The Clinton Herald, Clinton, Iowa

Business & Technology

January 8, 2014

JPMorgan to pay over $2 billion in Madoff fraud

(Continued)

The agreement resolves two felony violations of the Bank Secrecy Act in connection with the bank's relationship with Bernard L. Madoff Investment Securities, the private investment arm of Madoff's former business.

The civil penalty was imposed by the Treasury Department's Office of the Comptroller of the Currency.

The government said the civil penalty was assessed because the bank failed to pass along to U.S. authorities suspicions about Madoff it had reported to Britain's Serious Organised Crime Agency, and because the bank failed to detect and report other cases of suspicious activity, including more than $2 billion in transactions involving the Puerto Rican affiliate of an unidentified Venezuelan bank.

Under the agreement, criminal charges will be deferred for two years as JPMorgan admits to its conduct, pays the $1.7 billion to victims of Madoff's fraud and reforms its anti-money laundering policies, prosecutors said.

A statement of facts included in the agreement describes internal communications at JPMorgan expressing concerns about how Madoff was generating his purported returns. It says executives were disturbed by the fact that Madoff wouldn't let the bank examine his books.

"How much do we have in Madoff at the moment?" a bank analyst wrote in a 2008 email. "To be honest, the more I think about it, the more concerned I am."

In a statement, JPMorgan said it recognized it "could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time."

It noted that in late October 2008 it filed the U.K. suspicious activity report but didn't file one in the United States. The fraud was revealed with Madoff's arrest in December 2008.

"We do not believe that any JPMorgan Chase employee knowingly assisted Madoff's Ponzi scheme," the bank said. "Madoff's scheme was an unprecedented and widespread fraud that deceived thousands, including us, and caused many people to suffer substantial losses."

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