Stockbroker Fraud: Ex-JPMorgan Broker Who Gambled Gets Five Years, FINRA Bars Broker Over Elder Financial Fraud, Risky Alternative Investment Sales and Ex-Broker is Indicted by Jury for Allegedly Bilking Clients of $2.8M

Former JPMorgan Broker Who Stole Over $20M from Richest Clients, Gambled, Goes to Prison
Michael Oppenheim, a former broker with JPMorgan Chase & CO. (JPM), has been sentenced to five years behind bars. Oppenheim pleaded guilty last year to stealing over $20 million from 10 of his richest clients. At one point Oppenheim managed nearly $90 million for 500 clients. He claims he was addicted to sports gambling.

He began betting on NFL games in 1993 and later got involved in online sports betting. After losing hundreds of thousands of dollars, he began stealing from clients to cover his losses. Oppenheim also started options trading in tech stocks to repay these clients and in one day lost $2.7M. He concealed the theft by providing customers with bogus account statements.

Prosecutors contend that Oppenheim persuaded clients to take out up to millions of dollars from their accounts by promising to put their money in low risk municipal bonds that would be kept at the bank. Instead, he used the funds to get cashier’s checks that he deposited into accounts that were his but located outside the bank. Oppenheim purportedly targeted clients he knew wouldn’t be watching their accounts closely. His scam went on for over seven years.

FINRA Bars Broker for Senior Financial Fraud
The Financial Industry Regulatory Authority has barred David Joseph Escarcega from the financial industry. Escarcega is accused of making a dozen unsuitable recommendations involving debentures tied to the life insurance policy secondary market and targeting elderly clients. He must also pay a $52,270 fine, which is how much he kept in commissions.

According to FINRA, Escarcega sold the debt instruments, which were issued by CWG Holdings Inc., from 3/12 to 6/13. The regulator said that the debentures were very risky and only suitable for investors that could afford to lose all of their investments. The 12 customers involved in this matter were not that type of investor. A lot of the investments were placed in IRAs.

InvestmentNews says that nine of the investors were over the age of 70. Eleven of them were retired. Ten of them wanted conservative growth from their investments. Nine of them had only an “average” comprehension of alternative investments.

Former South Carolina Broker Accused of Defrauding Clients of $2.8M is Indicted

A grand jury has indicted Claus Foerster of fraud. The South Carolina broker is accused of scamming clients for over fourteen years while at Smith Barney & Co., Raymond James Financial Inc. (RJF) and Morgan Keegan & Co. Raymond James, which acquired Morgan Keegan in 2012, fired Foerster after he admitted to misappropriating money from clients through a phantom private investment fund that he set up externally. In 2014, the Financial Industry Regulatory Authority decided to bar him from the brokerage industry in the wake of allegations that he ran a Ponzi scam.

According to the indictment, Foerster is accused of soliciting clients to get involved with SG Investments, a bogus company that he claimed would give them higher returns than his broker-dealer employers. Once they agreed to invest, he would purportedly tell them to take money from the breakage accounts and put the funds in their personal banking accounts. They would then write him a check for the money.

Foerster is accused of keeping $2.8M for himself and hiding his fraud by giving clients fake earning statements so they would think that their funds were properly invested and making them money.

If you suspect that your investment losses are due to broker fraud, contact our securities law firm today. Shepherd Smith Edwards and Kantas, LTD LLP has helped thousands of investors recover their funds.

Ex-JPMorgan adviser gets 5 years’ prison for embezzling $20 mln, Reuters, March 8, 2016
Finra bars broker for selling risky alternative investments to elderly clients, InvestmentNews, March 4, 2016

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