1779 FBF: Helen Davis Chaitman - Bernie Madoff, JP Morgan Chase, and Other Immoral Financial Institutions

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Welcome to this week's edition of Flashback Friday. Your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on an investing some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's a successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now, here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to the Creating wealth show, episode 671. Greetings from Jekyll Island, Georgia. Happy Mother's Day to you. Don't worry, the sound quality will not be this bad throughout the show. Just a little intro here because we're with the remaining Venture alliance and we're just concluding a great weekend. Went horseback riding today, did some cool things this weekend and we thought we would just say hello. Our guest today will be Helen Davis Chapman. She was one of the leading attorneys in the Bernie Madoff case. She's the author of a fantastic book entitled JP Madoff. We're going to talk about how JP Morgan and it's interesting that we're here in Jekyll island, the birthplace of the Federal Reserve, one of the biggest conspiracies and scams in all world history. We had our meeting yesterday in the Federal Reserv Room here at the Jekyll Island Club Hotel where the Federal Reserve was formed just over a hundred years ago. So a lot of fascinating history here. This is an incredibly beautiful property and our guest today will be very applicable to this whole discussion because she is the one who really discovered how complicit JP Morgan was in the Bernie Madoff case, how they really enabled his crime. It's a fascinating, fascinating interview. And let's have a couple of hellos here from a couple of our Venture alliance members. Elizabeth, how are you?

Great. Thanks for letting me be part of this introduction with the Venture alliance team. It's Always so exciting to be part of the conversation. I always feel like I'm a better investor and I'm a better person because of the engagement of the quality of the people that are involved. So it's been a fantastic weekend and thank you for letting me be a part of it.

And thank you for helping us organize our hot seats. That's one of the things we do at the Venture alliance, our hot seats. And Elizabeth has been instrumental in really organizing that and making it a lot better. And her husband Neil. And by the way, they're from Seattle. Hi there. Thank you. Jason. One of the real cool things is. I don't know if it's me or it was you or your mom, but one of us did stay in the. With the condominiums that Chase had or JP Morgan. And it's kind of cool that we slept in the same, you know, maybe not the same, but exactly the same room. I didn't even know that. Oh, yeah. Wow. Oh, wow. I don't know which one it was, but of our eight rooms or whatever we were in there. Fascinating. This is just. This place is dripping with history, Mom. My mom is here, by the way, and we just did a hot seat with my mom about how she needs to sell one of her Los Angeles properties and increase her income dramatically. But you know, I've gotten on Mom's case about that before. See, now that Elizabeth told her she should do it, she's probably going to do it. Mom won't listen to me. But anyway, happy Mother's Day, Mom.

Thanks, Jason. Happy Mother's Day to all of you mothers. Mothers from Gulf Shores, Alabama, and also Jason, you know, you don't do anything I tell you either.

Oh, I'm getting beat up here on this intro. Yeah. Okay, let's switch over to our fighter pilot member, and that is Brandon, who is. Who may be a blue angel someday soon. Yeah, until they hear that is that top secret military clearance that I just. You might have heard something you weren't supposed to hear there, folks, but. Brandon, what's up?

Hey.

Good.

I didn't actually fly a jet here.

But I was happy to join the group this weekend.

This property is gorgeous. It is beautiful.

And just the history. Being able to share the experience and learn about the history.

It was pretty cool. Talking monetary policy in the same room the Federal Reserve was conceived in. So I just want to say to my mom, Sharon Cook, happy Mother's Day. And I hope that you can participate.

In this soon by buying a property from the network. Awesome. Awesome. Good stuff. You Know, folks, I have said many times on the show before that the forces of governments and central banks are far too powerful to beat. And you know the old saying, if you can't beat them, join them. So align your interest as an investor with their interest. That's how you win the game. So we've talked a lot about that on prior episodes. We won't do it today, but I think you'll find this interview coming up fascinating. Remember, our next event is our Cincinnati, Dayton, sort of metro area Ohio tour, and it's coming up in just about a month or so. So go to jasonhartman.com and click on the Event section and check that out. And let's just go ahead and dive into our interview. Thank you all for coming this weekend. Thanks, Jason.

Thanks for having us.

So let's go ahead and join our guest and learn about JP Madoff. It's my pleasure to welcome Helen Davis Chapman. She's a leading attorney on mortgage lending liability and a legal representative to over 1600 investors impacted by none other than Bernie Madoff, the infamous Bernie Madoff. She's author of JP Madoff, the Unholy Alliance Between America's Biggest bank and America's Biggest Crook. Helen, welcome. How are you?

