Ex-JPMorgan personal banker combating FBI embezzlement expenses

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

Kevin Chiu, a former enterprise relationship supervisor and personal consumer banker who had labored at a pair of JPMorgan places of work in Brooklyn, pleaded not responsible in federal court docket in New York on Wednesday to expenses of fraud, embezzlement, cash laundering and id theft. According to a criminal complaint, Chiu allegedly stole from consumer 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 court docket paperwork. In keeping with the grievance, he used that account to purchase shares {of electrical} automobile maker Tesla and different shares and ended up dropping most of his investments.

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

A JPMorgan spokesperson declined to remark. Makes an attempt to succeed in the legal professionals listed within the court docket file as representing Chiu have been unsuccessful.

Not like typical bankers, workers in JPMorgan’s personal financial institution present companies extending to every little thing from monetary planning and investing to philanthropy and household workplace administration. Non-public banks usually 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 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 underneath administration.

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Chiu’s alleged misdeeds have been uncovered in July 2022 when a consumer — a 74-year-old girl — entered one of many Brooklyn places of work and offered some doubtful paperwork to a supervisor. The consumer defined, in accordance with 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 house since she most well-liked to come back into his workplace to debate them in individual. 

The consumer stated the financial institution had despatched her a press release in Israel anyway, one displaying that she had solely $13,000 in her account. An announcement individually supplied by Chiu had put the determine at $900,000, in accordance with 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, stated it is considerably shocking 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 consumer’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 let you know, 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 mistaken?'”

JPMorgan opened an inside investigation, in accordance with the grievance, and located that Chiu had been transferring the consumer’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 consumer accounts, both to embezzle the cash or cowl his tracks.

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Chiu can be accused of taking a few of 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 accordance with the grievance, would use the digital cost service Zelle to switch it to his personal account. The FBI alleges he additionally despatched a few of the cash to his girlfriend.

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

According to the BrokerCheck database maintained by the Monetary Business 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.