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: House OKs Bill for Border Crisis Funds Rare Whale Fossil Pulled From Calif. Backyard Denver Celebrates Pot at the County Fair Escaping Email: Inspired Vision or Pipe Dream? Obama Calls on Hamas to Release Israeli Soldier Hispanic Caucus Slams GOP for Border Bill Shifts Obama: GOP Not Even Trying to Solve Immigration Emory Prepares to Treat American Ebola Cases US Employers Add 209K Jobs, Rate 6.2 Pct House GOP Optimistic About New Border Bill Four Rescued From Crashed Plane Clinton Before 9-11: Could Have Killed Bin Laden Couple Channel Grief Into Soldiers' Retreat WWI Aviation Still Alive at Aerodrome in NY Raw: Woman Who Faced Death Over Faith in N.H. Russell Simmons, LL Cool J Visit Youth at Jail Raw: Obama Gets Hug From Special Olympian US, UN Announce Deal on Gaza Cease-Fire Despite Moratorium, Detroit Water Worries Remain Faith Leaders Arrested at DC Deportation Protest
Latest World News
Hispanic Caucus Slams GOP for Border Bill Shifts Renewed Violence Taking Toll on Gaza Residents 2 Americans Detained in North Korea Seek Help Raw: Tunisia Closes Borders With Libya Gaza Truce Unravels; Israel, Hamas Trade Blame Clinton Before 9-11: Could Have Killed Bin Laden Today in History for August 1st Raw: Rescuers at Taiwan Explosion Scene US, UN Announce Deal on Gaza Cease-Fire US Warns Against Traveling to Ebola-hit Areas Raw: Deadly Taiwan Gas Leak Explosion Netanyahu Vows to Destroy Hamas Tunnels Malaysian PM: Stop Fighting in Ukraine Workers Dig for Survivors After India Landslide Fighting Blocks Access to Ukraine Crash Site Raw: Smoke, Explosions Fill Gaza Skyline Today in History for July 31st Raw: 16 Killed in Gaza Market Strike Raw: Guinea Rap Concert Stampede Kills 33+ Raw: Deadly Landslide Hits Indian Village
Photos of the Week