Court papers have revealed that a US bank executive at JP Morgan refused to do business with convicted fraudster Bernard Madoff, after seeing “red flags”.
Michael Cembalest, chief investment officer of JP Morgan Global Wealth, decided not to invest his clients’ money with Madoff, who was jailed for 150 years in 2009 for a $65 billion fraud which deprived thousands of investors of their savings.
Legal papers disclose that “Cembalest’s group conducted due diligence on BLMIS (Madoff’s firm) and after seeing all the red flags, chose not to invest with any BLMIS feeder funds”.
Madoff was operating an illegal Ponzi scheme at the time, which pays out using new investor money rather than from any profits
In a further revelation, Madoff’s right-hand executive Frank DePascali has told investigators that the Ponzi scheme had been going since at least the 1980s. If so, Madoff’s claim that he was a legitimate investment manager until the early 1990s, is simply not true.
The court, hearing evidence in relation to asset gathering for victims of the fraud, was told there was a “lack of documentation” and absence of “proper legal relationship between Madoff and some of the feeder funds.”
Copyright Press Association 2011