For over a decade, Madoff ran his Ponzi scheme out of a bank account at JPMorgan. Instead of making trades with the money he received from investors, Madoff simply deposited the funds in an account at the bank, from which he paid dividends.
The bank account in which Madoff held investors’ funds nearly hit zero several times in 2008, a fact that JPMorgan could not have failed to notice, considering that the account had previously held billions.
In December of 2010, Irving H. Picard, the trustee for the investors who were defrauded by Madoff, filed a lawsuit against JPMorgan Chase, alleging that the bank knew that Madoff’s transactions were fraudulent but continued doing business with him.
he trustee’s lawsuit alleges that JPMorgan made $1 billion in fees and profits from its role as Madoff’s main banker. The trustee is seeking to recover $5.4 billion in damages.
When the trustee’s suit was filed, attorney David J. Sheehan noted that JPMorgan “was BLMIS’ [Bernard L. Madoff Investment Securities’] primary banker for more than 20 years and was responsible for knowing the business of its customers—in this case, a very large customer.”
He added, “Madoff would not have been able to commit this massive Ponzi scheme without this bank. [JPMorgan] should pay the price for its central role in enabling Madoff’s fraud.”
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The suggestion that Madoff was so brilliant that he could swindle his clients is credible.
The suggestion that Madoff could have used his funds like a personal checking account, never buying stocks, simply putting money in and taking it out occassionally and that his BANKERS would NOT have noticed that?
THAT is NOT credible, folks.
The thing is that no person and no investment house or bank actually understands the details on the full range of investment possibilities. Knowing transactional details is not the same thing as UNDERSTANDING the moral or legal implications of the overarching structure.
Be clear that it was then and remains my opinion that the greatest missed opportunity since Truman fired MacArthur was Bush's decision to reward failure by paying AIG 100c on the dollar in 2008 - instead of declaring an emergency and allowing failed institutions to to declare bankruptcy, then selling the asset at fire-sale prices.
I understand the reason, CALPERS and any number of public pension funds would have gone under. So what? That would have created another opportunity to undo the damage of the Reagan years.
So the legal question is SHOULD these banks have smelled a rat? As much as I loathe corporate degeneracy, it's hard for me to set the standard that high
SHORT OF RICO PROSECUTIONS OF BIGS AND RATING AGENCIES. They were all in it, which makes the RICO hurdle, and while it was criminal, it would fall more to the RICO standard than the ordinary criminal standard because no individual bank is guiltier than another one and all of them depended on the ratings people.
RICO can strip away the corporate veil to allow personal assets to be seized - including trusts for children and clawbacks of charitable donations. There is simply not the will out there for this kind of prosecution.
The United States - above a certain material level, 80% of the top 5% plus (by submissive nature, co-opted by religion and politics) the next 10%-15% who believe supporting avarice is meet and right and the path to their personal version of Heaven - is as THOROUGHLY corrupt (rail to rail, stem to stern, bridge to boiler room) as any western empire since Rome. The Raj never experienced anything like the United States today.
Theoretically, what sort of "price" might JP Morgan pay (civil/criminal) if, in fact, the bank aided and abetted Bernie's scheme to steal from other rich people?
See above. There isn't going to be a standard type of conviction because the evidence won't support it.
The only hope is RICO. The only group advocating anything like that are the most aware and hard line Tea Party types on the dumbo right - and vengeance-focused nihilists like me.
