What happens when greed, opportunity and a gambling addiction form the perfect unethical storm? You get men such as Michael Oppenheim, a former JPMorgan Chase & Co investment adviser who stole more than $20 million from wealthy clients to fuel his gambling addiction. His unethical behavior will cost him five years in jail.
The mechanism of Michael Oppenheim’s behavior was neither unique nor creative. He had about 500 clients listening to his advice; people who trusted him. For about seven years, he persuaded some of his clients (actually ‘marks’), to allow him to withdraw their money because he was going to invest it in low-risk municipal bonds. He had no such intention. He took most of the money and bet “whatever,” and then whatever was left over, he put down on high-risk options.
He only got five years because his lawyer begged the court to recognize Oppenheim’s life-long gambling addiction as an extenuating factor.
That is the essence of the case and if this were simply a news story, I suppose it could end right there. However, the case is far from simple if we are examining it from an ethical point of view. In fact, the ethical mechanism is quite complex.
Oppenheim and opportunity
Though Michael Oppenheim was gambling addicted (or presumably so), he was not a crazed mad-man. He knew how to manipulate the system and he understood that if he built up a level of trust with his clients, neither his “story” nor his decisions would be questioned.
This level of outrageous fraud makes me wonder why no firewall existed. Over a seven year period, the organization (JPMorgan Chase & Co) allowed this shark to exist. How did his fraud and his practices come to no one’s attention? Did no one supervise this man?
Then there is what I will call the “pattern.” Did Michael Oppenheim target a certain kind of client? Were the clients elderly? Were they grieving the loss of a spouse who gave up their decision making to this man?
I well understand that with 500 extremely wealthy clients, over a seven year period, that $20 million is not a fortune. I would also assume that as with any gambler or options “play,” that there were some bets that paid off big. Perhaps he was able to repay some of the funds to the point where it might have appeared that he was making them money. However, I am not naïve as to that point either. One doesn’t just place money back into an account.
My point is that Oppenheim acted completely outside the rules and regulations that JPMorgan Chase & Co presumably had in place. He did so for quite some time and no one, it seems kept tabs on him. The scenario does not add up.
Lifelong addiction
It is one thing for a man to go to Las Vegas and drop $1,000 “at the tables.” OK, it happens. However this individual played to the tune of millions of dollars. While I understand that most anyone can keep a deep, dark secret on most anything, it is doubtful for me to believe that “no one, knew nothing.”
An adviser does not work alone. He undoubtedly had a support staff and I wonder if any of them had any suspicions or doubts as to what was transpiring. Suppose they did? Why would they not report it? There is a troubling level of subterfuge that smacks of a large ethical breach.
Where is the ethics training?
I have spent a career consulting, teaching and advising on matters of fraud, and especially on financial fraud. I am not a mind-reader, but if Mr. Oppenheim had been sent to me “one-on-one” for ethical training, I am fairly certain I would have uncovered something. I have been where he is going. His life will be forever changed by the time he leaves prison.
I also understand that men and women in the financial world get to a certain level where they are nearly untouchable to their firms. It is precisely at those levels where they need ethical training and ethical scrutiny. If nothing is wrong, no harm. However, I have learned that no one is “so cool,” so invaluable or so clever that they cannot or should not be touched.
JPMorgan Chase & Co would have saved themselves a lot more time, money and negative publicity had they spent a tiny bit of money on ethical monitoring.
WHAT ARE YOUR THOUGHTS?
