Bernie Madoff suspicions reported to SOCA 6 weeks before his downfall
I am very grateful to an AWEB member who has drawn my attention to the publication on the internet of a Suspicious Activity Report (SAR) submitted to SOCA by the London Office of JP Morgan Chase Bank (JPMCB) on 29 October 2008.
The report seems to pretty accurately flag up issues surrounding Bernie Madoff which came to public knowledge only after his arrest on 11 December 2008.
The SAR, which is published by ABC News in the USA, appears to have been found amongst papers prepared for civil litigation concerning the enormous losses suffered by investors.
The SAR - which reads almost as if it were written after the investigation rather than before it - refers to "concerns around Madoff Securities" and refers to "the investment performance achieved by its funds which is so consistently and significantly ahead of its peers year-on-year, even in the prevailing market conditions, as to appear too good to be true - meaning that it probably is".
The Bank's SAR also highlights "The BLM (Bernhard L Madoff Investment Securities LLC) auditors, Friehling and Horowitz, are relatively small and unknown, and possibly more dependent than is appropriate on retention by BLM".
More worryingly the SAR (now in the public domain) refers to "Columbian interests who will not be happy with JPMCB's actions" . . . "and thinly veiled threats to the security of bank staff involved e.g. we know who you are and where you live/work".
On the one hand, commentators will point to the fact that, if these concerns occurred to JPMCB, this disclosure underlines the alarming failure of others in the City and overseas to see the 'red flags'.
On the other, the publication of the 'restricted' SAR - with its reference to threats to bank staff - will alarm other reporters (and potential reporters) under the UK money laundering legislation who may have concerns about their personal safety. I am not suggesting however that this information leaked from SOCA (the published document may well be the bank's own copy of the SAR which it submitted).