Madoff Claims Senior J.P. Morgan Execs Knew Of $65B Ponzi Scheme

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Imprisoned US Ponzi scheme fraudster Bernard Madoff alleged that some senior executives at J.P. Morgan Chase & Co. “knew what was going on” and that all the banks were given sufficient account information to detect any suspicious activity, the Financial Times reported Friday.

In an interview from his North Carolina jailhouse, Madoff claimed, “I am not a banker, but I know that $100 billion going in and out of a bank account is something that should alert you to something … There were senior people at the bank who knew what was going on.” He did not elaborate.

Irving Picard, the trustee liquidating Madoff’s firm, Bernard L. Madoff Investment Securities, filed a lawsuit in December 2010 against J.P. Morgan alleging that the bank was “willfully blind to the fraud” and “complicit in it.”

Madoff also claimed that HSBC Holdings and UBS, which were also being sued by Picard, were “going to have big problems.”

J.P. Morgan, HSBC and UBS all denied any wrongdoing, the FT reported.

Madoff, now 72, confessed in 2008 to operating a $65 billion Ponzi scheme that destroyed the life savings of some 2,300 people. He was sentenced to 150 years in jail and was imprisoned in Butner Federal Corrections Complex in Butner, N.C.

(Source: NY Post)


2 COMMENTS

  1. How many lies did Mr. Madoff tell to keep his scheme afloat for as long as he did? Let’s see: if he had 5,000 investors, and each received a monthly statement 12 times per year, plus a single tax summary per year, that would be (5000 x 13) 65,000 per year. And that’s just the minimum number for a single year.

    There is no point in reporting his unsubstantiated jailhouse accusations. Aside from his long and deep history of lying, he is in prison, with no hope of leaving prison in this lifetime, and so his accusations are probably just a way of getting some attention from an interviewer that breaks the tedium of his life in jail.

    I have heard – for what, if anything, it is worth – that he pals around with Michael Pollard.

  2. To nfgo3 (#1)

    Madoff’s claim that a bank will take notice and make discreet enquiries when $100 million move in and out of an account is credible. Given that many such deposits and withdrawals involved the same account must have alerted the bank and should have wanted to know more about the owner of the account. The trustee’s description of banks “willfully blind to the fraud” rings true to me.

    In my work as a commercial mortgage underwriter, I have come across this attitude of being “willfully blind to the fraud” by lending institutions when the loan officer or the lending institution stood nothing to lose. They dropped the fraudulent mortgage into a conduit pool and sold the entire pool about 2-3 months after the mortgage origination. The lender’s risk exposure is only during these first 2-3 months while the mortgage is still on their balance sheet. The ones holding the bag are those investing in such a conduit pool.