JPMorgan to pay $1.7 billion to settle Madoff charges

JPMorgan is expected to reach a $2 billion settlement with the feds this week for its turning a blind eye to Madoff's Ponzi scheme.

NEW YORK (CNNMoney)

Prosecutors from the office of U.S. Attorney Preet Bharara of the Southern District of New York said they'll use the funds to compensate victims of Madoff, convicted mastermind of the biggest Ponzi scheme in history.

Federal prosecutors accused JPMorgan (JPM, Fortune 500) of ignoring red flags about Madoff's crimes, and allegedly turning a blind eye to his massive fraud.

Related: Five things you didn't know about Madoff's scam

"We recognize we could have done a better job pulling together various pieces of information and concerns about Madoff from different parts of the bank over time," wrote JPMorgan spokesman Joseph Evangelisti in an email to CNNMoney.

He said the bank filed a Suspicious Activity Report about Madoff's activities in the United Kingdom in 2008, but did not file a similar report in the U.S.

"We do not believe that any JPMorgan Chase employee knowingly assisted Madoff's Ponzi scheme," he said.

Madoff swindled about $20 billion from thousands of investors who thought he was operating a legitimate Wall Street firm. Some funds from this settlement will be used to compensate victims, according to reports, though a spokeswoman for the court-appointed trustee in charge of allocating recovered assets declined to comment.

First Published: January 7, 2014: 9:35 AM ET

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