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Was JPM's October 2008 Redemption From Madoff On Concerns Of Fraud The Reason For The Ponzi's Implosion?
Earlier today, Irving Picard, trustee of the Madoff liquidation trust, filed a lawsuit against JPM, accusing the bank of enabling massive fraud and seeking over $6 billion in fees and damages from Jamie Dimon's bank. As per the press release (full copy below), the reason for the lawsuit is that "JPMC admitted in the months before Madoff’s arrest that BLMIS’s returns were too good – especially in down markets – to be believable, but for years they pretended that was not the case,” while on the banking side, the complaint charges, JPMC should have been more vigilant in seeing illegal cash flows. Instead, “JPMC was willing to ignore decades of suspicious and inexplicable activity." As a result "given that the main BLMIS account was held by JPMC, the bank was in a perfect position to investigate,” Mr. Sheehan said. “It had only to review its internal account records to determine whether there was a legitimate explanation for the cash moving in and out of the BLMIS accounts. And when there ultimately was suspicion of illegal activity, JPMC had a duty to take action. It failed to do so." The release goes on further to indicate that the full complaint has been filed under seal in bankruptcy court, undoubtedly per JPM's demands that its dirty laundry not be exposed, very much the same reason why Goldman is seeking a sealed courtroom hearing during its lawsuit against Sergey Aleynikov. Luckily, ABC has managed to obtain what appears to be a key part of the evidence confirming just how much JP knew. Curiously, we find that it may have been a major redemption by none other than JPM in October of 2008 that set off the avalanche leading to Madoff turning himself in once the ponzi was over.
From ABC News, which has dug up an October 29, 2008 internal memo (months before Madoff handed himself in) in which the firm explains its suspicion:
JPMCB's concerns around Madoff Securities are based (1) 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 is probably is, and (2) the lack of transparency around Madoff Securities trading techniques, the implementation of its trading strategy, and the identity of its OTC option counterparties; and (3) its unwillingness to provide helpful information. As a result JPMCB has sent out redemption notices of one fund, and is preparing similar notices for two more funds.
And like any ponzi, the second there is a major redemption request, the jig is up (same thing goes for the broader stock market these days): this opens up the interesting question - was JPM's redemption request the reason for the collapse of Madoff Securities? Surely, unable to replenish funds during the most volatile market in history, this is precisely the straw on the camel's back that started the unwind and led to Madoff's turning himself in.
While JPM may or may not be at fault, we have one question namely why is Picard going after JPM for not doing something that the relevant regulator in this case - the SEC - should have done? After all, it is the SEC's fault for allowing Madoff to continue as long as he did. And even after all the internal investigations, the SEC continues to be the same toothless, corrupt, incompetent organization which is currently allowing hundreds of other like ponzi schemes to flourish in the current market, about which we will read only after the market blows up next time.
And another question: should every fund whose administrator believes may be a scam, be turned in by said administrator? And to whom? Obviously the SEC no longer even pretends to be a market reulgator: after all how does one reach them: advertisements on redtube.com?
Alas we believe Picard's case in this matter is very weak. But who knows: perhaps for once justice may prevail. Then again, the plaintiffs are people who only used to be rich. As such, their ability to bribe the relevant legal representatives may be severely limited. And that, as everyone knows, is the only way to "extract" justice in America these days.
Full ABC disclosure
Link to Picard release.
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In today's regulatory environment, it's virtually impossible to violate rules.
-Bernard Madoff
"once physical disappears, the game is over"
Andrew Maguire
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_%26_Adrian_Douglass.html
11:58:32
Good one.
Your KWN was dated just a few days after McGuire showed the CFTC how JPM was rigging silver in real time...
And JPM still hasn't stopped PM manipulation. That is total lack of fear by these banks.
There's a book in your local public library that details the Madoff operation; it's very educational.
No, his joo overlords decided to pull the ripcord and let Bernie hang. He was just the front man for the Russian (joo) and Israeli mafia black op ripoff. Most of the money Bernie ripped off is in banks in Israel and joo accounts in Switzerland.
Yep that is about it. Notice the way they handled this case? They sure were in a hurry to get it over with. We sure don't want to piss off some very important people.
Palm Beach Florida Zip code 33480 (do it to it: Ron Lundy).
ASOLs, including Trump, Kass, Madoffs they all live here.
So, JPM actually knew it was a Ponzi, and profited several years from Madoff's returns on other people's money before going out with a profit, when they knew the Ponzi would fall down?
Impossible. Banks are too honest to do this.
There was a guy named Jeffrey Picower who, undoubtedly, also knew what Madoff was doing and was essentially extorting Madoff. He would tell Madoff what percentage gains his "investments" were going to have that year. And Madoff would do it, or pretend to. The guy made massive coin off Madoff and Madoff's marks. And then, after Madoff was arrested and news got out about Picower massive profits off Madoff and the way he dictated what they would be to Madoff, Picower suddenly died. What good luck for his family.
