JPMorgan Knew Madoff’s Returns Were False

JPMorgan Knew Madoff’s Returns Were False - 4/23/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

HEADLINE NEWS:

JPMorgan Knew Madoff’s Returns Were False
David Glovin and Joel Rosenblatt

Bloomberg. April 23, 2009
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EXCERPT: JPMorgan Chase & Co. was sued by Florida investors who lost $12.8 million invested with Bernard Madoff through the bank and claim it knew Madoff’s investment returns were false. The investors, in a complaint filed today in federal court in Manhattan, claim JPMorgan Chase “entered into a conspiracy” with Madoff in violation of federal racketeering laws. Madoff, 70, disclosed the fraud on Dec. 11 and pleaded guilty last month to running a Ponzi scheme that may have cost investors as much as $65 billion. The suit by MLSMK Investments Co., a Palm Beach, Florida- based partnership, claims the New York-based bank learned of the fraud in September 2008 after investigating why funds that invested with Madoff hadn’t suffered steep losses in the global sell-off. The bank “quietly liquidated its entire $250 million cash position” with a fund that had invested with Madoff while continuing to provide fee-generating services to Madoff’s business, according to the complaint. “Rather than protect other victims of Madoff’s fraud as it had already protected itself, Chase chose not only to protect Madoff but to partner with him in the fleecing of his victims by providing exactly the same range of services, for substantial fees, after learning of his criminal enterprise,” MLSMK said it its complaint. […] Bank Accounts Madoff had accounts with JPMorgan and Bank of New York. Last month, JPMorgan agreed to transfer $2.4 million in a Madoff account to the trustee for Bernard L. Madoff Investment Securities LLC. Madoff pleaded guilty on March 12 to defrauding investors by using money from new ones to pay off old ones. Prosecutors said Madoff told investors they had as much as $65 billion with Madoff Securities. Madoff is in custody and faces as a prison sentence of as much as 150 years.

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