JPMorgan’s First Settlement of 2014 Comes Courtesy of Madoff


Bernie Madoff’s Ponzi scheme lost $17.3 billion, making it the largest fraud orchestrated by a single person in American history. His entire scheme was estimated to be worth as much as $65 billion, but a large portion of that sum is the result of made-up profits recorded by the investor. In 2009, Madoff pleaded guilty to 11 counts of felony financial fraud and was convicted of swindling thousands of investors — ranging from his friends and acquaintances, to money managers, and even charities — and for that activity he was sentenced to 150 years in prison. At his trial, Madoff confessed that he began his Ponzi scheme in 1991, but according to federal investigators, the origins of the con could date as far back as the 1970s.

Given the sheer magnitude of the Ponzi Scheme, federal prosecutors have alleged that JPMorgan Chase (NYSE:JPM), the investor’s bank for more than two decades, should have have caught sight of the red flags thrown up by Madoff’s crimes. Since April, the federal government has been investigating the extent of the bank’s knowledge of the investor’s criminal activities.

Now, government authorities are expected to finalize a $2-billion settlement of criminal and civil charges this week, as sources briefed on the case told the New York Times. In addition to the fine, the settlement will include a so-called deferred prosecution agreement that would suspend a criminal indictment as long as JPMorgan acknowledges the facts of the government’s case and changes its behavior. courtesy