An Finra arbitration panel has ordered J.P. Morgan to cough up $2.5 million in damages for an ex-rep in New Jersey who said the bank wrongfully fired and defamed him—when it claimed that he and his wife violated anti-money-laundering rules by dividing up bank deposits of $15,000 in wedding gift money.
Still, even though the Financial Industry Regulatory Authority panel found that J.P. Morgan had wrongfully terminated Liet C. Han in 2017, one of the arbitration panelists dissented in a stinging rebuke to his co-panelists, insisting Han was no victim and should have known as a bank employee better than to break up large deposits.
J.P. Morgan fired Han in December 2017, after claiming that he had made small deposits in a personal affiliate bank account a few days apart to avoid filing a currency transaction report, or CTR, a form that must be filled out by banks whenever customers make deposits of $10,000 or more. Breaking up deposits is referred to “structuring” or “smurfing,” and is considered a red flag among regulators for money laundering.
Han’s attorneys successfully argued, however, that it was mainly a misunderstanding. He said the deposit was actually made by Han’s wife, Angela, right after the two were married. Angela Han does not work in financial services and was unclear about the rules, said Liet Han’s attorney, Blaine H. Bortnick of Rasco Klock in New York City.
Han sought twice the amount of damages he was awarded, $5 million, as he claimed breach of contract, wrongful termination and defamation, and sought expungement of his record, another fight he won. He’s been with Ameriprise Financial since 2018 and works in Hillsborough Township, N.J.
Bortnick, who said his client did not want to be interviewed, told Financial Advisor that Han and his wife were married in July 2017 and that Han’s colleagues and boss were at the wedding.
“It’s like anybody’s wedding. It’s all day and half the night. There are zillions of people. It’s stressful. The next morning you get up, pack the car with gifts and go home. On the way they got $15,000 in cash as wedding gifts,” he said.
The couple saw the bank was nearby, said Bortnick, and decided to deposit the money but wanted to keep some aside for their honeymoon overseas. “They were always intending to hold back some. His wife goes; [Liet is] not at the teller line. He’s is in the back. She’s at the teller line; she handles the transaction.”
Bortnick said that when Angela Han went to the teller she was informed she would have to fill out forms if the deposit was $10,000 or more and she wanted to avoid that for the sake of convenience. However, according to the dissenting Finra panelist Mitchell Regenbogen, an administrative law judge in New York, this “pulling back” of the money was exactly the kind of thing Liet Han should have been trained not to do.
“Rather than [Han] simply going to the teller and completing the CTR, he and his wife ‘pulled-back’ the cash and deposited an amount under $10,000 in order to avoid the form, with [Han] depositing on the next business day the exact balance that was pulled back,” wrote Regenbogen.
Liet Han, the panelist continued, “ignored years of training and instructions as a registered representative and a member of the financial services industry, which training included specific and repeated admonitions against the exact behavior he and his wife engaged in on July 3 and July 5, 2017, with the last anti-money laundering training having been taken by [the] claimant only 24 days prior.” He said that Han and his wife deposited about $9,700, and held back $6,000.
Bortnick said that his clients had other banks with joint checking accounts and if the couple were going to “structure” deposits, they could have gone to any of those other banks.
“Chase would have never found out. It was kind of a ridiculous accusation, and something like five months later they decide to investigate and they fire him and give him a U5 that throws him on his back. You can’t get a job or a seriously good job with that on your U5.” He noted that despite the dissent on the damages, Regenbogen didn't fight the U5 expungement. Regenbogen noted that Han was a high earner and J.P. Morgan had an incentive to keep him if the bank thought it could.
J.P. Morgan said in a statement, “We are concerned about the impact of this decision on the industry’s fight against money laundering. We plan to vigorously pursue all legal options.”
Bortnick said that the teller’s instructions to Liet Han’s wife were part of the sticking point and Angela misunderstood them.
There’s a gray area when it comes to conversations tellers and bank customers have about the Bank Secrecy Act—banks are often wary of crossing a line when it comes to informing customers about the law and seeming to advise clients not to deposit too much money.
The point was taken up in a Santa Clara Law Review paper published in 2010, written by Courtney J. Linn, a money laundering specialist and onetime assistant U.S. Attorney in the Eastern District of California. In a paper called “Redefining the Bank Secrecy Act,” he wrote that banks have been skittish about discussing the crime of structuring with clients since a landmark case called Ratzlaf vs. the United States because they “fear that the conversation may cross a line between merely explaining the law, which is permissible, and advising a customer as to how to evade the law, which is not permissible.”
"The majority," wrote Regenbogen in his dissent on Han, "has inexplicably decided to effectively nullify the Bank Secrecy Act, discard
the specific and mandatory conditions that governed [Han's] employment, and proclaim that the law, [J.P. Morgan's] code of conduct and the claimant’s own procedure manual did not apply to the claimant. They are giving license to registered representatives to illegally structure transactions, are rendering employer and Finra investigations meaningless, with the majority’s only requirement for doing so being offered self-serving and theatrical stories created after the fact."
The other two arbitration panelists in the Han case were Linda J. Baer and Sean F. Monahan.