Chase Answer Due in Bizarre Identity Theft Case

Like many Americans, I have been a victim of identity theft. Actually, I am one of those very unlucky folks who have been victimized multiple times. As a former law enforcement officer, I was able to do my own investigation and determine who stole my identity. Those fraudsters were never prosecuted, however. My “injuries” were simply several hours of hassle but ultimately, I wasn’t responsible for the money taken from my accounts.

Before you have any sympathy for my plight, wait to you read about Yelena Galper and her tragic story which included her arrest and indictment on felony money laundering charges. After a 7-week trial, Galper was acquitted of all charges. She never laundered money and was guilty of no crime. Her life, however, was ruined. 

If Galper was “guilty” of anything, it may be for banking at JPMorgan Chase.

In a case based largely on bank records, the FBI determined that Galper was laundering money for a Medicare fraud scheme. It appeared as if the ill-gotten gains from the Medicare fraud scheme were flowing into several accounts controlled by Galper at Chase.

The money would be deposited into Galper’s accounts. Then it would be withdrawn as cash or cashier’s checks and given back to the medical clinics. The group running the money laundering scheme would keep a fee for each transaction laundered through the bank.

Galper was acquitted at trial. So if Yelena Galper really wasn’t laundering the money, who was? It turns out the scheme was being operated by Chase employees!

It appears Galper got tangled into the mess when accounts were opened at Chase in her name. She claims, however, that she had no knowledge of the accounts. While Galper was standing trial and fighting for her freedom, it appears that money laundered through her accounts was being used for stays at luxury hotels, international travel and expensive dinners. Chase was reaping benefits too.

Bank policy requires customers engaging in large cash transactions to present photo identification. The bank’s records say that Galper did so even though she wasn’t present and had no knowledge of what was happening.

How did this happen? It appears a Chase branch manager was in on the scheme.

Not only did the branch manager and other Chase employees who were part of the scheme get kickbacks, the bank actually awarded two of them for bringing in new business for the bank.

Like all criminal enterprises, the Medicare fraud scheme ultimately unraveled. The FBI interviewed Galper who denied any knowledge of the accounts or the crimes. The FBI didn’t believe her, however. In an unfortunate twist of the plot, the criminals who targeted Galper for money laundering and identity theft were also using an old dormant account that Galper really owned but no longer used. She claims that the bank’s employees also fudged bank records to make it appear that she appeared in person and with ID when cashing checks.

Not only was Galper arrested but her real bank accounts were closed out and Chase reported her to a credit reporting company.

Galper sued Chase in 2013 after being acquitted of all charges. Her complaint didn’t name the bank employees, probably because they were likely headed to lengthy prison cells. Collecting from inmates is rarely successful.

A federal judge in Manhattan tossed the case but earlier this fall, a three judge panel from the U.S. Court of Appeals for the 2nd Circuit reversed the trial court and reinstated Galper’s claims against the bank.

Last Thursday Chase asked for more time to respond to the complaint. The court agreed but only gave a one week extension. That means after waiting years, Chase will finally have to decide if they are willing to accept responsibility for identity theft caused by the actions of their employees. If not, the case will likely be resolved next year by a jury.

Banks are not responsible for every bad act of their workers. But they can be responsible if they fail to properly supervise workers or if the workers were acting in the apparent scope of their authority.

The legal issues are quite interesting and unfortunately not completely resolved. Galper’s ordeal began in 2009 and six years later, the case is just getting started.

Obviously, we think that Chase is liable and should pay for the misconduct of their workers.

The classic playbook of big banks is to delay. Banks have deep pockets and can funds teams of expensive lawyers. Victims of identity theft and bank fraud, however, are often broke and desperate for money. Drag the case out for years and many folks will simply settle for pennies on the dollar.

The other reason banks often drag out cases is procedural. The banking laws have many loopholes and are quite complex. Banks will use every procedural tool at their disposal to get the case knocked out of court on technical grounds.

Banks win their cases in front of judges. Victims of big banks win their cases in front of juries. Judges act as the gatekeepers, however, and decide what juries get to hear and even if a case can get to a jury.

It’s not that most judges are “unfair” or unsympathetic. The lender liability laws are overly complex and banks exploit those complexities to avoid facing the music.

If and when a case does finally make it through all the hoops, chances are it settles quickly. As we said before, we think that juries have a unique ability to “cut to the chase” and are often sympathetic to bank fraud victims. Banks don’t like to try cases before juries and will usually settle rather than take their chance before a jury

So why don’t we hear about these cases more often? I would love to share some of our big wins but when a banks settles, it is almost always with a confidentially provision. One enforceable by the courts. Banks don’t want others to know that they had to pay up.

Yelena Galper still has a long road ahead of her. Thus far she has won every hurdle. Later this week we should hear from Chase. Was she somehow a money launderer or part of a big Medicare fraud scheme? A jury of her peers said no. They believed her version. Chase must now admit or deny that three of their employees used her identity and bank accounts. Assuming they admit, it will be interesting to see how they will argue that they should remain blameless for all of Yelena’s suffering and losses.

Perhaps after 6 years, we may finally hear the truth of what happened. Assuming Yelena is being truthful with the court, hopefully Chase will finally pay up. Identity theft victims can go through living Hell, especially when their legitimate bank accounts are closed, their credit is ruined and they are arrested for felonies they didn’t commit.

This is a story we will follow closely. Maybe we can even write about a happy ending (if there is a settlement that isn’t sealed.)

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Need more information? Contact attorney Chris Katers at (414) 777-0778 or contact the author of this post, attorney Brian Mahany at (414) 704-6731 (direct) or by email at [hidden email]. You can also visit our Cases We Handle page for a list of some of the common lender liability cases we take.

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Related topics: JPMorgan Chase (6) | bank fraud (21) | identity theft (2) | lender liability (50) | money laundering (3)