Today, the U.S. Department of Justice announced it had come to terms with JPMorgan Chase (NYSE:JPM) for its actions related to the Bernie Madoff Ponzi scheme, and the bank has agreed to settle the charges for $1.7 billion.
The $1.7 billion settlement will be paid to the U.S. government, but then distributed to victims of the Bernie Madoff fraud. In addition, JPMorgan Chase has agreed to not claim, assert, or apply for any tax deductions resulting from the settlement amount. JPMorgan was Madoff's primary bank in the later years of a multidecade fraud that ended in 2008 when he revealed to the FBI that his investment advisory business was a Ponzi scheme.
The settlement also includes a two-year deferred prosecution agreement related to JPMorgan Chase's actions in allegedly violating the Bank Secrecy Act. This included both its "failure to maintain an effective anti-money laundering program," as well as its "failure to file a suspicious activity report" after employees began to question the actions of Bernie Madoff and the returns he proposed to deliver, according to the documents from the office of the U.S. Attorney for the Southern District of New York..
Although the bank submitted a report to the United Kingdom Serious Organised Crime Agency ("SOCA") in October 2008, noting "the investment performance achieved by [the Madoff Securities] funds... is so consistently and significantly ahead of its peers year-on-year, even in prevailing market conditions, as to appear to good to be true -- meaning that it probably is," the bank failed to file a concurrent report in the United States, according to prosecutors.
The Justice Department also highlighted that JPMorgan did not have the appropriate policies, procedures, or controls in place to ensure that the information communicated to SOCA was also disseminated to anti-money-laundering officials and organizations in the United States.
JPMorgan Chase has not released official comment regarding the settlement, but in December JPMorgan CEO Jamie Dimon said, "We have more to go. You read about Madoff in the paper today. We have to get some of these things behind us so we can do our job. Our job is to serve clients around the world. That's our job. So I want to get it behind us."
Reports were circulating yesterday morning that JPMorgan would pay $2 billion to settle over claims related to its role in the Madoff scheme.
-- Material from The Associated Press was used in this report.