Defrauded Chinese investors accuse JPMorgan of failure to check transfers to binary options firms

Maria Nikolova

Numerous Chinese investors defrauded by Ponzi scheme Bar Works, say JPMorgan failed to spot the red flags around the activity of the scammers’ bank account with JPMorgan.

A group of 27 Chinese investors who were defrauded by Bar Works, a Ponzi scheme operated by Renwick Robert Haddow, are suing JPMorgan Chase & Co. (NYSE:JPM) and JPMorgan Chase Bank, N.A. over failure to react accordingly to the suspicious activity of the scammers’ bank account with JPMorgan.

Each of the plaintiffs invested in Bar Works entities, whose mastermind was Renwick Robert Haddow. He used the entities to perpetrate a massive Ponzi scheme upon the plaintiffs. Each of the plaintiffs was specifically advised to send his/her investment proceeds to Bar Works Inc’s bank account at JPMorgan Chase Bank, believing that to be a sign that Bar Works was a reputable business.

In their complaint, filed with the New York Southern District Court, the plaintiffs allege that JPMorgan knew that Bar Works was an elaborate Ponzi scheme.

In addition, the plaintiffs say that JPMorgan had actual notice that Haddow was laundering investors’ money, as a result of Bar Works Inc’s deposits being immediately transferred out of the business operating account to known overseas money laundering havens such as Mauritius, the Seychelles and Morocco.

The complaint mentions numerous suspicious transactions, which should have triggered investigations and reports to regulators, including:

  • Amounts being transferred to 27 countries identified as major money laundering countries by the United States Department of State.
  • International wire transfers worth $3.8 million to Portugal, Spain, Cyprus and Poland. Cyprus and Spain are identified as countries of primary concern by the Department of State. Poland and Portugal are identified as countries of concern by the Department of State.
  • About $6.3 million was transferred to Morocco, Isle of Man and Mauritius – major money laundering centres.

There were numerous “red flags” that JPMorgan should have noticed and should have reacted to, the plaintiffs say. The list of such “red flags” include suspicious wire activity with offshore entities.

“Through the bank account with JPMorgan, Haddow frequently engaged in transactions with high-risk, offshore entities, such as so-called “binary trading” operations”, the plaintiffs say.

The defendants are accused of participation in a breach of trust, aiding and abetting embezzlement, aiding and abetting breach of fiduciary duty, aiding and abetting conversion, unjust enrichment, commercial bad faith, and gross negligence. The plaintiffs claim combined $3,050,000 in damages.

The case is captioned ZHAO et al v. JPMorgan Chase & Co., et al (1:17-cv-08570).

Read this next

Metaverse Gaming NFT

DCentral Miami brings together all of Web3, NFT, DeFi, Metaverse

The world’s biggest Web3 meeting entitled DCENTRAL Miami is set to take place November 28-29, featuring a lineup of some of the biggest and most influential names in the blockchain space.

Digital Assets

Crypto ban expands across UK banks as Starling joins ‎crackdown

UK digital bank Starling has banned ‎all customer payments related to cryptocurrencies, another blow for the crypto traders ‎who recently saw a sizable number of banks deciding not to ‎finance the wobbly asset class.‎


Markets Direct at FIA EXPO 2022: Traders know what they want from brokers

The FIA Expo 2022, one of the most prestigious events within the global derivatives trading industry, took place in Chicago on 14 & 15 November.


FIA Expo 2022: TNS addresses public cloud limitations with hybrid infrastructure

November is the month of the FIA Expo, one of the largest futures and options conferences in the world, bringing together regulators, exchanges, software vendors, and brokers in one place: the Sheraton Grand Chicago Riverwalk. 

Retail FX

Italy’s regulator blacks out Finance CapitalFX, MFCapitalFX

Italy’s Commissione Nazionale per le Società e la Borsa (CONSOB) has shut down new websites in an ongoing clampdown against firms it accuses of illegally promoting investment products in the country.

Retail FX

Suspected leader of Honk Kong ramp-and-dump scam appears in court

A leader of a sophisticated ramp-and-dump scheme made his first court appearance in a Hong Kong court today, charged with market manipulation and various criminal offences. The case stems from an earlier joint operation of Hong Kong’s financial watchdog, the Securities and Futures Commission (SFC), and the local police. 

Institutional FX

Cboe’s James Arrante discusses growing demand for fixed income, FX algo

We caught up with James Arrante, senior director of FX & US treasuries product and business management at Cboe Global Markets, to uncover emerging trends in the FX and fixed income markets and learn more about the bourse operator’s recent initiatives.

Retail FX

Eurotrader acquires UK broker Petra Asset Management

Eurotrader Group has formally entered into the UK market with the acquisition of FCA-regulated broker, previously named Petra Asset Management Ltd. The new entity operates under the brand name Eurotrade Capital Ltd.

Inside View, Retail FX

The Game of Chess Continues – OPEC, China and the Oil Market

Over the past decade, the US has been complaining about the amount of power which the BRIC group, and specifically China, has on the global economy. BRIC stands for Brazil, Russia, India and China; these were the world’s fastest growing economies. Only in the past 10 months, the US has turned their attention toward OPEC due to the prices of fuel. Nevertheless, China seems to have a strong influence even over the price of crude oil.