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  • Dec 19, 2014
  • Updated: 7:16am

JPMorgan Chase

JPMorgan Chase is the largest bank in the United States, and one of the world’s largest public companies. 

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FRAUD

JPMorgan agrees to pay US$1.7b in Madoff case

PUBLISHED : Wednesday, 08 January, 2014, 3:42am
UPDATED : Wednesday, 08 January, 2014, 3:42am

JPMorgan Chase has agreed to pay US$1.7 billion to resolve US claims that it played a role in facilitating Bernard Madoff's Ponzi scheme, the US government said, resolving yet another legal obstacle facing the bank.

The biggest bank in the United States by assets entered into a deferred-prosecution agreement with the office of Preet Bharara, the US attorney in Manhattan, and acknowledged lapses in oversight related to an account Madoff used to fund his multibillion-dollar fraud.

Wall Street firms have spent years fighting claims by Madoff's victims that the companies ignored wrongdoing to continue reaping fees.

Madoff, 75, maintained accounts with JPMorgan for more than 20 years before confessing to running a fraud that cost investors about US$17 billion. He is serving a 150-year federal prison sentence in North Carolina.

JPMorgan agreed to the filing of two criminal counts in Manhattan federal court. As part of the deferred-prosecution agreement, the bank agreed to fully co-operate with the US government in its investigation for two years.

The New York-based bank is charged with failure to maintain an effective money-laundering programme and failure to file a suspicious activity report, according to a copy of a letter dated Monday to the bank's lawyers provided by Bharara's office.

Under the agreement, JPMorgan admitted to a statement of facts and to pay the US$1.7 billion to the government, which said it planned to distribute the funds to the victims of Madoff's fraud, the largest Ponzi scheme in US history.

JPMorgan agreed last year to pay US$15.7 billion to resolve other US regulatory probes into practices including mortgage-bond sales and energy trading.

In recent years, deferred-prosecution agreements have become a popular tool for the Justice Department to resolve criminal investigations against large banks.

HSBC entered into a US$1.9 billion deferred-prosecution agreement in December 2012 to resolve allegations of money laundering and violations of US sanctions on Iran.

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