JPMorgan Chase was not one of the many victims of Bernard Madoff’s Ponzi scheme. On the contrary, the bank made a lot of money off Madoff, close to a billion dollars.

 

According to an analysis by Linus Wilson of the University of Louisiana at Lafayette, JPMorgan earned $907 million in pre-tax profits from the bank account Madoff had open from 1986 to 2008, when the scheme was exposed. Just before the financial crisis of that year unfolded, the account held as much as $5.5 billion.

 

The Securities and Exchange Commission referred to the account as “nothing more than a slush fund.”

 

In his paper, Wilson writes that the bank failed to investigate the huge flows in and out of the Madoff account, which should have triggered an internal investigation. It did, however, use funds in the account to invest in high-yield loans.

 

Attorney Irving Picard, who is attempting to recover the losses of Madoff’s victims, has sued JPMorgan for $6.4 billion, which represents less than a third of the $19.6 billion lost by Madoff investors.

-Noel Brinkerhoff

 

JPMorgan's $907 Million Madoff Bonanza (by Colin Barr, Fortune)

Madoff’s Dirty Money (by Linus Wilson, University of Louisiana at Lafayette)