There was more than one pilot fish! but picower did the smartest thing, and died. if he didn't I'm sure someone would have helped him.
"the SEC continues to be the same toothless, corrupt, incompetent organization which is currently allowing hundreds of other like ponzi schemes to flourish in the current market"
Well, exactly how do you expect the SEC to shut down the Fed.
Might as well sue the SEC while you're at it. Not like they didn't know.
The book, which you need to read, details the fact that a New York Stock analyist put together a slide show demonstration how and why Madoff's operation "could only be a massive Ponze scheme"; and presented it to the SEC office in New York. He improved on his presentantion and did it twice more; once in the Boston regional headquarters. Read the book; among other things you'll find out why Madoff pleaded guilty and why it was all over quick. Because of the Silician Street Guy from Brooklyn; who was in charge of the 17th. floor. The book is a perfect example of the difference between knowing what happened and having some sound bites from the media coverage.
Guess Bernie ain't talking so his kids don't end up living at his present address. But if he would talk, the evil old dude would no doubt have a lot to say about this and many other " innocent party " arrangements. A book by the King of Ponzis would be a bestseller.......especially with all proceeds to victims. Bernie could trade for a lox on his bagel every Sunday til death.
+6 capers
and a shmear
Smells like a backdoor bailout to me! The Fed gives JPM the money. I knew all along these bastards would find a way. They even were reportedly trying to get the SIPC coverage, retroactive. They sucked money out all along. They used their obvious contact, Schumer.
"I knew all along these bastards would find a way."
Wait...whaaa? Why...we've actually made money on the whole shabang...Barry and Timmah said so...LOL.
A running tally on the whole sordid affair;
http://bailout.propublica.org/list
as Jamie Dimon believes, if you arent cheating, you arent trying
I worked at the bank at the time Bernie fell and remember the women running private client services crowing about how JPM knew his numbers were too good to be true and didn't trust his auditor, etc on the morning meeting. They better hope that there is no tape recording of that meeting....
The reason they're suing is that they have evidence; The Bank was totally complicit with knowledge before and after the fact. They were the money launderers.
They either have hard evidence or can make an anecdotal showing and hope to get the rest through discovery... generally, you would show some leg in the complaint, some boobs towards the end of discovery, and then flash the gash right before trial. Never know what they have... it behooves them to keep a little close to the vest, at this juncture.
You may find a subpoena in your mail soon or have an unsavory character dressed in some type of outfit so as to draw away suspicion serve you on your doorstep/present work. The "I have no recollection" response will get you added to the defendants list... the truth may as well... I'd contact an attorney asap and be proactive about your defense before getting served. [you will be sought for deposition, etc., when general discovery leads to your identity, presuming due diligence is undertaken and/or the bank is forthright in discovery... generally speaking, only specifically incriminating documents are illegally/improperly withheld, but "people" are readily identified]
Thanks for the posting, Tyler, but until something is done about all this BS, you're just blowing more smoke.
The fucking system is broken and we're fucked, big time. Shut down one big bank and the others will fall. Just choose one. Otherwise, this is more crap to keep readers.
this is more crap to keep readers.
where there is smoke there is fire. fire in a paper house. it is falling apart and they are desperate.
"Otherwise, this is more crap to keep readers."
We've come a long way baby...this all seems a rather mainstream way of looking at the world...now ;-)
What was that bit about Columbian interests and thinly veiled threats.
Was Madoff laundering cocaine money?
why not the CIA/banks are.
No he wasn't. the whole scheme was you send me the money, I spend it. Then I send you a completely false record of stock buy and sells that represent your account. It was moronic. it offends the mind. but he did it for many, many years.
Some people took baths... some people got out a nice return... my guess would be columbian drug lords would fit squarely within the latter group. In the end, bernie was just a somewhat sealed mechanism for larger/harder fish to prosper... we'll see how much they can tie back to other parties, but as the saying goes, "follow the money". We'll see...
Surely, Bernie hasn't given up hope that an inside accomplice will reach a political office from which to provide a pardon, based on essential financial services preformed during a state of national emergency.
Bernie's Italian 'associates' from the old neighborhood did OK. Until last month. Annette Bongiorno and Joanne Crupi were arrsted November 18th. They and Fank DiPasquale, Bernie's CFO, got their Italian neighborhood to 'invest' in Bernie's funds from the earliest days.
Of course a secretary who drives a Bentley can attract the wrong kind of attention.
That's amazing; I didn't know that. I figured they were untouchable.
I rarely disagree with Tyler's key points, but I have to take issue with the notion that Madoff was regulated by the SEC. This article makes a strong case that it was FINRA (formerly the NASD) who was asleep at the switch:
http://seclaw.blogspot.com/2009/01/finra-claims-no-jurisdiction-over.html
Now, fill in the blanks (from Wikipedia):
In 1996 _________ joined the National Association of Securities Dealers (NASD) as the president of NASD Regulation. ________ became the vice chairperson of the NASD in 2002, and in 2006 ___________ became NASD's chairperson and CEO. As the CEO of NASD _________ oversaw its consolidation with NYSE Member Regulation to form the Financial Industry Regulatory Authority.
