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JPMorgan Suspected Madoff Was Ponzi-ish, Did Nothing
By
Jen Chung
Published Feb 3, 2011
Modified Feb 3, 2011
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By
Jen Chung
Published Feb 3, 2011
Modified Feb 3, 2011
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This is how Irving Picard, the trustee in charge of the Bernard Madoff bankruptcy and locating funds for victims, is earning his fee: Suing JPMorgan Chase for $6.4 billion by way of accusing the bank of being complicit in Madoff's huge Ponzi scheme and ignoring any warnings. The lawsuit, filed last year, was recently unsealed and the NY Times reports, "Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him."
Madoff was arrested in December 2008, after admitting his amazing, too-good-to-be-true returns were faked and he was running a $60 billion Ponzi scheme. According to the Times, lawsuit cites a June 2007 e-mail that 'an obviously high-level risk management officer for Chase’s investment bank sent... to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.'" Picard wants $1 billion back in investments and $5.4 billion in damages.
JPMorgan Chase issued a statement saying that Picard's lawsuit was "based on distortions of both the relevant facts and the governing law. Contrary to the trustee’s allegation, JPMorgan did not know about or in any way become a party to the fraud orchestrated by Bernard Madoff... Madoff’s firm was not an important or significant customer in the context of JPMorgan’s commercial banking business, and the revenues earned from Madoff’s bank account were modest and entirely consistent with conventional market rates and fees.”
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Bernard Madoff
jp morgan chase
lawsuit
ponzi scheme
warning
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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Gothamist is funded by sponsors and member donations
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