By Pam Martens and Russ Martens: October 11, 2023 ~
Immediately upon departing her post as Chair of the Federal Reserve, but prior to getting the nod from the Biden administration to become U.S. Treasury Secretary, Janet Yellen engaged in what the courageous reporter at ProPublica, Jesse Eisinger, called a “two-fisted money grab from banks.” Yellen raked in more than $7 million in speaking fees with the bulk of that coming from Wall Street banks and trading houses, including JPMorgan Chase. In a Tweet, Eisinger said: “This is corruption, but isn’t called that because it’s so quotidian.”
Now there is the appearance that a quid pro quo is coming full circle.
According to a press release posted on JPMorgan Chase’s website, “it has been designated by the United States Treasury Department under a financial agency agreement to provide account validation services for federal government agencies” in order to ensure “Treasury’s commitment to payment integrity and the reduction of improper payments.”
Hiring JPMorgan Chase to ensure “payment integrity” is like the U.S. Treasury hiring Allen Weisselberg as its accountant. Since 2014, JPMorgan Chase has admitted to five separate criminal felony charges brought by the U.S. Department of Justice. The first two of those felony charges related to the bank ignoring brazen red flags as Ponzi kingpin, Bernie Madoff, laundered billions of dollars through the bank for years.
At the time of the Madoff charges in 2014, FBI Assistant Director-in-Charge George Venizelos said this:
“J.P. Morgan failed to carry out its legal obligations while Bernard Madoff built his massive house of cards. Today, J.P. Morgan finds itself criminally charged as a consequence. But it took until after the arrest of Madoff, one of the worst crooks this office has ever seen, for J.P. Morgan to alert authorities to what the world already knew. In order to avoid these types of disasters in the future – we all need to be invested in making our markets safer and more equitable. The FBI can’t do it alone. Traders, compliance officers, analysts, bankers, and executives are the gatekeepers of the financial industry. We need their help protecting our markets.”
JPMorgan Chase and its predecessor banks handled the primary business account for Madoff for decades. Despite billions of dollars in check-kiting occurring between Madoff and one of his largest clients, Norman F. Levy, the bank never filed the legally-required Suspicious Activity Reports (SARs).
JPMorgan Chase and its predecessor banks also extended tens of millions of dollars in loans to Levy and his family so they could invest with the insolvent Madoff. According to Irving Picard, the Trustee of the Madoff Victims Fund, Levy had $188 million in outstanding loans in 1996, which he used to funnel money into Madoff investments. Picard’s lawyers wrote in court filings that JPMorgan Chase (JPMC) “referred to these investments as ‘special deals.’ Indeed, these deals were special for all involved: (a) Levy enjoyed Madoff’s inflated return rates of up to 40% on the money he invested with Madoff; (b) Madoff enjoyed the benefits of large amounts of cash to perpetuate his fraud without being subject to JPMC’s due diligence processes; and (c) JPMC earned fees on the loan amounts and watched the ‘special deals’ from afar, escaping responsibility for any due diligence on Madoff’s operation.”
The final insult from JPMorgan Chase to the integrity of the U.S. financial system came when it notified U.K. financial authorities that it thought Madoff was running a Ponzi scheme but skipped the pesky detail of sharing that information with U.S. authorities.
In case you think the bank’s long-term relationship with Madoff was a one-off failure of prudent management, think again.
Since June, JPMorgan Chase has agreed to pay $365 million to rid itself of two federal lawsuits that charged it with looking the other way for 15 years as Jeffrey Epstein laundered over $1 billion through the bank in a sex trafficking of minors enterprise. Once again, no Suspicious Activity Reports were filed by the bank until after Epstein was arrested by federal prosecutors in 2019 according to the lawsuit brought by the Attorney General of the U.S. Virgin Islands. (The other lawsuit was brought by Epstein victims.) See our report: JPMorgan’s Settlements Reach $365 Million Over Civil Claims It Banked Jeffrey Epstein’s Sex Trafficking of Minors; Criminal Charges Could Lie Ahead.
Another reason that the U.S. Treasury might want to select a more appropriate vendor to ensure its “payment integrity” is that just three years ago the U.S. Department of Justice criminally charged JPMorgan Chase with rigging the market for the very securities issued by the U.S. Treasury in order to pay the U.S. government’s bills. The Justice Department wrote that the bank had engaged in “thousands of instances of unlawful trading in U.S. Treasury futures contracts and in U.S. Treasury notes and bonds…” The bank was simultaneously charged with a criminal count for rigging the precious metals market.
Making the vetting of JPMorgan Chase conducted by the U.S. Treasury Department look even more bogus, a former JPMorgan Chase attorney whistleblower charged in a federal lawsuit in 2021 that the bank was making improper payments to politically-connected parties and hiding the payments through dodgy accounting.
The plaintiff in the case was Shaquala Williams, an attorney and financial crimes compliance professional with more than a decade of experience at multiple global banks.
Williams charged in her lawsuit that JPMorgan Chase was keeping two sets of books and effectively making a monkey out of the U.S. Department of Justice by brazenly flouting the non-prosecution agreement it had signed with the Justice Department in a previous case. It came out in Williams’ deposition testimony, which is part of the court record, that one of the people being paid under her allegation of the bank keeping two sets of books was Tony Blair, the former Prime Minister of the U.K. (See our report: JPMorgan Whistleblower Names Former U.K. Prime Minister Tony Blair in Court Documents as Receiving “Emergency” Payments from Bank.)
In 2016 the Justice Department had charged that JPMorgan’s Asia subsidiary engaged in quid pro quo agreements with Chinese officials to obtain investment-banking business and had falsified internal documents to cover up the activities. The quid pro quo agreements involved the bank putting the children of high-ranking Chinese government officials on its payroll in order to enhance its business interests in China. In exchange for avoiding prosecution by receiving a non-prosecution agreement, the Justice Department required the bank to put in place compliance controls around third-party payments. Williams alleges, among other serious charges, that the so-called third-party payment controls were a sham and that when she blew the whistle to her superiors at the bank, JPMorgan Chase retaliated against her by firing her in October 2019.
Williams’ case was quietly settled by the bank for an undisclosed sum just 10 days before the trial was to begin.
Both Reuters and Dow Jones MarketWatch previously reported on this contract between the U.S. Treasury and JPMorgan Chase. Neither respected financial news outlet saw fit to provide one scintilla of information to their readers on the ludicrous nature of this contract award.