Ex-JPMorgan non-public banker combating FBI embezzlement prices

An ex-JPMorgan non-public banker is combating 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 workplaces in Brooklyn, pleaded not responsible in federal courtroom in New York on Wednesday to prices of fraud, embezzlement, cash laundering and identification 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 response to the criticism, he used that account to purchase shares {of electrical} car 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, based on the criticism, fired him eight days later and compensated the affected purchasers.

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

In contrast to typical bankers, staff in JPMorgan’s non-public financial institution present companies extending to every part from monetary planning and investing to philanthropy and household workplace administration. Personal banks sometimes cater to the prosperous or very prosperous, many requiring purchasers to have a minimal of $1 million in investable property. 

JPMorgan’s plans for its non-public 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 below administration.

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Chiu’s alleged misdeeds have been uncovered in July 2022 when a shopper — a 74-year-old lady — entered one of many Brooklyn workplaces and introduced some doubtful paperwork to a supervisor. The shopper defined, based on the legal criticism, 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 stated the financial institution had despatched her an announcement in Israel anyway, one exhibiting that she had solely $13,000 in her account. A press release individually supplied by Chiu had put the determine at $900,000, based on the criticism.

Sam Edwards, a securities lawyer at Houston-based Shepherd Smith Edwards & Kantas and a former president of the Public Investor Advocates Bar Affiliation, stated it is considerably stunning how unsophisticated the alleged rip-off was. On this case, he stated, 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 stated. “As a result of I can inform you, in my expertise, there are a number of instances 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 mistaken?'”

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

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

All advised, Chiu is accused of transferring $2.4 million out of shopper accounts, partially to cowl the $1.6 million in losses. He carried out the fraud, states the criticism, partially by persuading his 74-year-old shopper to fill out clean transaction varieties. He additionally accomplished a number of the transfers utilizing the checking account and routing numbers of at the least three purchasers, states the criticism.

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.