Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him, according to internal bank documents made public in a lawsuit on Thursday.I guess his colleagues were too busy supping on caviar to respond, "So is our entire bank...so what?"
On June 15, 2007, an obviously high-level risk management officer for Chase’s investment bank sent a lunchtime e-mail to colleagues to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.”
Despite those suspicions and many more, the bank allowed Mr. Madoff to move billions of dollars of investors’ cash in and out of his Chase bank accounts right up until the day of his arrest in December 2008 — although by then, the bank had withdrawn all but $35 million of the $276 million it had invested in Madoff-linked hedge funds , according to the litigation.Right up until the very last minute. Classic. But get a load of Chase's defense.
“Madoff’s firm was not an important or significant customer in the context of JPMorgan’s commercial banking business, and the revenues earned from Madoff’s bank account were modest and entirely consistent with conventional market rates and fees.”In criminology, Sykes and Matza called this Techniques of Neutralization, the attempt to deny criminal culpability through a series of rationalizations. Two of these are Appeal to Higher Loyalties and Denial of a Victim.
Read another way, their statement says, "yes we made some money off that scumbag Madoff, but he was small potatoes, we earned practically nothing, and besides he's a criminal who had it coming."
Unbelievable. It continues to astound me that none of these clowns on Wall Street, with whom Madoff was dealing during his 15 year $50 billion scheme, is sitting with him in the pokey over in Butner. Not one.
UPDATE: Bernie Madoff Speaks. In today's (2/16/11) NYT, Madoff asserts that most of the big banks and investment firms with whom he was doing business knew of his schemes. "They had to know. But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’"
Of course, he's also one of the greatest liars and scam artists of all time, so take it for what it's worth. But isn't it ironic that we even have to qualify his word over the word of JPMorgan Chase?