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December 11, 2013

Five Years Later: Bernie Madoff’s Ponzi Scheme and JP Morgan Chase’s Alleged Crimes in Helping Him

Five Years Later: Bernie Madoff’s Ponzi Scheme and JP Morgan Chase’s Alleged Crimes in Helping Him
“Five years ago today, the arrest of disgraced Wall Street icon and financier Bernard Madoff revealed the largest Ponzi scheme in history, with more than $17 billion in losses and thousands of victims, many financially destroyed. A crime this big cannot last for years without enablers and, as detailed in court filings, JP Morgan Chase was a key enabler,” said Dennis Kelleher, President and CEO of Better Markets, Inc., an independent nonprofit organization that promotes the public interest in the financial markets.
“JP Morgan Chase was for decades Madoff’s banker. A court-appointed trustee charged with recovering funds for Madoff’s victims filed a lawsuit against JP Morgan and alleged that the bank ‘turned a blind eye’ to the fraud, while lining its pockets with almost $500 million in fees and saving itself another $250 million by withdrawing its own investments with Madoff right before his arrest. Indeed, the complaint states that JP Morgan Chase ‘was at the very center of the fraud, and thoroughly complicit in it,’” Mr. Kelleher said.
“In addition to other lawsuits, federal prosecutors are investigating JP Morgan’s involvement with Madoff’s crimes. As with its recent $13 billion settlement with the Department of Justice, the bank is reportedly desperately trying to settle all matters related to the Madoff Ponzi scheme and appears to be hoping to settle these claims with minimal, if any, meaningful public disclosure. However, JP Morgan should not be allowed to pay the government what is effectively hush money so it won’t have to detail its illegal, if not criminal, misconduct to the American public. Announcing yet another big settlement that appears to be tough but isn’t is simply a gross disservice to the American people, who deserve ample, detailed information to determine for themselves whether any settlement of its involvement with Madoff’s crimes is appropriate to their involvement,” said Mr. Kelleher.
“JP Morgan’s interests are clear: cut the best deal possible while keeping as much information and detail as possible hidden from the American public. If the Department of Justice, which is working overtime to repair its tarnished reputation, is to live up to its name, it cannot allow that to happen. Any deal that does not include full and complete public disclosure sufficient to enable truly independent third parties to evaluate the settlement should be viewed suspiciously as a possible sweetheart deal that simply could not withstand such scrutiny. This is not about punishing JP Morgan. This is about truth, transparency and accountability and whether the Department of Justice seeks real justice to inspire public confidence or just some more superficial positive press coverage,” Mr. Kelleher concluded.
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight, and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure, thereby eliminating or minimizing the need for more taxpayer funded bailouts.
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