JPMorgan is again being hauled in court over allegations that it didn’t do enough to prevent an elderly client from being defrauded of millions by an outside investment advisor.
Stanley Tulin, a former chief financial officer of Equitable Financial in New York City, and his wife, Riki, moved last week into federal court of the Southern District of New York with a lawsuit alleging JPMorgan had not properly overseen their accounts while an investment advisor drained them of more than $19 million. The suit, initially filed in Pennsylvania state court in March, accuses J.P. Morgan Private Wealth Advisors and other subsidiaries of not doing enough to prevent a fraudulent scheme carried out by now-disgraced advisor Scott J. Mason and his firm, Rubicon Wealth Management.
Mason pleaded guilty in January to charges related to two schemes that defrauded his clients of more than $23 million and was sentenced in June to more than eight years in prison. The Securities and Exchange Commission separately accused Mason and Rubicon Wealth Management in January of misappropriating more than $20 million from 13 clients in the decade leading up to 2024.
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Tulin, who is also suing Mason and Rubicon in Pennsylvania state court, argues in his lawsuit against JPMorgan that much of the fraud in his case could have been prevented had the firm been more vigilant. His suit specifically accuses JPMorgan and various of its subsidiaries of negligence, breach of fiduciary duty, aiding and abetting fraud, and other violations.
“Over the course of at least multiple years, Mason and Rubicon transferred millions of dollars from Plaintiffs’ J.P. Morgan accounts to accounts controlled by Mason, often forging Plaintiffs’ signature or using fraudulent forms,” according to the suit. “Upon information and belief, Mason used the fraudulently transferred funds to finance his lavish lifestyle, diverting the Tulins’ money for personal expenses and indulgences, rather than for the purposes it was intended.”
The federal criminal charges against Mason accused him of using his ill-gotten gains to pay for international travel, country club dues, credit card bills and an ownership stake in a miniature golf course in New Jersey, among other things. He ultimately pleaded guilty to wire fraud, securities fraud, investment adviser fraud and five counts of filing a false tax return. He was ordered to pay nearly $25 million in restitution to victims and nearly $2.4 million to the IRS.
JPMorgan declined to comment for this article. The Tulins’ lawyer, William Harvey of Klehr Harrison Harvey Branzburg in Philadelphia, did not respond to requests for comment.
JPMorgan, other firms accused of doing too little
JPMorgan is among many firms accused in recent years of not doing enough to prevent scams that ultimately deprived their clients, many of them elderly retirees, of their life savings.
On Monday, a judge in a separate case found that JPMorgan has to go before an arbitration panel administered by the Financial Industry Regulatory Authority to defend itself against allegations that it should have done more to prevent one of its customers from being defrauded of more than $8 million by her son. JPMorgan had previously argued that the dispute belonged in the regular court system because the accusations weren’t really being leveled against its brokerage division, the only part of its business subject to FINRA regulation.
But not all the decisions have gone against the megabank. In October, a federal court in Boston rejected an elderly couple’s attempt to hold JPMorgan responsible for their loss of their $50 million fortune. The clients in that case — Peter Doelger and his wife, Yoon — accused the firm of keeping their money in risky investments even though Peter was showing clear signs of dementia.
Charles Schwab, Wells Fargo and Bank of America are also among the large institutions that have been accused in legal actions in recent years of not doing enough to prevent what victims argue should have struck them as obvious schemes. Plaintiffs in these cases often argue that financial firms are well-positioned to detect the warning signs of fraud and inform authorities that something may be amiss. Among the red flags they often point to are sudden changes in clients’ behavior — for instance, a consistent saver suddenly taking out large amounts of money to invest in gold bars or cryptocurrencies.
Against this, firms often contend that there are legal barriers preventing them from doing more. In many cases, for instance, scammers will win the confidence of their victims and induce them to transfer funds out of their accounts on their own. Firms have insisted they don’t have a legal right to refuse clients who insist on using their money for certain purposes, no matter how out of the ordinary those may be.
Too many red flags to ignore?
In the latest case against JPMorgan, the Tulins accuse the firm of not doing enough to verify what turned out to be the forged signatures and fraudulent forms Mason used to carry out his scam. The Tulins also accuse JPMorgan of allowing Mason to extend a line of credit that they had taken out in 2010 to help their daughter buy a house.
The Tulins, according to the suit, believed the credit account had been closed. But Mason extended it and then used it to make off with millions of dollars with “forged signatures from the Tulins and questionable notary certifications.”
“J.P. Morgan’s failure to take action when confronted with signs of fraud went beyond mere oversight,” according to the suit. “At various points, the bank was made aware, either through red flags or other means, that Mason was engaging in unauthorized and suspicious transactions, such as transferring money to accounts owned or controlled by Mason. Instead of investigating these matters, J.P. Morgan’s response was to facilitate the fraudulent transactions. J.P. Morgan’s omissions in failing to inform the Tulins of the suspicious and fraudulent transactions further enabled Mason’s illegal actions.”
Bill Singer, a securities lawyer and the retired author of the Broke and Broker blog, said part of the trouble for institutions like JPMorgan is that they’ve gone to great lengths in recent years to hold themselves out to the public as one-stop shops for all sorts of financial services. That promise of being able to manage everything from checking and banking accounts to brokerage investments implies that firms will have a comprehensive understanding of what clients are doing with their money.
Firms, according to Singer, might as well be saying: “Yes, ultimately we worked with a man who turned out to be a criminal. But we are still a world-class financial organization with great oversight, although none of this looked suspicious to us.
“That’s a great bit of marketing,” he added.
The Tulins expected to retire with more than $30 million
The Tulins’ suit contends the fraud scheme the couple fell prey to “shattered their sense of security and threatens their ability to live out their golden years as they had always envisioned.” It says that Stanley Tulin brought on Mason as his financial advisor in the late 1990s, around the time he was named senior executive vice president and chief financial officer of Equitable Financial. He later served on the executive committee of AXA Group, Equitable’s former parent company.
Throughout this time, he was making around $3 million a year and expected Mason to invest his savings according to “an extremely conservative strategy,” according to the suit. That involved putting money mostly into government and tax-exempt bonds, the suit says.
Had Mason followed that plan, the Tulins’ net worth would have increased to more than $30 million. The suit says the couple remained unaware of the scam until they were contacted by an FBI agent in 2024.
“At 75 years old, the Tulins depend on the wealth they’ve accumulated over a
lifetime to live comfortably in retirement,” according to the suit. “They have three children and four grandchildren whom they support from time to time, ensuring their legacy continues. But that legacy has been ripped from them—not by their own mistakes, but by those they trusted to manage their wealth.”