Thank you so much, Jason. I'm just fine.

It's good to have you on the show. And you're coming to us from New Jersey and you practice law in New York City, right?

That's exactly right.

Fantastic. So before we started, I was asking you, did you represent the Bernie Madoff investor victims as a class? And you said no, it wasn't a class. First of all, how many victims were there? Just remind us of that if, in case you're, you know, tell us in case we don't know.

It's a pretty daunting number. 35,000 people lost money and made up.

Wow, 35,000 victims. And so you represented 1600 of them, probably one of the largest groups. But they all, I'm surprised. Did they all get splintered up and have to do their own thing to go after him? Why wasn't it a class action?

There's a bankruptcy liquidation pursuant to the securities Investor Protection act, and there's a trustee in the liquidation who has represented the investors in order to collect money to pay them back. And unfortunately, all he has recovered is about $10 billion out of a loss of 64.8 billion. So it's only about 16 cents on the dollar of all the losses that have been suffered. I have represented the Madoff victims in several different kinds of Lawsuits that I have pursued in the hopes of being able to enhance the recovery. But if my success rate representing Madoff victims were typical of my practice, I wouldn't be practicing law anymore.

So the success rate is low, you're saying? And why is that? I mean, is it just because he hid the money? Is it because he spent the money? I mean, 16 cents on every dollar. Is it that the prior. I mean, there was a lot of math that had to be done to unwind a Ponzi scheme in terms of clawing money back from investors who were paid out? Right.

Well, I actually am defending about 95 clawback actions because I think that they're cruel, number one, and number two, I think they're impermissible under the law as it has existed for the last 400 years. Now, whether ultimately the second search court of appeals will sustain them is an open question. But I think if the court follows the law, as it should, then these cases will ultimately be dismissed.

Welcome to this week's edition of Flashback Friday. Your opportunity to get some good review by listening to episodes from the past that Jason has hand picked to help you today in the present and propel you into the future. Enjoy.

I'm talking about the clawback cases that have been filed against innocent investors who were duped. I have, for example, a client who's 95 years old, a retired physician, who drew down on his IRA account after he became 70 and a half. And over the 20 odd years that he did that before Madoff confessed, he took out more money than he had put in, as one would expect. That's the whole purpose of an IRA that you invest in the stock market and you build up a nest egg on which you can rely in retirement. So this poor man retired, took out money, took out more than he put in, and he's been sued by the trustee for a million and a half dol. Now he has a home which he's lived in his entire adult life. And if he loses this lawsuit, he will lose his home in his late 90s, and that is, in my opinion, absolutely cruel.

Well, there's a good case to be made for what you're saying. Did he buy the home with proceeds from the Madoff investments as an early paid out investor?

No. No, he didn't. He lived in the home long before he retired. So he was earning income as a physician, bought, bought his home, raised his family in it, lives there with his wife. And then he lost his investment and now he's being sued and he'll lose his home if he loses this lawsuit.

Wow, that's something else. You know, that is a good testimony for why you should have your real estate encumbered with mortgages, I guess. Wow, that's something else.

What the lesson is from that.

Yeah, what should we know? What, what do people maybe not know about Madoff that came out? I mean, you had deep involvement, you have deep knowledge of this. We've all heard about it in the media, we've all read about it, et cetera. What are some of the things we might not know?

Well, the most important thing for listeners to learn is something that nobody so far has told them. And this is the subject of my book. Bernie Madoff is one of these people that you meet in life who if they have a choice of doing something in a legal way or an illegal way, they just instinctively do it in the illegal way. He would have been a small time crooked had it not been for the backing of JPMorgan Chase. And that is, in my opinion, the most important lesson that people can learn. Because JPMorgan Chase recognized that Madoff was committing crimes in the early 1990s. And instead of closing his account down, which they had an obligation to do, and reporting him to the federal government, which they had an obligation to do, they figured out how they could make money off the crime. And they harbored Madoff for over 20 years. Now, he could never have swindled 35,000 people had he not been associated with a major financial institution. JPMorgan Chase gave him the credibility that he needed in order to defraud so many thousands of people.

That is just stunning. So I have no doubt, I wouldn't put it past JP Morgan with all the other stuff, and any of the banksters, frankly, that came out in the financial crisis. What did they do? I mean, first of all, how would they know? Would they just have to monitor the balances going in and out of accounts and have to say, hey, this just doesn't make sense? I mean, is the bank responsible for doing all that math on someone's bank account or what? How would they know this?

