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JP Morgan Fined $2.6 Billion for Failing to Anticipate Madoff’s Scheme

leaprate.com | January 9, 2014

By Victor Golovtchenko

The never-ending story of banking industry heavyweights getting hefty fines goes on with yet another twist. First it was the uncovering of mortgage fraud, then the Libor scandal, followed by the London Whale and now we still have an ongoing investigation surrounding the 4pm London FX fix. Uncertainty surrounding another lawsuit against the biggest US bank is dissipating with a settlement involving Bernie Madoff's giant Ponzi scheme.

The price tag that JP Morgan will pay is about $2.6 billion which comprises about two weeks of revenue for the company. Chase was the primary bank that Bernie Madoff used in his fraudulent endeavors that caused one of the biggest scandals in the financial industry’s history. The company will pay to the government $1.7 billion, $300 million to the Office of the Comptroller of the Currency and $543 million for private claims.

According to the prosecution JP Morgan failed as an institution by allowing Bernie Madoff and his associates to launder billions of dollars in Ponzi proceeds from a single set of accounts at the bank. Leading prosecutor on the case Preet Bharara stated in a press conference that the anti-money laundering procedures in place at the bank were completely inadequate as they freely allowed roundtrip transactions on his account.

In an unusual event the bank has actually admitted to wrongdoing and committed to fully cooperate with authorities and upgrade its anti-money laundering procedures. In the period between 1986 and 2008 the bank received $150 billion dollars in deposits and transactions linked to Madoff Securities’ accounts raising all types of questions, yet as you might already imagine it never asked any.

Proceeds from the fines will be distributed to Madoff’s victims, while the company has escaped criminal charges by the US Department of Justice by agreeing to reform its policies and practices. An easy let go if you consider the ramifications of the wrongdoings, however there was not much that the government could do at this point in time – the systemic importance of the biggest US bank is of utmost importance and we all know how criminal charges affect public companies.

Not only too big to fail, but too big to be criminalized – good luck to the smaller institutions in being let go in a similar fashion.


Back to January 2014 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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