According to a report from the Wall Street Journal,"the various deals announced Tuesday include a deferred-prosecution agreement with Manhattan U.S. Attorney Preet Bharara and a total of $2.24 billion in compensation for victims of Mr. Madoff's fraud. Of that amount, $1.7 billion will be forfeited through the Justice Department and another $543 million will go separately to a court-appointed bankruptcy trustee collecting funds for Madoff victims and other plaintiffs.
Mr. Bharara said at a press conference that J.P. Morgan "failed miserably" as an institution concerning Madoff and that the bank repeatedly ignored warnings about him despite "plenty of reasons to be uniquely suspicious."
The deferred-prosecution agreement means criminal charges against the bank for violations of the Bank Secrecy Act will be lifted in two years pending the payments and reforms of J.P. Morgan's anti-money-laundering policies. The Justice Department, however, said it can't "make any promises" about the prosecution of J.P. Morgan for criminal tax violations.
A J.P. Morgan spokesman said, "we recognize we could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time" but "we do not believe that any J.P. Morgan Chase employee knowingly assisted Madoff's Ponzi scheme." He said the bank is "making significant efforts" to improve its practices, and "we believe the lessons we have learned will make us a stronger company."
The $1.7 billion payment to the Justice Department is the largest U.S. penalty ever for a violation of the Bank Secrecy Act, according to the government. The 1970 law requires banks to maintain an effective anti-money-laundering program and file a suspicious-activity report, or SAR, when they "detect certain known or suspected violations of federal law or suspicious transactions."
