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Banking and Finance

JPMorgan to Pay Record $1.7B to Settle Claims It Failed to Report Madoff Fraud

 NEW YORK — (Mealey’s) JPMorgan Chase Bank NA has agreed to a civil forfeiture of a record $1.7 billion to settle claims that it violated provisions of the Bank Secrecy Act during its time as the primary bank for Bernard L. Madoff’s massive Ponzi scheme, according to information released today by federal authorities.

According to a deferred prosecution agreement released today by U.S. Attorney for the Southern District of New York Preet Bharara, JPMorgan has agreed to what is widely being called a record payout under the federal statute on claims that it failed to maintain an effective anti-money-laundering program and failed to file a suspicious activity report during its time as Madoff’s primary bank.

Under the terms of the agreement, which are subject to court approval, JPMorgan has waived service of the government’s civil forfeiture complaint and agreed to a final order of forfeiture of $1.7 billion.

No Tax Deduction

According to the agreement, JPMorgan will not be allowed to claim the forfeiture as a tax deduction and will work with federal authorities in their investigations into Madoff’s fraud.

The government is represented by Bharara, Assistant U.S. Attorneys Arlo Devlin Brown and Matthew L. Schwartz and Criminal Division Chief Lorin L. Reisner, all in New York.

JPMorgan is represented by John F. Savarese, Stephen R. DiPrima and Emil A. Kleinhaus of Wachtell, Lipton, Rosen & Katz and Steven R. Peikin of Sullivan & Cromwell, all in New York.

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