(NEW YORK) — In another major victory for JPMorgan Chase and its CEO Jamie Dimon, prosecutors say the bank and its officials will not face criminal charges for “turning a blind eye” to the Ponzi scheme of Bernie Madoff, whose principal accounts were held by the bank for 22 years and were central to his multi-billion dollar fraud.
Instead, prosecutors will announce on Tuesday that the bank will pay in excess of $2 billion to settle criminal and civil charges that the bank failed to report suspicious activity that might have tipped off investigators to Madoff’s scheme years earlier.
It was the second time in three months that the Department of Justice declined to bring criminal charges against JPMorgan Chase, the country’s largest bank by assets. In November, it accepted a payment of $13 billion from the bank to avoid criminal charges growing out of the sub-prime mortgage scandal that helped drive the American economy into a recession.
“The Justice Department seems unwilling to use its power to prosecute,” said Jack Blum, a former consultant to the IRS. “This is, I think, a pretty disgraceful record of tackling an individual problem of criminality.”
Bank records and e-mails disclosed in a civil suit filed against the bank paint a picture of officials “turning a blind eye” to Madoff’s suspicious transactions in his bank account, as “the drive for fees and profits became a substitute for common sense, ethics and legal obligations.”
In one internal bank e-mail in 2007, an official wrote, “there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of Ponzi scheme.”
In documents filed in the bank’s deferred prosecution agreement with the Department of Justice, JPMorgan Chase admitted its officers failed to file suspicious activity reports in October 2008 even after its office in London notified British authorities that Madoff’s performance is “too good to be true.”
“There was no meaningful effort by the Bank to examine or investigate” Madoff’s operation, as required by money federal laundering laws.
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Susie East, CNN
Paul Moyer, Deseret News