02/26/2011 08:10 pm ET Updated May 25, 2011

The Shameful Performance of JP Morgan Chase Re: Madoff

I am astounded, stunned, shocked and ferociously outraged by the amoral performance of the establishment bank in America -- JP Morgan Chase (JPM,NYSE).

For 7 years, from 1998 until 2005, JPMorgan Chase sat by passively and negligently while $76 billion -- yes, $76 billion -- was laundered in exchanges between two of the bank's wealthy customers -- Bernard Madoff's Investment Account 703 and the Private Bank Customer Number 1, who has been identified as Norman Levy, a New York real estate developer, who died in 2005.

That's $76 billion, which clearly did not belong to either Madoff or Levy. That's $76 billion -- more money than either Warren Buffett or Bill Gates is worth today. The amount involved beats the amounts involved in any scandal involving Swiss banks that have been hiding money for wealthy Americans wishing to avoid taxes.

Yet no one, no bank officer, senior or junior, thought to investigate whether these unbelievable amounts which were being passed back and forth between Madoff's Account 703 and a single individual, the heretofore relatively unknown real estate developer Norman, were a series of legitimate financial transactions or not. They weren't.

Nobody at our most prestigious posh powerfully influential bank raised even an eyebrow when during 12 months of 2002 318 separate checks in identical amounts of $986,301 -- just less than $1 million -- were handed over in transactions by Madoff's BLMIS firm to JPMC Customer 1. Some of these "highly unusual transactions were often sent multiple times on a single day," according to a legal document filed in federal bankruptcy court several days ago.

When 318 checks made out for the same amount -- just under $1 million -- are being delivered multiple times on a number of days, questions must be asked.

Especially since the very same money was often returned from Customer 1 to Madoff's 703 Account from December 2001 to March 2003 -- in amounts "almost always equal to the total monthly dollar amounts going out of the 703 Account to Customer 1." In December 2001, Madoff's account received checks for $90 million "on a daily basis -- a pattern of activity with no identifiable business purpose."

All these transactions should have been monitored, should have raised suspicions, should have required an immediate intense investigation of both Madoff and Norman Levy. The US Attorney or District Attorney should have been called in to supervise this matter.

There is no great mystery why none of the necessary search for the truth never took place.

The court case just filed suggests the influence of Customer 1 -- Norman Levy -- was stupendous as he "had close business relationships with senior executives at JPMC's predecessor banks" -- which included Chemical New York, Manufacturers Hanover and finally Chase Manhattan Bank -- which was merged into JP Morgan in 2000.

We don't know the identity of these "senior executives," because large portions of the complaint have been redacted, that is blanked out and don't appear in the documents available to the public right now. We must find out who these perfidious chaps were.

These highly questionable transactions back and forth among two wealthy clients of JP Morgan Chase should have been reported as "suspicious" on grounds of potential money laundering and because such reporting was mandatory under the Patriot Act, passed after the terrorist attack of Sept. 11, 2001. Violating this statute is a criminal offense, I am told by lawyers familiar with the reporting requirements.

As the court document alleges in bold typeface "JPMC Had a Duty to Investigate Suspicious Activity in BLMIS's Account." The complaint states that "JPMC never conducted any serious investigation of the activity in the 703 Account or filed a SAR with the United States government."

That nothing was done until just months before Madoff's scam came undone is going to cause a terrible stain on the reputation of JP Morgan Chase and a mighty multi-billion dollar payment to keep the whole despicable tale of amorality from becoming common knowledge.