay over $2.5 billion in Madoff fraud

NEW YORK (AP) — JPMorgan Chase & Co., already beset by costly legal woes, will pay more than $2.5 billion for ignoring obvious warning signs of Bernard Madoff’s massive Ponzi scheme, authorities said Tuesday.

The nation’s largest bank will forfeit a record $1.7 billion to settle criminal charges, plus pay an additional $543 million to settle civil claims by victims. It also will pay a $350 million civil penalty for what the Treasury Department called “critical and widespread deficiencies” in its programs to prevent money laundering and other suspicious activity.

The bank failed to carry out its legal obligations while Madoff “built his massive house of cards,” George Venizelos, head of the FBI’s New York office, said at a news conference.

“It took until after the arrest of Madoff, one of the worst crooks this office has ever seen, for JPMorgan to alert authorities to what the world already knew,” he said.

Madoff banked at JPMorgan through what court papers referred to as the “703 account.” In 2008, the bank’s London desk circulated a memo describing JPMorgan’s inability to validate his trading activity or custody of assets and his “odd choice” of a one-man accounting firm, the government said.

In late October 2008, it filed a suspicious activity report with British officials. In the weeks that followed, JPMorgan withdrew about $300 million of its own money from Madoff feeder funds. The fraud was revealed when Madoff was arrested in December 2008.

“Despite all these alarm bells, JPMorgan never closed or even seriously questioned Madoff’s Ponzi-enabling 703 account,” said U.S. Attorney Preet Bharara.

“On the other hand, when it came to its own money, JPMorgan knew how to connect the dots and take action to protect itself against risk.”

Madoff, 75, pleaded guilty and is serving a 150-year prison term.

When his scam unraveled, account statements for thousands of his clients showed $60 billion in assets. In reality, the roughly $17.5 billion in principal they gave him was almost gone.

Text Only | Photo Reprints
Latest News
World/National News

Latest U.S. News
Raw: Fire Destroys 3 N.J. Beachfront Homes Raw: Space X Launches to Space Station Man Charged in Kansas City Highway Shootings Obama Awards Navy Football Trophy Ceremony at MIT Remembers One of Boston's Finest Raw: Students Hurt in Colo. School Bus Crash Raw: Church Tries for Record With Chalk Jesus Police Arrest Suspect in Highway Shootings Drought Concerns May Hurt Lake Tourism Vermont Goat Meat Gives Refugees Taste of Home Calif. Investigators Re-construct Fatal Bus Cras Appellate Court Hears Okla. Gay Marriage Case Horseless Carriage Introduced at NY Auto Show Chelsea Clinton Is Pregnant Beau Biden Plans 2016 Run for Del. Governor Flamingo Frenzy Ahead of Zoo Construction Obama: 8 Million Healthcare Signups Obama Hopeful on Ukraine, Will Watch Russians U.S. Sending Nonlethal Aid to Ukraine Military Holder: Americans Stand With KC Mourners
Latest World News
Raw: Four French Journalists Freed From Syria Raw: Massive 7.2 Earthquake Rocks Mexico Captain of Sunken SKorean Ferry Arrested Raw: Pope Presides Over Good Friday Mass Anti-semitic Leaflets Posted in Eastern Ukraine Raw: Magnitude-7.2 Earthquake Shakes Mexico City Raw: Faithful Celebrate Good Friday Worldwide Deadly Avalanche Sweeps Slopes of Mount Everest Today in History for April 18th Mayor Rob Ford Launches Re-election Campaign Author Gabriel Garcia Marquez Dead at 87 Crew Criticized Over Handling of Ferry Disaster Agreement Reached to Calm Ukraine Tensions Raw: Pope Francis Performs Pre-easter Ritual Raw: Bulgarian Monastery Dyes 5000 Easter Eggs Diplomats Reach Deal to Ease Tensions in Ukraine Malaysia Plane: Ocean Floor Images 'Very Clear' Raw: Two Lucky Kids Get Ride in Popemobile Raw: Royal Couple Visits Australia Mountains Raw: Pro-Russian Militants Killed on Base
Photos of the Week