You gave away the answer. The person is a blank.
I believe Bernie's niece was his compliance officer and she was married to an SEC regulator. I kid you not.
The correct answer is: Mary Schapiro
Wait, so:
JPMC admitted in the months before Madoff’s arrest that BLMIS’s returns were too good – especially in down markets – to be believable
But BoA, Goldman, etc having hundreds of days without trading losses is somehow believable?
Right. Notice nobody questions it. Like with Bernie, they assume they're "gurus". And nobody questions a guru. They're different from you and me.
That's the essence of the Wall Street/Fed Ponzi: a confidence game that makes you believe that all that debt will ever get repaid, and all that paper can really be worth anything. The Fed says that if you trust them, then all debts will be repaid through 'growth'. Wall Street says that all that paper is backed by more valuable paper backed by more valuable paper that will never be questioned. Banks backing up banks like Russian dolls.
We're also supposed to believe that in the depths of the 2009 depression, corporate profits were at "records" and cash levels and balance sheets looked better than ever.
just like the LTCM gurus. black box secret hocus pocus magic returns. infallible. They know best.
Bingo. Kudos.
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by Anonymous
HAha awesome video gives me hope that some people in this? country have their heads on their shoulder. People are really losing it.
Obviously a diversion as the real brains behind the caper, as anyone with half a wit knows, is Waddel & Reed
They ignored his suspicious deposits. Meanwhile, Joe Blow gets interrogated for daring to pull out $10,000 of his own money from his own account...
"Meanwhile, Joe Blow gets interrogated for daring to pull out $10,000 of his own money from his own account..."
And Rangel (chairing the committee that writes tax law for everyone else) parks his old jalopy car in a government (our) garage without paying for it, pays for personal expenses with campaign donations, hides income from overseas properties...etc. ad nauseum...gets a censure!?!
Ooooooh...not the dreaded censure he says...LOL.
How Wiki of you tyler...keep it up with the lawsuit under seal info. I must ask why such a civil suit be filed under seal as should we all? why? puke answer.
I shouldn't, but I feel empathy for Bernie.
He will die in jail while the creators of the biggest Ponzi in history won't.
At least when the States will go bankrupt, Bernie will have the opportunity to do a prison break.
Hey, no that's wrong. He should be beat to death in jail; slowly. And I'm not a vengeful person; but the amount of real harm that he caused to real people is mind boggling; he was and is a real psychopath.
Control Fraud...is utterly dependant on Accounting Fraud.
Of course, it was all done for a good purpose...as all fraud is justified by the participants, however squirrelly their logic.
With the National Security State, degree-mills and true-believers, there is no longer need to "buy" judges...they can be rented by the hour.
Case is very weak. But! This makes it stronger. By "this" I mean JPM's decision to pull its money out (if alleged is true).
In general, a bank (same for SEC) should not be forced to make regulatory type decisions based on fund's returns. Who's to say what's appropriate or possible? (Not the government! ...a second look makes sense in extreme situations but only for the purpose and to the extent of learning more)
The key is not sexy and does not lie in market analysis. It's an accounting and operations (banking) issue. While the SEC eventually got close enough that they should have smelled a rat they failed at audit not at investment analysis (again it is not a government agencies' job to determine what returns should be possible).
Either Madoff's firm was a properly regulated suitable investment for the public (mutual funds, brokers, etc) or it was not (hedge funds). In either scenario sophisticated investors failed to do proper research. Fund of funds and investment managers sell due diligence. Putting funds in a vehicle audited by a 2 person nobody accounting firm in bumblefuck, FL without further research ain't diligent! It's stupid and reckless and it wouldn't happen if the Fed didn't force feed dollars into the system (slushing cash spills out in fake AAA rated assets, wall st executive comp) but I digress.
Here the bank took itself out of a simple utility function and into the stupid reckless territory by also being an investor (Glass-Steagall anyone!?!). This should warrant liability that wouldn't ordinarily be there in a banking relationship. Enough to pin the tail on the too large for its own good JPM donkey? Maybe not, but could add a 0 to the settlement pmt.
Thank you for listening. Good night.
People... JPM knew because of Bear Stearns!!!
That's where the game was. When JPM took over BS, they saw the trading side of Madoff's ops. That's when they knew to investigate. That's when they knew to redeem. That's when they forget to act in their clients best interests as fiduciaries. (Yes, JPM got out, but didn't advise clients to do so.)
They (with the takover of BS) were privy to their cash side of his business, and the trading side of his business.
all the best, Miss America
Is this what Wikileaks will detail next year?