Michael J. Oppenheim of Livingston, New Jersey, a former registered investment advisor representative and registered representative of J.P. Morgan Securities LLC, was charged in a criminal complaint by the United States Attorney for the Southern District of New York for one count each of wire fraud, embezzlement, securities fraud, and investment advisor fraud in connection with his alleged conversion of $20M in client funds. U.S. v. Oppenheim (S.D.N.Y. Apr. 16, 2015).
Simultaneously on April 16, 2015, the SEC filed a parallel complaint against Oppenheim charging him with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. SEC v. Oppenheim, Civil Action No. 15 cv 2357 (S.D.N.Y. Filed Apr. 16, 2015).
U.S. Attorney & SEC allegations
According to the aforementioned Complaints, the U.S. Attorney and SEC allege that from March 2011 through March 2015, Oppenheim, acting in the capacity as a “private client advisor” with a major New York financial institution, convinced his customer victims to withdraw large sums of money from their bank accounts by falsely representing that the proceeds would be invested in low-risk municipal bonds.
Unbeknownst to his clients, Oppenheim is alleged to have withdrawn funds from customer accounts and subsequently deposited proceeds in his control at other financial institutions.
Upon obtaining control of the funds, the Complaints state that Oppenheim allegedly utilized customers’ money to pay down personal loans and engage in highly unprofitable stock and options trading including Tesla, Apple, Netflix, and Google. According to the SEC Complaint, Oppenheim typically lost the entire amount of the deposits (Oppenheim’s trading losses totaled $13.5M in 2014 alone with “Broker 1”). In the process, Oppenheim took steps to cover up his fraud by fabricating customer account statements and transferring funds from one customer’s account to another in order to replenish stolen funds.
Oppenheim Permanently Barred by FINRA
Following his termination from JP Morgan Securities in March, 2015, Oppenheim was permanently barred by FINRA after consenting to a FINRA sanction and to an entry of findings that he failed to provide documents and information, appear for on-the-record testimony, and cooperate with FINRA’s investigation. FINRA Letter of Acceptance, Waiver and Consent No. 2015044987101 (July 15, 2015). FINRA investigated Oppenheim for conversion of customer funds, altering customer documents, creating false account statements, and failing to disclose outside brokerage accounts to the Firm.
Oppenheim Faces Maximum 30 year Sentence for Fraud
Oppenheim faces a maximum of 30 years in prison on the embezzlement count, 20 years for each count of wire and securities fraud, 5 years on the investment advisor fraud count, and $5M in fines (or twice the gross gain or loss from the offense). The SEC seeks to permanently restrain and enjoin Oppenheim and his associates who participated in the scheme, order Oppenheim to pay civil monetary penalties, and order Oppenheim and his spouse, Alexandra Oppenheim (a relief defendant), to disgorge ill-gotten gains received as a result of the conduct alleged.
Courts and securities arbitration panels, in identical circumstances, have long held registered representatives responsible for the conduct of misappropriation and stockholder theft. Oppenheim’s customers are urged to consult with an attorney or take legal action to preserve their rights.
Guiliano Law Group
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