By late 2014, his portfolio’s assets had swelled—and so, too, had his debt to JPMorgan, reaching $17 million, according to court documents.
Fuel prices were starting to slide, making the market more treacherous. Peter and an up-and-coming JPMorgan employee, James Baker, made arrangements to move the portfolio to the bank, according to the couple’s lawsuit. A graduate from Boston College in 2010, Baker had been with the firm for about a half-decade, mostly as a private banking analyst. He’s now a managing director. JPMorgan said its comments disputing allegations are on his behalf, too.
Baker told Peter about the bank’s new MLP program managed by Chickasaw Capital Management, an outside firm founded by former Goldman Sachs Group Inc. employees. The couple traveled to JPMorgan’s New York headquarters in August 2015 to listen to a two-hour presentation, according to their lawsuit. Baker and Chickasaw’s representatives left them a 26-page folio that described MLPs as complex and suggested that clients should enlist market professionals to help navigate risks. Chickasaw’s managers had an average of 19 years of experience, it said.
‘Big Boy Letter’
But when Peter agreed to move his assets to JPMorgan, concerns arose inside the bank, according to copies of internal communications filed as part of the lawsuit. Baker emailed colleagues that Peter was worth $90 million to $100 million and wanted to transfer $33 million in MLPs to the program. But another employee noted that concentration of MLPs exceeded what JPMorgan considered prudent. The firm’s guidelines at the time recommended that a client shouldn’t put more than 5% of their portfolio in MLPs, the employee wrote.
Executives debated whether to make an exception, eventually proposing they could let Peter put about 33% of his wealth into the MLP program, if he didn’t increase it.
But that math was off, according to the family. They told the court that his wealth was nowhere near that high—making the MLPs the vast majority of his portfolio.
To make an exception, JPMorgan executives decided to ask Peter to sign what one called a “Big Boy letter.” A manager in Baker’s office wrote to a colleague that Peter was eager to move his account to JPMorgan and “will sign any letter that we draw up.”
That month, the bank sent Peter a three-page document, warning that his bet on MLPs was larger than recommended and urging him to diversify his portfolio. But, JPMorgan wrote, it was willing to handle the investment as long as Peter signed a letter absolving the bank of any liability. The firm explained that Peter would need to acknowledge he was a professional in the energy industry, that he was sophisticated enough to understand the risks of MLPs and that he deemed the investments suitable.
While the document estimated he was worth around $100 million, it asked him to confirm he had at least $50 million—enough that JPMorgan said it considered him an “institutional account.”
On Oct. 1, 2015, Peter met Baker and signed it. Colleagues celebrated in internal messages, with the head of the firm’s private bank in Boston writing “Rah whoo!”
Forgetting Words
In the year leading up to that moment, Peter had been visiting hospitals and doctors because of bouts of paranoia and memory lapses. During a hospital stay in 2014, Peter complained to a doctor that he could hear someone talking to him from his stomach, Yoon said.
An even more dramatic incident happened on what turned out to be the very same day JPMorgan discussed the idea of having Peter sign a suitability letter. A police officer visited Yoon at home to tell her Peter was in the hospital. Her husband had called 911 while driving, convinced that someone was following him. Authorities persuaded him to go to an emergency room.
The doctor who examined Peter there later became the president of Massachusetts General Hospital. His diagnosis in Peter’s medical record is blunt: “paranoid ideation; cognitive deficits; dementia.”
A physician’s assistant who examined Peter noted that he couldn’t recall three words—“red, cup, floor”—after three minutes.
Yoon said she wasn’t really sure at the time how serious the episodes were. She described her husband as sometimes odd and a bit of a loner.
Both sides agree that Peter’s diagnoses weren’t relayed to the bank. He signed the letter days after leaving the hospital.
In the three months after the letter was signed, Peter’s portfolio plunged 19%, ending 2015 at about $30 million. But the bank’s outlook for the year ahead was optimistic, estimating the market was undervaluing such assets.
Baker’s relationship with the couple is now a point of contention in the case. Yoon said she and her husband believed he was their investment adviser. Yet court records show Baker didn’t register with regulators to become one until later, after the Doelgers sued. A copy of his resume filed as an exhibit in court says he was an “investment specialist.”
Baker became a fixture in the Doelgers’ life. Peter didn’t use a computer and would ask Yoon to print out statements for him to read. He also watched financial news on television. If their investments slumped, he would call Baker, who would tell him things were fine, Yoon said.
In his employment records with the Financial Industry Regulatory Authority, Baker has said Peter was repeatedly warned to diversify his portfolio. Baker has also portrayed Peter as active and sharp: They would chat about current events, including oil production outputs in the Middle East and China’s impact on the global economy, the banker said in a declaration to the court, seeking to have the case dismissed.
They would also discuss sports, musing on Tom Brady and the New England Patriots, Yoon recalled. The three of them sometimes met up at one of the couple’s homes or clubs in the Boston area or Florida, usually for lunch.
But Yoon said the financial discussions with Baker were way over her head and afterward she would ask her husband about them. “I said ‘Peter, do you understand what he was saying,’” she recalled in the interview. “He said ‘No.’ I told him I never understood what he was saying. Now I feel like we were both dumb and dumber.”