In 1970, at a time when we had people in Washington, in Congress, who actually fulfilled their political responsibilities, Congress recognized that in order to ferret out financial frauds and protect the public, the government needed the cooperation of financial institutions. And so they enacted a statute called the Bank Secrecy Act. And the Bank Secrecy act requires banks to monitor their customers accounts. The phrase that's used is know your customer. A bank officer has an obligation to understand the customer's business, to monitor the account for.

Activity which is not indicative of the known purpose of the customer's business. And if the bank officer believes that a crime has been committed, the bank has an obligation to close the account and notify the federal government of what it has found. Now, early on, JPMorgan Chase, which had a glass bottom boat view of Madoff's crimes because he had different lines of businesses, but the only business he maintained through JPMorgan Chase was the fraudulent business he was supposed to be in, the investment advisory business. JPMorgan Chase saw billions of dollars coming into the account. They were checks from the Upstate New York Plumbers pension fund. They were checks from universities, they were checks from investment. JPMorgan Chase saw that money coming into the account. It never saw $1 spent to purchase a security.

Wow. Yeah, that's pretty bad.

In the period from 2003 to 2006 for which I have the information.

Madoff kept on deposit at JPMorgan Chase, 3 to 6 billion dollars. Now, you're too young to remember this, but I remember when you'd get a toaster in Manhattan if you opened up a deposit account with $5,000.

The old days of banking. Yeah.

Where you got, what do you get if you leave? And this is before the Fed was dumping money out the window for the banks. This was before 2008. What do you get if you leave 3 to 6 billion dollars on deposit? The bank had free use of that money.

Wow, that's just startling. So Madoff didn't even attempt to act like he was running a legitimate investment business by buying some securities. I mean, it seems like he would have purchased a token amount just to, you know, have the, have the deniability factor, if nothing else.

He didn't even set up the structure. And the interesting thing is that he had been thrown out of Bankers Trust because he was running an illegal check hiding operation with one of his henchmen, a man named Norman Levy. He was thrown out of Banker's Trust and he went across the street to what was then Chemical bank and later became part of JPMorgan Chase. And if he'd been thrown out of Chemical bank, he would have had a really hard time because probably at that point no other bank would have taken him. So he had a tremendous amount at risk in making sure that JPMorgan Chase allowed him to continue. And they did. And he incentivized them. He paid them a lot of money. He left a huge amount of money. Just think about it. Here's a guy who's supposed to be a genius on Wall Street. And he leaves three to six billion dollars in his bank.

Right, right. In other words, it's uninvested, you're saying. Right, that's the point of saying that.

Yeah, yeah. It's an outright bribe.

Unbelievable. That's just. It's just disgusting. It really is. I would be surprised that you can. You can write this book without getting sued by JP Morgan. I mean, have they rattled the saber at all?

Well, that's such an interesting question, and clearly that would have been a major problem for me because JPMorgan Chase spends billions of dollars not only paying fines, but also litigating. And, you know, it hires the best lawyers in the country, and it hires them in hoards. But. And I certainly could never afford to litigate against JPMorgan Chase. But the interesting thing is that.

The claim that they could assert in theory would be a libel claim that what I wrote was inaccurate. And in fact, that's why I have 1143 footnotes in my book, because I don't want anyone to have any doubt about the source of my information. And virtually every sentence in that book has a link to the source. And people can read the source material. If they have the Kindle version, they can go right to it and read the source material. I am very comfortable that there isn't a statement in my book, unless I'm quoting Bernie Madoff, that I can't vouch for.

Interesting.

In fact, I have on my website, jpmadoff.com in the center of the homepage, I have a roulette wheel. And each slice of the roulette wheel is another fine, settlement, OR penalty that JPMorgan Chase has paid out in the last five years. They have paid out $36 billion in fines and settlements for violating Libor, the London Interbank Rate, for manipulating Libor.

They paid out. They pled guilty to two felonies with respect to the Madoff case and paid a big fine. There isn't a law that they have not broken in the last five years.

But just. Just to be in balance, okay, not that it's. It's certainly not excusable, but to be in balance. I mean, they're all. All of these banks and securities firms do this stuff. I mean, Merrill lynch seems like they're at the center of every other scandal. They're paying out huge fines. It's part of their business plan to pay fines. I mean, it's just absurd. Look at B of A. Of course, Countrywide, you know, Mozilla gets a slap on the wrist. You know, pay a few million Dollars, and it's pocket change to him. This is just. It's just disgusting, isn't it?

