Ex-JPMorgan personal banker preventing FBI embezzlement expenses

An ex-JPMorgan personal banker is preventing FBI allegations that he embezzled $1.6 million from shopper accounts after which blew most of it on inventory trades.

Kevin Chiu, a former enterprise relationship supervisor and personal shopper banker who had labored at a pair of JPMorgan places of work in Brooklyn, pleaded not responsible in federal courtroom in New York on Wednesday to expenses of fraud, embezzlement, cash laundering and id theft. According to a criminal complaint, Chiu allegedly stole from shopper accounts between October 2020 and June 2022 after which tried to cowl his tracks by transferring cash out and in of different accounts he managed. 

The FBI alleges he despatched a lot of the embezzled funds to a brokerage account held by his mom at one other establishment, which is unnamed within the courtroom paperwork. In accordance with the grievance, he used that account to purchase shares {of electrical} automobile maker Tesla and different shares and ended up shedding most of his investments.

The FBI says Chiu admitted to the alleged misdeeds in an interview with JPMorgan staff on July 6, 2022. The financial institution, in response to the grievance, fired him eight days later and compensated the affected shoppers.

A JPMorgan spokesperson declined to remark. Makes an attempt to succeed in the legal professionals listed within the courtroom document as representing Chiu had been unsuccessful.

In contrast to typical bankers, staff in JPMorgan’s personal financial institution present providers extending to the whole lot from monetary planning and investing to philanthropy and household workplace administration. Non-public banks sometimes cater to the prosperous or very prosperous, many requiring shoppers to have a minimal of $1 million in investable property. 

JPMorgan’s plans for its personal financial institution name for doubling its advisor headcount by including 1,500 planners by 2026. The financial institution has roughly $2.1 trillion in property beneath administration.

Learn extra: $1.7B crew departs Avidian, types unbiased RIA

Chiu’s alleged misdeeds had been uncovered in July 2022 when a shopper — a 74-year-old lady — entered one of many Brooklyn places of work and introduced some doubtful paperwork to a supervisor. The shopper defined, in response to the prison grievance, that she maintained residences in each Brooklyn and Israel and that she had requested Chiu to not ship statements to her Israeli residence since she most well-liked to return into his workplace to debate them in individual. 

The shopper mentioned the financial institution had despatched her an announcement in Israel anyway, one exhibiting that she had solely $13,000 in her account. An announcement individually supplied by Chiu had put the determine at $900,000, in response to the grievance.

Sam Edwards, a securities lawyer at Houston-based Shepherd Smith Edwards & Kantas and a former president of the Public Investor Advocates Bar Affiliation, mentioned it is considerably shocking how unsophisticated the alleged rip-off was. On this case, he mentioned, it is a good factor that JPMorgan made the “mistake” of sending the shopper’s assertion to her residence in Israel. In any other case, Chiu’s alleged misdeeds wouldn’t have been uncovered.

“Thank goodness she then introduced it in to the financial institution,” Edwards mentioned. “As a result of I can inform you, in my expertise, there are loads of occasions when one thing like this occurred and there was some proof of wrongdoing, and there’s a basic query of, ‘How did you not know one thing as improper?'”

JPMorgan opened an inner investigation, in response to the grievance, and located that Chiu had been transferring the shopper’s cash into the brokerage account held in his mom’s title. The grievance alleges inspectors later discovered that Chiu had been making comparable transfers out of 5 different shopper accounts, both to embezzle the cash or cowl his tracks.

Learn extra: SEC opens case towards ex-Morgan Stanley VP who ripped off personal mom

Chiu can be accused of taking among the cash he had put into the brokerage account and ultimately shifting right into a separate checking account belonging to his mom. He then, in response to the grievance, would use the digital fee service Zelle to switch it to his personal account. The FBI alleges he additionally despatched among the cash to his girlfriend.

All advised, Chiu is accused of transferring $2.4 million out of shopper accounts, partly to cowl the $1.6 million in losses. He carried out the fraud, states the grievance, partly by persuading his 74-year-old shopper to fill out clean transaction types. He additionally accomplished among the transfers utilizing the checking account and routing numbers of no less than three shoppers, states the grievance.

According to the BrokerCheck database maintained by the Monetary Trade Regulatory Authority, the self-regulator for broker-dealers, Chiu joined J.P. Morgan Securities in July 2017. FINRA barred him from the business in February.