Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Lawyers use Bernie Madoff jailhouse interview to sue JPMorgan executives in NY over fraud

NEW YORK, N.Y. - A new lawsuit against JPMorgan Chase & Co. relied on a jailhouse interview with Bernard Madoff to bolster claims that top executives at the nation's largest bank for many years confronted Madoff about significant concerns in filings with a regulatory agency regarding his private investment business but always backed off because he earned the bank so much money.

In the lawsuit filed Thursday in Manhattan federal court, lawyers for two pension funds quoted Madoff from an in-person interview conducted last fall in Butner, N.C., where Madoff is serving a 150-year prison sentence, as well as telephone interviews conducted with him.

They said Madoff told them that the former chief executive officer at two banks that preceded the formation of JPMorgan and a former JPMorgan board member confronted Madoff in the 1990s and through the next decade, too.

But the lawsuit said they usually raised their concerns "as an after-thought" at the end of luncheon meetings as they passed along concerns raised every quarter by relationship managers at the bank, including the chief risk officer at JPMorgan's Investment Bank.

Madoff told the lawyers that the meetings often were attended by one of his longtime customers, the late real estate maven Norman Levy, whose accounts raised concerns for the bank because he was also one of JPMorgan's important customers, the lawsuit said.

The lawsuit said JPMorgan reviewed Levy's brokerage accounts showing billions of dollars in debit balances and margin accounts with Madoff, but noticed that Madoff's filings with the Securities and Exchange Commission showed no customer receivables or payables from Levy or any other customers, revealing that Madoff was not investing Levy's money or lending him money on margin.

Madoff said he told Chase executives he would not discuss information about his clients with them and that they should ask Levy for answers, the lawsuit said. It added that Madoff said he told Levy not to answer the bank's questions.

"As Madoff explained, this was theatre to Levy, which he got a kick out of doing," the lawsuit said.

According to the lawsuit, Madoff said the bank's executives "would 'cower' because Levy was such an important customer of JPMorgan's Private Bank. Thus, faced with the choice of shutting down Madoff's account and losing lucrative profits, or turning a blind eye to the troubling and unanswered questions presented by Madoff, JPMorgan — at its highest level — chose to turn a blind eye."

Madoff told the lawyers that his motivation to now discuss JPMorgan's role in his fraud was to help his victims recover assets that he stole, the lawsuit said.

The lawsuit also said Madoff recalled that the bank's ability to review the banking activities in Levy's accounts and its handling for more than 20 years of the account for Madoff's private investment business gave it better insight into what he was doing than even the SEC could achieve.

Madoff also told lawyers that he believes the bank was intimidated by him as it earned hundreds of millions of dollars from his business, the lawsuit said.

Chase spokeswoman Tasha Pelio said the bank had no comment on the lawsuit, which sought unspecified damages and changes in bank policies to prevent similar frauds.

Last month, JPMorgan agreed to pay $1.7 billion to settle criminal charges stemming from Madoff's fraud and said it would reform its protections against major frauds. The $1.7 billion is part of $2.6 billion the bank has agreed to pay to settle legal actions brought as a result of the Madoff fraud.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Submit a Random Act of Kindness
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates