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

Digital Assets

Binance executives sue Nigerian authorities over rights violation

Two senior executives from Binance have filed a lawsuit against against Nigeria’s national security adviser’s office and its anti-corruption agency, alleging violations of their fundamental rights.

Retail FX

Banxso announces 8.7% interest rate on deposits in South Africa

“With Banxso, they can enjoy the benefits of both worlds – earning competitive interest and having the freedom to trade, all within the same platform.”

Industry News

FINRA to publish transaction details in U.S. Treasury securities

“Consistent with our longstanding practice, FINRA is introducing greater transparency in a calibrated and careful manner, benefiting liquidity and resilience in this critical market while also mitigating potential information leakage concerns.”

Institutional FX

OpenYield launches “cheap and easy” fixed income trading for brokers

“We’re on a mission to make bonds cheap and easy to trade, and are excited about the opportunity to build generational capital markets infrastructure.”

Digital Assets

Sumsub and Mercuryo publish a guide for VASPs: “Mastering Travel Rule Compliance”

“At Sumsub, we’ve concentrated our efforts on filling the gap in understanding the complexity of Travel Rule regulation and helping organizations find the best solution to stay safe and compliant while minimizing costs and avoiding potential risks of non-compliance. This guide we created with Mercuryo, our trusted partner, is the ultimate navigation tool all VASPs can consult.”

Digital Assets

Bitget Wallet Leads with Record Swap Volume & New Crypto Innovations

This week, Bitget Wallet achieved a milestone by surpassing Metamask with a record 388,757 Swap order transactions, securing the global lead. The significant 7-day trading volume, almost 68,000 more than its rival, underscores its liquidity and user trust. This robust activity signals Bitget Wallet’s prominent role and reliability in the dynamic crypto market.

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

<