J.P. Morgan Allegedly at the Center of the Madoff Fraud


A lawsuit filed by the Madoff bankruptcy trustee, Irving Picard, which was unsealed on February 3, 2011, alleges that J.P.Morgan Chase & Co. stood “at the very center” of the Madoff fraud, according to a Wall Street Journal article by Michael Rothfield entitled “Madoff Trustee’s Suit Says J.P. Morgan at ‘Very Center of Fraud.”

The lawsuit seeking disgorgement of $6.4 billion of JPMorgan’s profits and fees, which was filed in December, alleges that J.P. Morgan ignored red flags of fraud, and waited until late October 2008, less than two months before Madoff surrendered and the fraud was exposed, before reporting its long-held suspicions ? not to the U.S Securities and Exchange Commission ? but to U.K.’s Serious Organised Crime Agency.

J.P. Morgan allegedly told the British regulator that its concerns about Madoff were based on the “investment performance achieved by its funds which is so consistently and significantly ahead of its peers, year-on-year, even in the prevailing market conditions, as to appear too good to be true?meaning that it probably is.”

The suit alleges that bank employees’ concerns went unheeded and irregularities in his accounts were disregarded. JPMorgan allegedly ignored billions of dollars passing through the Madoff’s firm’s main J.P. Morgan account, much of it by hand-written check, as well as account balance discrepancies and unreported obligations, including a $95 million loan.

Instead, the bank’s efforts were allegedly geared to making money by offering products tied to Madoff through investment funds that fed money to him.

“They had, legally, an obligation to make inquiry, and they didn’t,” David Sheehan, an attorney for trustee Irving Picard, was quoted as saying, adding: “You’re literally seeing millions of dollars going in and out on a daily basis, and not one phone call is being made.”

Page Perry is an Atlanta-based law firm with over 125 years collective experience representing institutional and individual investors in investment-related litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.