Jason, I couldn't agree with you more. I could have written my book about bank of America, about Goldman Sachs, about hsbc, about Citigroup. But here's the thing that just is so important for people to understand. We have allowed our elected officials to act like whores. They accept money to look the other way. And nobody is protecting the public. We have now behemoth financial institutions that are organized very much like the Gambino crime family. Their profit picture is to figure out what law they can break. They know that they will have to ultimately give a small percentage of their profits back to the federal government when they're prosecuted for it or when they negotiate a settlement. But we have a president in the White House. We have an attorney general in the Department of Justice. We have the securities and Exchange Commission. We have the entire House of Representatives and the entire Senate. Nobody is. Except for Bernie Sanders, nobody is willing to stand up and tell it like it is. The American people are being totally victimized by these behemoth.

Immoral financial institutions.

I couldn't agree more. It's absolutely disgusting. And we didn't even make it up to the Federal Reserve level. And that's another discussion. Yeah, that's a completely different discussion. Bernie Sanders, I like what he's saying, but the problem is, I feel that his solutions will be a disaster because he'll just make government larger. And the crux of this problem, to my thinking, is that government has. Wall street owns government, Banks own the government, the pharmaceutical companies own the government, the private prison industry owns the government. You know, it's just disgusting. I mean, we either. We either have to somehow just end lobbying, which. The original idea of that was good on its face. You know, gives people access to the government. Right. Or just make the government smaller, because the bigger it is, the bigger the corruption. It just seems like the corruption is proportionate to the size of. Why do we have a whole industry of people that are just constantly at government's door for a handout or a favorable law or. I mean, it's disgusting. You know, it seems like it's just. The only thing you can do to fight it is. Is the size. You know, better ideas would be appreciated. But that's my simplistic idea.

Right. Or to prohibit.

Campaign financing because, you know, if you. You know, a lot of people make excuses for Obama because he had a difficult time dealing with Congress, but he ran the executive branch of the government and he the buck stops with him. The idea that Eric Holder would mouth such an absurd concept that the banks are too big to fail and therefore the criminals within them have to stay at their jobs. They don't just, I mean, how could someone even say that with a straight face?

It's mind boggling. It really is. And the fact that these corporate, you know, if corporations, they get all the rights of people, right, but they can't go to jail. You can't put J.P. morgan in jail, you know, I mean, J.P. morgan Chase, you know, you can't do that, right? It's an epically disgusting scenario we have. Has Obama furthered Wall street crime? I mean he, he's supposed to be the people's president, right?

Absolutely. He, he has, he has. In my opinion, he has done an absolutely horrendous disservice to the public. Because when you think about it, where does all the money from Wall street come from? It comes from cheating every single American. You know, JPMorgan Chase does business with 50% of American households and they are the masters of mortgage fraud, credit fraud, fraud. You know, one of my favorites. You'll get a kick out of this. They paid $375 million to settle a claim that they defrauded their credit card holders to whom they offered a credit monitoring service. And it came out that they and people signed up for it and they were charged for it and they paid for it. And the business plan had two parts. One part was the how much they would charge for it and the other part was what they would give the customers who paid for the service. They never developed the second part of the business plan. They charged for it, but they never got around to giving the customers any service for it.

Unbelievable.

Yeah, and the funny thing is it's contagious because I just noticed two weeks ago that HSBC just settled for the same. They did the same thing. They probably saw that JPMorgan Chase had done this and they figured they'd give it a run. And who are the victims? They're all, it's you and me and everybody else who is still doing business.

With JPMorgan Chase or any of the big banks probably. You know, like you said, you could have written a book about any of them. Pretty much. I gotta say, I love this wheel on your website. Everybody. You've got to go to jpmadoff.com and/victims. If you want the direct link, you click on this wheel, Libor victims, Mortgage backed securities and it shows the amount. What the amount they paid out to these victims or the amount of the litigation, the settlement, or what, what.

The amount that was paid out. And all of that information is taken directly from JPMorgan Chase's SEC filing.

Unbelievable. Municipal bond buyers, you know, they just keep veterans. Just incredible. This is disgusting. $659 million. They paid a federal government $45 million fine to settle charges. Just. It's insane. I hope you do this for all the banks and big brokerage firms, because it's just. It's just really, really absurd. What else do you want people to know? I mean, how do we fix this? What's the solution?

