(Reuters) - A former investment adviser at JPMorgan Chase & Co was arrested Thursday and charged with taking at least $20 million out of client accounts and using it to unsuccessfully trade options and pay personal expenses, authorities said.
Michael Oppenheim, 48, was arrested at his New Jersey home, authorities said. He worked at the bank nearly continuously from 2002 until last month, according to a criminal complaint for fraud and embezzlement filed in Manhattan federal court.
Oppenheim took client money for about three years and lost or spent nearly all of it, according to a separate lawsuit filed by the U.S. Securities and Exchange Commission.
Oppenheim's lawyer did not return a call requesting comment. A message left at Oppenheim's home was not returned.
JPMorgan, the largest U.S. bank by assets, said it alerted authorities to the matter and was working with affected clients. "We are angry that this person violated the trust our clients place in us," it said in a statement.
It is rare for an investment adviser to be charged with an eight-figure crime, said New York criminal defense lawyer Greg Morvillo: "We see it in the headlines and think it's happening all the time. But it's a minute percentage in the financial industry who don't follow the rules and regs."
As a vice president and private client adviser, Oppenheim worked with 500 mostly wealthy clients, the SEC said.
According to authorities, Oppenheim beginning in 2011 persuaded clients to let him withdraw money from their accounts, sometimes millions of dollars, for investments in low-risk municipal bonds.
Authorities said he used the money to obtain cashier's checks that he deposited in brokerage accounts he controlled, and he traded stock and options in companies such as Tesla Motors Inc.
"After each theft and deposit, and in short order, Oppenheim lost the bulk of the stolen funds in highly unprofitable options trading," the SEC said.
Oppenheim's losses last year came to $13.5 million, the SEC said. He also used client money to pay bills and a home loan, authorities said.
To cover up his embezzlement, Oppenheim gave clients fraudulent statements and moved money from one client account to another, authorities said.
Minimal cash remains, the SEC said. Its lawsuit seeks any ill-gotten gains from Oppenheim and his wife, Alexandra Oppenheim. Some client funds were deposited in an account in her name, the SEC said. The FBI did not charge her.
(Additional reporting by Nate Raymond; Editing by Chizu Nomiyama, Bernadette Baumand Bernard Orrr)