U.S. Attorney's Office
Southern District of New York
(212) 637-2600
November 5, 2015

Former Investment Adviser at Global Bank Pleads Guilty in Manhattan Federal Court to Multi-Millon-Dollar Scheme to Defraud Clients

Preet Bharara, the United States Attorney for the Southern District of New York, announced that MICHAEL OPPENHEIM pled guilty today to embezzlement and securities fraud for using his position as an investment adviser at a global financial institution based in New York City (the “Bank”) to defraud multiple Bank clients out of approximately $22 million over the course of a seven-year period. Among other false and misleading statements, OPPENHEIM lied to his clients by claiming to have invested their money in low-risk municipal bonds and sending them doctored account statements purportedly reflecting those investments and profits earned. In truth, OPPENHEIM used the clients’ money for his own personal benefit and, in certain circumstances, to pay back other investors. OPPENHEIM was arrested on April 16, 2015, and pled guilty today before United States District Judge Analisa Torres.

Manhattan U.S. Attorney Preet Bharara said: “Michael Oppenheim has now admitted he lied to his clients about how he would handle their money and embezzled $22 million in clients’ money to make his own personal investments and to pay his own expenses.”

According to the Complaint, the Information, and other statements made in open court:

From at least March 2008 to March 2015, OPPENHEIM, a former investment adviser at the Bank, a global financial institution based in New York City, abused his relationship of trust with his clients in converting to his own use and personal benefit more than $22 million belonging to ten clients whose investment advisory accounts at the Bank he purported to manage. OPPENHEIM did not invest these clients’ money in low-risk municipal bonds at the Bank as promised. Instead, after taking a client’s money, OPPENHEIM, without the client’s knowledge, used the client’s money to obtain cashier’s checks purporting to be remitted by the clients. OPPENHEIM then deposited the cashier’s checks in at least three online brokerage accounts OPPENHEIM controlled at financial institutions other than the Bank. OPPENHEIM used clients’ funds for his own personal use, including on-line trading in accounts he controlled, and to pay for personal expenses such as a home loan and bills.

In an effort to cover up his fraudulent scheme, OPPENHEIM provided some clients with fraudulent Bank account statements. The purported Bank account statements reflected bonds held by other clients of the Bank, but OPPENHEIM caused his clients’ names to appear on the statements in order to give the false impression that OPPENHEIM had purchased bonds on behalf of those clients, as he had promised. In a further effort to conceal his fraud, on several occasions, and without his clients’ consent or authority, OPPENHEIM withdrew funds from one client and deposited those funds into the account of another client.

OPPENHEIM continued the fraud until he was terminated by the Bank in March 2015.

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OPPENHEIM, 48, of Livingston, New Jersey, pled guilty to one count of embezzlement and one count of securities fraud. The embezzlement count carries a maximum of 30 years in prison. The securities fraud count carries a maximum sentence of 20 years in prison. The charges carry a maximum fine of $5 million, or twice the gross gain or loss from the offense. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge. According to the terms of the plea agreement, OPPENHEIM has agreed to forfeit $22,432,375, and to pay $27,292,856 in restitution.

OPPENHEIM is scheduled to be sentenced by Judge Torres on February 15, 2016, at 4:30 p.m.

In a separate action, the U.S. Securities and Exchange Commission (“SEC”) has pending civil charges against OPPENHEIM.

Mr. Bharara praised the work of the Federal Bureau of Investigation, and thanked the SEC and the Financial Industry Regulatory Authority (“FINRA”) for their assistance.

The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit and the Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Janis Echenberg and Brooke Cucinella are in charge of the prosecution.

 

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