Written by Biloxi
Bernie Madoff, who is serving a 150-year sentence for milking millions of dollars from investors in a Ponzi scheme had a lot to say in prison in what banks knew in his Ponzi scheme. JP Morgan Chase who is being sued by Madoff trustee deny that the bank knew or was an accomplice in Madoff's Ponzi scheme. Madoff disagrees according to the NY Times:
“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”
While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.
Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results — now emerging in lawsuits — that bankers were passing around before his scheme collapsed.
“I’m reading more now about how suspicious they were than I ever realized at the time,” he said with a faint smile.
He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny.
And Mr. Madoff provided information to Irving Picard, Madoff's trustee, to help uncover assets for the victims of Madoff and not to provide him with criminal evidence against the banks:
In some e-mails, Mr. Madoff conceded that Mr. Picard’s team conducted its own investigation into the withdrawals made by some big clients, in the years before the Ponzi scheme collapsed, to determine who might have known what and when. Such withdrawals could indicate that investors could have been aware of the fraud, which could increase their liability.
And what did JP Morgan Chase know about Madoff's fraud? According to the Wall Street Journal, JPMorgan Chase CEO knew of the banks' decision to pull money out from hedge funds that were Madoff-related but wasn't informed of report of red flags on Madoff's Ponzi practices:
J.P. Morgan Chase & Co. Chief Executive James Dimon wasn't informed about a formal report that raised suspicions about Bernard Madoff prior to Madoff's arrest. But he did know about the bank's 2008 decision to pull money from many hedge funds, some of which turned out to be Madoff-related, according to people familiar with the Madoff case.
It wasn't until after Mr. Madoff's December 2008 arrest that the CEO was given a full accounting of the firm's exposure and told that some of the funds had ties to Mr. Madoff, these people added.
What J.P. Morgan executives knew about Madoff is at the heart of a lawsuit alleging that J.P. Morgan Chase ignored or dismissed warning signs about the fraud even as it earned hundreds of millions from its relationship with the firm. The suit was filed last December by Irving Picard, the trustee seeking to recover money for Mr. Madoff's victims, and unsealed earlier this month
Of course, Mr. Madoff had asserted that banks and hedge funds "were complicit" in his Ponzi scheme. The question how many more major banks and hedge funds ignored the warning signs of Madoff's fraud yet profits from their relationship to Madoff?
No comments:
Post a Comment