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Ear to the Ground

JPMorgan Chase Execs Doubted Madoff Before the Fall

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Posted on Feb 3, 2011
Madoff pleads guilty
AP / Louis Lanzano

Bernard Madoff arrives at court in Manhattan in March 2009.

It appears that some higher-ups at JPMorgan Chase were on to fraudster Bernie Madoff nearly two years before the catastrophic implosion of his Ponzi scheme, but said execs didn’t take this knowledge as reason enough to stop doing business with him. As The New York Times reported, this information emerged Thursday in connection with a lawsuit against the banking giant.  —KA

The New York Times:

On June 15, 2007, an obviously high-level risk management officer for Chase’s investment bank sent a lunchtime e-mail to colleagues 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.”

Even before that, a top private banking executive had been consistently steering clients away from investments linked to Mr. Madoff because his “Oz-like signals” were “too difficult to ignore.” And the first Chase risk analyst to look at a Madoff feeder fund, in February 2006, reported to his superiors that its returns did not make sense because it did far better than the securities that were supposedly in its portfolio.

Despite those suspicions and many more, the bank allowed Mr. Madoff to move billions of dollars of investors’ cash in and out of his Chase bank accounts right up until the day of his arrest in December 2008 — although by then, the bank had withdrawn all but $35 million of the $276 million it had invested in Madoff-linked hedge funds , according to the litigation.

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By samosamo, February 4, 2011 at 7:07 pm Link to this comment


““It appears that some higher-ups at JPMorgan Chase were on to
fraudster Bernie Madoff nearly two years before the catastrophic
implosion of his Ponzi scheme, but said execs didn’t take this
knowledge as reason enough to stop doing business with him.”“
That is conspiracy to commit fraud, a felony. Since the corporate
world obtained person status, this jpmorganchase should be
arrested, jailed to stop any more such criminal activity, tried,
prosecuted and punished severely.

Make them have to play there secret ‘get out of jail’ card for
everyone to see.

Report this

By Jim Yell, February 4, 2011 at 12:38 pm Link to this comment
(Unregistered commenter)

One of the biggest blunders of Obama is the conceit that neither capitalists are elected officials should be punished for criminal activity. This conceit he shares with Republicans excepting that Republicans think only Democrats and Lefties should be punished for their crimes.

It is this conceit that makes his Administration unable to address the wounds of our country. He continues the crimes of Bush/Cheney because of this conceit which does not allow him to deliver on his promises to turn the country away from Official lawlessness. What he gets from the right is hard to understand as they clearly would rather destroy the country than offer a real solution.

That is why I feel we were played by Obama. That he is at best a moderate right wing politician willing to betray his campaign promises and to advance the interest of the mega rich. The coming election I will not vote for Democrat or Republican. I will vote for any lefty willing to run, or progressive. Hopeful I am not.

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By Tex, February 4, 2011 at 12:55 am Link to this comment
(Unregistered commenter)

Here’s someone even worse than Madoff:

Report this
PatrickHenry's avatar

By PatrickHenry, February 3, 2011 at 10:10 pm Link to this comment

The GS execs turned a blind eye to Madoff for years. He was in their club.

A weapon of mass financial destruction.

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