Broker pleads guilty to $20 million theft

A case where an advisor stole from some of his best clients suggests wealth professionals continue taking short cuts to fame and fortune … at the expense of the other 99.9% of the industry

by Eric Larson, Bloomberg
A former JPMorgan Chase & Co. broker admitted he stole more than $20 million from customer accounts and used the money to pay his bills, gamble online and to trade his own stocks.
Michael Oppenheim, 49, pleaded guilty Thursday in Manhattan federal court to securities fraud and embezzlement, part of a scam that targeted 10 of his wealthiest clients beginning in 2008.
Under the plea deal, Oppenheim seeks a sentence of eight to 10 years in prison. U.S. District Judge Judge Analisa Torres isn’t bound by the recommendation. She set the sentencing for Feb. 15. The two charges carry a total maximum prison term of 50 years.
"Judge, I am ashamed of my conduct,” Oppenheim said. "I wish I would have been caught sooner." Choking up, he then stopped speaking.
According to prosecutors, the former broker induced clients to withdraw hundreds of thousands or even millions of dollars from their accounts by promising he’d invest the money in low- risk municipal bonds to be held at the bank. Instead, the U.S. said, he used the money to obtain cashier’s checks and deposited them in his own accounts outside the bank, using the money for online trading and personal expenses.
He was arrested in April at his home in Livingston, New Jersey. New York-based JPMorgan fired Oppenheim shortly before his arrest.
Falsified accounts
Oppenheim covered up his scam for years by giving customers falsified account statements that showed other customers’ bonds, and by moving cash from one customer account to another to inflate balances, prosecutors said. The FBI referred to his scheme as playing "hide and seek" with customer money.
Oppenheim at one point had about 500 clients and almost $90 million under his management, according to the complaint.
Oppenheim was charged with four counts of wire fraud, and one count each of embezzlement, securities fraud, and investment adviser fraud.
When the charges were filed, New York-based JPMorgan said it was aiding customers who were affected by the alleged theft.