JPMorgan to Cough Up $2B in Madoff Case

Bank accused of turning a blind eye to vast Ponzi scheme

By Rob Quinn,  Newser Staff

Posted Dec 12, 2013 3:24 AM CST

(Newser) – Five years after history's biggest Ponzi scheme was exposed, Bernie Madoff's main banker is facing a rare criminal action for its role in the scam and is preparing to settle for around $2 billion, reports the New York Times. JPMorgan is accused of turning a blind eye to the $20 billion scam, with executives raising concerns internally but continuing to serve as his banker and failing to alert authorities. The settlement with federal prosecutors will include a deferred-prosecution agreement and the government plans to use a sizable chunk of the penalties to compensate Madoff's victims, sources say.

JPMorgan chief executive Jamie Dimon has called the case "meritless" but signaled the bank will pay up to get the matter behind it. One person who predicted the payout: Bernie Madoff. The bank "doesn't have a chance in hell of not coming up with a big settlement," he told the Financial Times in 2011 from the federal prison where he is serving a 150-year sentence.

  • Five former Madoff employees, meanwhile, are on trial in Manhattan for their part in the fraud. Madoff's former finance chief Frank DiPascali, who is working with prosecutors, testified earlier this week about the day he learned that the shady deals they had worked on for decades were part of a Ponzi scheme that was about to collapse, Bloomberg reports. "He turned to me and said, crying, 'I’m at the end of my rope,'" DiPascali told the court, saying that when he expressed confusion, his boss shouted, "I don’t have any more goddamned money—don’t you get it? The whole goddamn thing is a fraud!"

In this Wednesday, Dec. 17, 2008 photo, Bernard Madoff enters his house through a crowd of cameras in New York.
In this Wednesday, Dec. 17, 2008 photo, Bernard Madoff enters his house through a crowd of cameras in New York.   (AP Photo/Seth Wenig, file)
Bernard Madoff, chairman of Madoff Investment Securities, returns to his Manhattan apartment after making a court appearance Wednesday, Dec. 17, 2008.
Bernard Madoff, chairman of Madoff Investment Securities, returns to his Manhattan apartment after making a court appearance Wednesday, Dec. 17, 2008.   (AP Photo/Jason DeCrow)
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