The solution is, I think, to elect someone like Bernie Sanders. I don't think that Hillary. I think Hillary is just as tied to Wall street as Obama.

Hillary is an absolute criminal. I mean, she is a criminal.

Well, she's certainly tied to Wall Street. And I mean, Obama should not have been tied to Wall street except for the fact that he accepted a fortune in campaign contributions from the Wall street firms. And of course, Hillary has as well. And I don't think that Donald Trump will be any different. I don't think that there's any candidate other than Bernie Sanders who would have. And while I agree with you that if Bernie Sanders were elected, and that doesn't seem like a possibility at all, but if he were elected, he could not do anything unless the House and the Senate were repopulated with people who didn't evaluate legislation based on how much they were paid to vote one way or the other. We basically have a Kaching Congress. That's the way I think about it.

I love it. The Ka Ching Congress. That's a great way to put it. Right.

Nothing matters except how much will you pay me to vote for your bill? And there's no. No one can compete with the large corporations. There never was anyone who could compete with the large corporations. It's just we used to have people in Congress who had some kind of ethical spirit about what they're. They, what they were doing.

Well, another part of the problem is these, these career politicians, you know, if they, if they could only be there for four, six, eight years and they couldn't form these deep relationships with the money stream, the lobbyists coming in, that would help, right? Term limits just limit their time there.

What I would be in favor of is one term, only one term, that's it. And no campaign financing.

I think that's the best way to clean it up. But what I wanted to finish saying on Bernie Sanders was this. If he were elected, and I recognize he wouldn't Be. But if he had, if he were.

There'S always next time if he sticks around long enough.

But the thing is that he would control the executive branch of the government. And you know, the one thing that the banksters on Wall street haven't yet figured out is how to pay someone else to serve their prison sentences. And if the Department of Justice had simply put away three or four of.

The top, he would have sent a message.

Yeah, there would have been a ripple effect on Wall Street. All of a sudden things would have been cleaned up. They're not willing to spend their own time in jail.

Yeah, yeah, that's absolutely right. I mean, this whole financial crisis, I mean, these banksters, they took down the world, the whole world economy, I mean countries, Iceland went bankrupt over this. I mean, it's just insane how big the damage is. Well, is and was not a single person in jail really after all that.

Now the financial institutions are 10 times more powerful than they were in 2007.

It's really discouraging. I hope we see some changes. The only hope I think we really have is, is just this alternative media talking about this stuff. You don't hear much of it on the mainstream media, do you?

Well, that's very funny, Jason. I just have a little story that I can tell you. I was invited onto Opening Bell Maria Bartiromo show and I actually was about to go on a vacation. I bought all of Maria's books and I read them on vacation. I was all prepared to talk to Interview.

Yeah.

And.

She didn't. Neither she nor her producer asked me in advance what I was going to talk about. And she introduced me and said, we have Helen Chapman. She's the leading lawyer for the Madoff victims and it's six years since Bernie Madoff confessed. And Helen, why don't you tell us what you're working on? I said, well, as a matter of fact, Maria, I'm suing JPMorgan Chase. She said, suing JP Morgan Chase.

Let's pause for a commercial from JPMorgan Chase.

After 2 minutes and 44 seconds, she called an emergency commercial. I could hear someone screaming in her earpiece.

Oh my God.

That's just been physically ejected from the 42nd story window. Believe me, I would have been.

Wow, that is, that is mind boggling. It really is. Well, Helen, this has been a fascinating discussion. Give out your website, you know, maybe for your law firm too, but certainly for the book which we gave out. But whatever you'd like people to know.

Sure. The book is sold on Amazon.com if you're a member of Amazon prime. You can get the Kindle version without charge. And as I said, it has all of the source material. It's. It's well worth no charge. You'll learn an awful lot about how you can be cheated by America's biggest financial institutions. And the book is also available online as well.

Fantastic. Helen, please do that in an audio book. You will reach a whole other audience, so please turn it into audio as well. I hope a lot of people buy and read your book and certainly go to your website to spin that wheel, because that is just awesome. And again, that's jpmadoff.com victims. You'll just take two minutes to go there. It'll blow your mind. This is a fantastic idea to have the Wheel of Fortune there. So, yeah, fantastic. Good stuff, Helen. Thanks for joining us.

Well, thank you so much for having me, Jason. It was a pleasure.

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