JPMorgan Made $907 Million From Cash Held in Madoff Accounts, Study Says
JPMorgan Chase & Co. (JPM), the second- biggest U.S. bank, made $907 million in pretax profit from deposits held at the bank by imprisoned Ponzi scheme operator Bernard L. Madoff, a study said.
The Madoff firm’s balances in its JPMorgan account generated the profit from 1986 to 2008, according to Linus Wilson, an assistant finance professor at the University of Louisiana at Lafayette. Entitled “Madoff’s Dirty Money,” the study posted on the Social Science Research Network on Feb. 27 uses “previously unanalyzed data” from the Securities Investor Protection Corp., which handles the Madoff firm’s bankruptcy, Wilson said.
The profit calculation was arrived at by assuming that the Madoff deposits were reinvested in JPMorgan’s stock through Feb. 18, 2011, the study says.
Joseph Evangelisti, a spokesman for New York-based JPMorgan, declined to comment.
JPMorgan was sued by the trustee liquidating Madoff’s firm for $6.4 billion for allegedly aiding the con man’s fraud. JPMorgan denied wrongdoing, saying the earnings from Madoff were “wholly immaterial.”
JPMorgan’s fees totaled $597,000 in the six years before Madoff’s 2008 bankruptcy, Picard calculated. JPMorgan earned less than $3.5 million in interest by loaning $145 million to Madoff’s firm in 2005 and 2006, the bank said.
According to court filings, Madoff’s accounts with JPMorgan included Treasury securities as well as cash.
The JPMorgan case is Picard v. JPMorgan Chase & Co., 10-ap- 4932, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Linda Sandler in New York at lsandler@bloomberg.net;
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.
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