It's academic - literally and figuratively.  A new study by Finance Professor Linus Wilson concludes that JPMorgan Chase made over $900 million in pretax profits from Bernie Madoff's Ponzi scheme over a 23-year period - from 1986 to 2008.   The academic paper by Dr. Wilson, a finance professor at U. of Louisiana at Lafayette, makes use of newly released data and different methods of calculation than previous studies.

Professor Wilson's paper looks at total Madoff-linked account balances at JPMorgan Chase from 1986 to 2008, a longer period than earlier studies, which may have underestimated JPMorgan's profits.  That resulted in bank net profits of around $907 million.  The figure assumes JPMorgan reinvested Madoff client money, and the generation of a similar rate to that of other funds invested by the bank during a similar time period.

    Conclusions re:  Red Flags.    Aside from the enormity of the alleged gains, Wilson reached another conclusion that, in part, is based on prior academic research - i.e., that enough 'red flags' existed to make a reasonable observer suspicious - which presumably includes JPMorgan Chase.  Prof. Wilson lists 2 facts as being particularly problematic:  (i) Madoff's custody over his client accounts resulted in no 3rd party verification of trades (which, as it turns out, Madoff seems to have never made);  (ii) the very size and regularity of Madoff's returns should have raised suspicion in itself.   [CNBC NetNet, 3/3]

To Access Prof. Wilson's Journal Article, go to:   ['Madoff’s Dirty Money']