Former Investment Adviser At Global Bank Sentenced In Manhattan Federal Court To 5 Years In Prison For $20 Millon Scheme To Defraud Clients
Preet Bharara, the United States Attorney for the Southern District of New York, announced today that MICHAEL OPPENHEIM was sentenced today to five years in prison and over $20 million in forfeiture for using his position as an investment adviser at JP Morgan Chase & Co. (“JPMC”) to defraud multiple JPMC clients out of millions of dollars over the course of seven years. Among other false and misleading statements, OPPENHEIM lied to his clients by claiming to have invested their money in low-risk municipal bonds and sending them doctored account statements purportedly reflecting those investments and profits earned. In reality, OPPENHEIM used the clients’ money for his own personal benefit and, in certain circumstances, to pay back other clients. OPPENHEIM pled guilty in November 2015 before United States District Judge Analisa Torres, who imposed today’s sentence.
Manhattan U.S. Attorney Preet Bharara said: “Michael Oppenheim’s clients placed not just their money but their trust in their financial adviser, only to have Oppenheim use their investments as his cash cow – to the tune of more than $20 million. Thanks to the FBI’s investigation, Oppenheim’s business of siphoning his clients’ money is over.”
According to the Complaint, the Information, and other statements made in open court:
From at least March 2008 to March 2015, OPPENHEIM, a former investment adviser at JPMC, a global financial institution based in New York City, violated the trust of his clients by converting to his own use and benefit at least $20 million belonging to at least eight clients whose investment advisory accounts at JPMC he purported to manage. OPPENHEIM did not invest these clients’ money in low-risk municipal bonds at JPMC as promised. Instead, after taking a client’s money, OPPENHEIM, without the client’s knowledge, used the client’s money to obtain cashiers’ checks purporting to be remitted by the clients. OPPENHEIM then deposited the cashiers’ checks in at least three online brokerage accounts OPPENHEIM controlled at financial institutions other than JPMC. OPPENHEIM used clients’ funds for his own personal use, including on-line trading in accounts he controlled, and to pay for personal expenses such as gambling and trading debts, a home loan, and credit card bills, including for luxury clothing and travel.
In an effort to cover up his fraudulent scheme, OPPENHEIM provided some clients with fraudulent bank account statements. The purported bank account statements reflected bonds held by other clients of JPMC, but OPPENHEIM caused his clients’ names to appear on the statements in order to give the false impression that OPPENHEIM had purchased bonds on behalf of those clients, as he had promised. In a further effort to conceal his fraud, on several occasions, and without his clients’ consent or authority, OPPENHEIM withdrew funds from one client and deposited those funds into the account of another client.
OPPENHEIM continued the fraud until he was terminated by JPMC in March 2015.
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In addition to the prison sentence, OPPENHEIM, 49, of Livingston, New Jersey, was sentenced to three years of supervised release, and ordered to forfeit $20,185,225 to the United States. In connection with his plea agreement, OPPENHEIM also agreed to pay restitution of more than $27 million to the victims of his crime. A final restitution order will be submitted to the court by June 6, 2016.
The U.S. Securities and Exchange Commission (“SEC”) has pending civil charges against OPPENHEIM in a separate action.
Mr. Bharara praised the work of the FBI, and thanked the SEC and FINRA for their assistance.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Janis Echenberg and Brooke Cucinella are in charge of the prosecution.