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
Arrests Witnessed in Ferguson Charter Schools Alter Post-Katrina Landscape Texas Gov. Perry: Indictment 'a Political Act' US Officials: Video Shows American's Beheading Heavy Rains Flood Arizona Roads Video Shows Ferguson Cop Months Before Shooting US Trying to Verify Video of American's Killing FBI Director Addresses Ferguson Shooting in Utah Raw: Police at Scene of St. Louis Shooting Police: 2 Calif. Boys Planned School Shooting NOLA Police Chief Retires Amid Violent Crimes Lunch Bus Delivers Meals to Kids Out of School Water Bottles Recalled for Safety Researcher Testing On-Field Concussion Scanners Police, Protesters Clash in Ferguson Raw: Police, Protesters Clash in Ferguson Police Blame Ferguson Violence on 'Criminals' Raw: Rallies Across US Protest Ferguson Shooting Raw: Ferguson Protesters Treated After Tear Gas Raw: Tear Gas Fired in Ferguson
Latest World News
Raw: Deadly Landslides in Japan Raw: Explosions in Gaza As Airstrikes Resume Today in History August 20 US Officials: Video Shows American's Beheading US Trying to Verify Video of American's Killing Rockets Fired From Gaza, in Breach of Ceasefire Raw: Japanese Military Live Fire Exercise Today in History August 19 Raw: Russian Aid Convoy Crosses Into Ukraine Raw: Building Collapse in South Africa, 9 Dead Assange Gets Cryptic About Leaving Embassy in UK Raw: Pope Francis Meets 'Comfort Women' Kurdish Peshmergas Retake Mosul Dam WikiLeaks Founder Says He'll Leave Embassy Soon Raw: Israel Destroys Killing Suspects' Homes Raw: Pope Celebrates Mass in South Korea Today in History August 18 Raw: Pope Holds Open Air Mass for Asian Youth AP Video Journalist Mourned in Tuscan Hometown Raw: Spider 'Photobombs' Live Broadcast
Photos of the Week