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Biggest US Bank to Pay Hefty Settlements Involving Madoff Fraud

  • VOA News

Preet Bharara, U.S. Attorney for the Southern District of New York, announces a settlement with JPMorgan Chase, Jan. 7, 2014 in New York.
The biggest U.S. bank, JPMorgan Chase, has agreed to pay $2.5 billion in fines to the government and settlements with victims of Bernard Madoff's massive Ponzi scheme, the largest ever in the United States.

In a deal with the U.S. Justice Department, JPMorgan agreed to a $1.7 billion settlement of claims that it failed to adequately monitor Madoff's accounts at the bank that he used in carrying out the fraud that cost investors $17 billion. The government said it is the largest U.S. bank forfeiture ever and that it intends to pass on the money to Madoff's victims.

The 75-year-old Madoff was arrested more than five years ago and now is serving a 150-year prison sentence. Since then, however, multiple investigations and lawsuits have attempted to track his activities in which he used money from new investors to pay off older ones, until the scheme collapsed.

The government said "there was no meaningful effort" by the bank to watch his accounts, even after the bank's own computer system twice flagged suspicions.

In the settlement with prosecutors, criminal charges against JPMorgan are being delayed for two years while the payments to victims are carried out.

In separate deals connected to the Madoff fraud, JPMorgan agreed to pay a $350 million penalty to U.S. bank regulators and $543 million to resolve the private claims from investors who lost money.