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Estimating JP Morgan Chase’s Profits from the Madoff Deposits

Linus Wilson
University of Louisiana at Lafayette


August 23, 2009


Abstract:     
JP Morgan Chase allegedly had deposits from Bernard L. Madoff totaling $5.5 billion at one point in 2008. The Chase account was supposedly where most of the funds in his Ponzi scheme were deposited. Any large deposit can be a considerable source of profit to a bank. Assuming that the deposits returned the bank’s net interest margin and grew at a random geometric rate, this paper estimates that JP Morgan Chase generated $483 million in after-tax profits from this very large account over the course of sixteen years. With JP Morgan Chase the target of pending lawsuits relating to the Madoff fraud, this paper’s methodology and results may be of interest to litigants, prosecutors, journalists, and academics.

Keywords: deposits, fraud, JP Morgan Chase, litigation, Madoff, Monte Carlo simulation, net interest margin

JEL Classifications: G01, G21, G24, K13, K14, K23, K41, K42

Working Paper Series

Date posted: August 25, 2009 ; Last revised: September 06, 2009

Suggested Citation

Wilson, Linus, Estimating JP Morgan Chase’s Profits from the Madoff Deposits (August 23, 2009). Available at SSRN: http://ssrn.com/abstract=1460706


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Contact Information

Linus Wilson (Contact Author)
University of Louisiana at Lafayette ( email )
Department of Economics & Finance
P. O. Box 44570
Lafayette, LA 70504-4570
United States
(337) 482-6209 (Phone)
(337) 482-6675 (Fax)
HOME PAGE: http://www.linuswilson.com
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