JPMorgan Chase Is Under Fourth Criminal Probe after Pleading Guilty to Three Prior Felony Counts

By Pam Martens and Russ Martens: February 6, 2020 ~

JPMorgan Chase Bank BuildingYesterday, Bloomberg News reporters Tom Schoenberg and Liam Vaughan broke the story that JPMorgan Chase is under a criminal probe by the U.S. Department of Justice (DOJ) over charges of rigging gold, silver and other precious metals markets. Six traders who worked on the precious metals desk at JPMorgan Chase have been indicted thus far but this is the first report that the bank itself is also under a criminal investigation. This marks the fourth criminal probe of the bank in the past 8 years by the U.S. Department of Justice with the bank pleading guilty to three felony counts in two of the prior criminal investigations.

Throughout this serial crime wave, the Board of Directors of JPMorgan Chase has kept Jamie Dimon in his seat as Chairman and CEO. Despite knowing that three of the bank’s traders had been charged under the criminal RICO statute and that the investigation could very likely result in criminal charges against the recidivist bank itself, the Board recently awarded Dimon a pay package of $31.5 million for last year – buttressing presidential candidate Bernie Sanders’ message that the business model of Wall Street is fraud.

There was a time in America when a criminal probe of the nation’s largest bank, which holds $1.6 trillion in the life savings of moms and pops at more than 5300 bank branches across the country, would have been worthy of a front-page headline. Not today. Crime and fraud are so de rigueur at the bank led by Dimon that not one major newspaper ran the headline on the front page or anywhere else in the paper.

Corporate media is, in fact, complicit in letting Dimon and his Board off the hook. Dimon’s public relations flacks have teamed up with mainstream media to create the false narrative that Dimon is some kind of economic genius and a Wall Street superstar. Bloomberg News itself has perpetuated that myth by portraying Dimon as the man whose greatest mission is to take good care of his customers – despite the hard fact that federal regulators are perpetually documenting how the bank is ripping its customers off in brazen fraudulent actions. As recently as November 10 of last year, Lesley Stahl of the CBS investigative news program, 60 Minutes, interviewed Dimon and strolled through the bank’s trading floor without ever asking Dimon about the unprecedented felony charges the bank has been forced to plead guilty to under his tenure.

Equally outrageous, Dimon was allowed to serve as Chairman of the Business Roundtable for the past three years. His Chairmanship expired this past December 31. The Board of the Business Roundtable includes the CEOs of some of the largest corporations in America and is supposed to set the tone for ethical corporate conduct.

The precious metals case against traders at JPMorgan Chase became public on November 6, 2018 when John Edmonds pleaded guilty to charges brought by the U.S. Department of Justice. Edmonds admitted that from approximately 2009 through 2015, he conspired with other precious metals traders at JPMorgan Chase to manipulate the markets for gold, silver, platinum and palladium futures contracts traded on the New York Mercantile Exchange (NYMEX) and Commodity Exchange Inc. (COMEX).

According to the statement given to the DOJ by Edmonds, his motive was “to make money and avoid losses for himself, his co-conspirators, and the Bank” and he “learned this deceptive trading strategy from more senior traders at the Bank, and he personally deployed this strategy hundreds of times with the knowledge and consent of his immediate supervisors.”

On August 24, 2019, another trader at JPMorgan Chase, Christian Trunz, pleaded guilty to the DOJ for manipulating the precious metals market from approximately July 2007 and August 2016.

Then on September 16, 2019 the DOJ dropped its bombshell. It charged three more traders on the precious metals desk at JPMorgan Chase under the Racketeer Influenced and Corrupt Organizations Act (RICO) – the same statute that was used to indict members of the Gambino crime family in 2017. The trading desk, itself, was named a racketeering enterprise. The traders were charged with rigging the precious metals market during a period spanning more than eight years – from May 2008 to August 2016. One of those charged in that action was Michael Nowak, a Managing Director at the bank and the head of its Global Precious Metals Desk. The other two traders indicted were Gregg Smith and Christopher Jordan.

Curiously, two trial lawyers had previously raised the idea of JPMorgan Chase being prosecuted under the RICO statute in their book JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook. The trial lawyers are Helen Davis Chaitman and Lance Gotthoffer. In chapter 5 of the book, they write as follows: (JPMC stands for JPMorgan Chase.)

“In Chapter 4, we compared JPMC to the Gambino crime family to demonstrate the many areas in which these two organizations had the same goals and strategies. In fact, the most significant difference between JPMC and the Gambino Crime Family is the way the government treats them. While Congress made it a national priority to eradicate organized crime, there is an appalling lack of appetite in Washington to decriminalize Wall Street. Congress and the executive branch of the government seem determined to protect Wall Street criminals, which simply assures their proliferation.”

On November 15, 2019, the DOJ charged yet another precious metals employee at JPMorgan Chase, bringing the total to six. This time it was a salesperson involved with precious metals at JPMorgan Chase, Jeffrey Ruffo, whose sales clients were hedge funds. The DOJ indictment alleges the following:

“…one of the reasons the defendants and their co-conspirators used Deceptive Orders in their trading was to service and benefit key clients, including Ruffo’s hedge fund clients, which were important sources of revenue and market intelligence for the precious metals desk at Bank A [JPMorgan Chase].  For example, as alleged in the superseding indictment, if a hedge fund client wished to purchase gold, Ruffo would receive the order and communicate it to Smith, who, with Ruffo’s knowledge and encouragement, would then place Deceptive Orders to sell gold futures contracts in order to artificially lower the price at which the hedge fund could buy (or the defendants and their co-conspirators could buy on the hedge fund’s behalf).  By passing along the lower price, the superseding indictment alleges, the defendants and their co-conspirators hoped to retain that hedge fund’s business for the precious metals desk at Bank A.”

In other words, in August, September and again in November of last year, the Board of Directors of JPMorgan Chase were put on notice that the bank they were overseeing under their designated leader, Jamie Dimon, was accused of running a criminal enterprise out of its precious metals desk. They were also aware that at least two of those indicted are cooperating with the DOJ in the ongoing investigation. And yet, they still awarded Jamie Dimon a pay package of $31.5 million and allowed him to announce that he planned to remain at the bank for another five years.

Adding to the DOJ’s likelihood of bringing criminal charges against the bank is the fact that when all six of the traders/salesman were indicted, JPMorgan Chase was still under probation in its own plea agreement for its role in rigging the foreign exchange market. It entered into that plea agreement on May 20, 2015 but a Federal District court did not approve the deal until 2017. This meant that its three-year probation period did not end until January 2020. JPMorgan Chase pleaded guilty to one criminal felony count in that matter and agreed to two criminal felony counts in the Bernie Madoff matter in 2014. (It held the business bank account for Madoff for decades and did not report flagrant money laundering red flags to law enforcement. It did, however, tell U.K. regulators that it thought Madoff was likely running a Ponzi scheme. According to a report from the Government Accountability Office, JPMorgan’s own customers lost $5.4 billion in the Madoff scheme.)

The fourth criminal probe of JPMorgan Chase, which did not end in DOJ charges, resulted from the infamous London Whale scandal at the bank in 2012. Using hundreds of billions of dollars from its federally-insured bank, traders for JPMorgan Chase in London lost $6.2 billion trading exotic derivatives. The bank paid over $1 billion to settle charges in that matter. (See Looking Back on JPMorgan’s London Whale Saga.)

This is demonstrably a criminally recidivist bank. Dimon and the Board need to be removed. The bank needs to be broken up with the federally-insured bank placed under a sane, ethical, competent Board of Directors.

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