Let’s take a short ride back in time, not to the renaissance in Europe or even our own civil war. No, just 5 years ago, February of 2006 in New York City. All you need to bring is your common sense.
February 2006
Chase (later to become part of JPMorgan Chase) does its first risk analysis on Bernard Madoff’s account. The report expresses concern because returns were recorded as much higher than those of the actual contents of the portfolio.
June 15, 2007
A high-ranking Chase officer emails numerous colleagues stating his distress over client Bernard Madoff. In it, he refers to the “cloud” over Madoff’s head and speculation that the account is “part of a Ponzi scheme.”
December 11, 2008
Mr. Madoff is arrested for allegedly operating a $50 billion Ponzi scheme.
March 12, 2009
Bernard Madoff admits in court that he ran a decades-long Ponzi scheme stretching back to the early 1990s.
June 30, 2009
At the age of 71, Bernie Madoff is sentenced to 150 years in prison for his crimes.
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Folks, we just gave you the highlights. You merely need to apply your common sense. Big Bank has huge customer (with credentials, friends and lots of money). They smell something is fishy in early 2006. Do you think they just forgot about this multi-billion dollar customer? Hardly, they became more worried in 2007; worried enough to utter the words “Ponzi scheme”. But did they do anything? Nope. It was a huge account and at the end of the day, no one was going to rock the boat.
Claims against banks like JPMorgan Chase for aiding and abetting are difficult to be sure. Irving Picard, the Madoff trustee, is pursuing such a claim against JPMorgan Chase; a recent New York Times article on his case is the source of much of the information above. My firm is involved in several similar cases. We seek only to hold banks accountable for their willful ignorance.
No these banks did not receive billions in fees, but they played an integral role in the scheme’s success. Remember your common sense. How many fancy and sophisticated investors would willingly invest with Mr. Madoff if he stored their earnings in a padlocked trunk under his bed? A reputable bank makes all the difference in the world.
Assisted by David Martin