JPMorgan Chase & Co. will agreed to pay over $2 billion in a settlement over criminal charges surrounding the Bernie Madoff case. Photo by Timothy A. Clary/AFP/Getty Images
JPMorgan Chase & Co. will pay over $2 billion for failing to alert federal authorities to the largest Ponzi scheme in U.S. history. Prosecutors announced the settlement Tuesday, which includes over $1 billion to settle the criminal charges, millions to settle civil claims by Madoff’s victims, and millions to be paid to the Treasury Department.
Bernie Madoff’s Ponzi scheme was conducted mainly through JPMorgan accounts, and prosecutors charged that the bank should have alerted authorities to his suspicious activity. F.B.I. official George Venizelos said “JPMorgan failed to carry out its legal obligations while Bernard Madoff built his massive house of cards.”
A single individual was not charged in the case. Rather, prosecutors viewed the failure to detect warning signs as a structural failure. In a news conference, U.S. Attorney Preet Bharara said, “JPMorgan as an institution failed and failed miserably.”
However, Bharara pointed out, “when it came to its own money, JPMorgan knew how to connect the dots and take action to protect itself against risk.” In 2008, JPMorgan’s London desk alerted British officials that Madoff’s activity was suspicious and subsequently withdrew the bank’s own investments in Madoff Securities.
JPMorgan responded to the settlement in a statement admitting the bank “could have done a better job pulling together various pieces of information and concerns about Madoff.”