(Bloomberg) -- A former J.P. Morgan Chase advisor is facing jail time after admitting he scammed his clients out of more than $22 million to satisfy his gambling addiction.
Michael Oppenheim, 49, pleaded guilty last week in Manhattan federal court to securities fraud and embezzlement, as part of a scheme that targeted 10 of his wealthiest clients beginning in 2008. He addmited he used client money to bet on sporting events, as well as pay bills and trade stocks.
Under a plea deal, Oppenheim will seek a sentence of eight to 10 years behind bars, but U.S. District Judge Judge Analisa Torres won’t be bound by the recommendation at a sentencing hearing set for Feb. 15. The two charges carry a total maximum 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.
Oppenheim, who lost much of the stolen money on bad bets, has been seeing a psychologist to deal with a gambling addiction that’s affected him “off and on” throughout his life, defense attorney Paul Shechtman said.
The addiction “is what caused this criminal conduct,” Shechtman said outside court. “The difference between this time and earlier times is that he had access to more money and he wrongfully took it.”
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, authorities 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 lied to his clients about how he would handle their money,” Manhattan U.S. Attorney Preet Bharara said.
Oppenheim at one point had about 500 clients and almost $90 million in assets under management, according to the complaint made against him. He was arrested in April at his home in Livingston, N.J., shortly after J.P. Morgan fired him.
Oppenheim covered up the scam for years by giving clients falsified account statements that showed other clients’ bonds, and by moving cash from one client account to another to inflate balances, prosecutors said. The FBI called it playing “hide and seek” with client money.
Oppenheim was charged with four counts of wire fraud, and one count each of embezzlement, securities fraud and investment advisor fraud.
When the charges were filed, J.P. Morgan said it was aiding customers who were affected by the theft.
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