By the time Peter Doelger signed the paperwork to have JPMorgan Chase & Co. handle his fortune, he had built a company spanning the US, sold it to a conglomerate and bet the proceeds on stocks and oil, beating the markets.

By 78, he said he was worth at least $50 million. And, according to his family, he was starting to show signs of dementia.

What followed over the next half-decade was an almost total wealth wipeout, as Peter’s wife, Yoon, said they increasingly depended on JPMorgan’s advice for managing their portfolio, only to watch it lurch ever closer to zero. They ended up with $1.5 million, selling their Boston condo and moving in with relatives.

The details of how things unraveled are now spooling out of dueling high-stakes legal claims in Boston federal court — testing the degree to which a major financial firm might be held responsible if a wealthy client slides into dementia and their investments sour. The Doelgers filed first, seeking to recoup tens of millions of dollars from the nation’s biggest bank.

“We had 100% trust in them that they will manage our assets,” Yoon, 76, said during an interview at her sister’s apartment in Boston. “We didn’t expect them to make us a fortune but at least make us comfortable.”

Peter, now 86, can’t recall much of what happened. His hands trembled in the interview as he tried to tell the once-familiar story of how he started his company. When the topic turned to more recent years, he struggled to follow. A court-ordered exam declared him unable to testify in the litigation, and both sides have agreed not to contest it.

The couple’s situation spotlights an issue that has always lurked on Wall Street but is surging in scale as the baby boom generation retires with a record stockpile of wealth. Legions of boomers have enough saved to be deemed “accredited” or “sophisticated” investors under US securities laws, qualifying them to buy into riskier, complex asset classes with juicy commissions for intermediaries. Yet many of those clients will inevitably face cognitive decline. The industry lacks a formal system to detect when that happens.

In a study testing financial sophistication, households of accredited investors at least 80 years old typically scored worse than unaccredited investors a few decades younger. The authors — Michael Finke, a professor at the American College of Financial Services, and Tao Guo, retirement research director at Morningstar Investment Management — recommended the US consider revising rules for elderly customers.

“This case screams out for more attention to how waning cognitive abilities affect older people’s capacity for financial decision-making and independent financial management,” said Naomi Karp, a consultant on aging, law and policy who worked as an analyst for the Consumer Financial Protection Bureau. “We need to put more responsibility on financial firms since they are well-positioned to detect warning signs.”

That should include more training for staff and managers to spot red flags and intervene, she said.

Though the Doelgers are relying on their son-in-law, a lawyer, to represent them, the battle threatens to wipe out their remaining savings.

JPMorgan has filed a counterclaim in the same lawsuit, saying the Doelgers’ accusations have no merit and pressing them to pay its burgeoning legal costs, as well as other unspecified damages. The couple doesn’t have the right to seek redress, the firm argues, because Peter signed a letter upfront in 2015, attesting to his sophistication and interest in making outsize, risky bets on oil and gas partnerships.

Over the years, JPMorgan representatives helped him add to those investments, loaning him millions of dollars to leverage up the wagers, and sold him a debt swap that ultimately worsened his situation, according to the couple’s lawsuit. Yoon, a Korean immigrant with a degree in fine art, recalled her husband telling her after meetings to discuss investments that he didn’t understand what was said. Neither did she.

In its defense, JPMorgan has said Peter was a successful energy-industry CEO with experience in oil and gas investments when he transferred his holdings to the bank.

“JPMorgan repeatedly suggested to Mr. Doelger that he diversify and reduce his overall exposure,” the bank said in a statement. “Mr. Doelger signed an agreement, delivered to Mr. Doelger and his personal attorney, acknowledging that advice and affirming that he was ‘financially knowledgeable and sophisticated’ and ‘fully aware of the concentration risk.’”

The bank said it has policies and procedures for protecting elderly and vulnerable clients.

“No one at JPMorgan ever observed any signs of cognitive decline from Mr. Doelger when working with him, and neither Mr. Doelger, his personal advisers, or his family members ever told JPMorgan prior to this legal dispute that Mr. Doelger was suffering from any cognitive decline,” the company said. The claims “are contrary to the record and will be vigorously contested in court.”

Beer Baron
The Doelger family’s wealth began taking shape alongside JPMorgan itself in 19th century Manhattan. Peter’s great-grandfather — a German coppersmith also named Peter Doelger — immigrated to the city as a young man and set up a brewery just before the Civil War, introducing lager to New York’s masses. Soon after legendary banker J. Pierpont Morgan moved into his brownstone on Madison Avenue, the beer baron commissioned a towering mansion on Riverside Drive. The Doelger brewery empire thrived until Prohibition and eventually collapsed. Artifacts of its brand are still found throughout the city.

The younger Doelger carved his own path. After graduating from Middlebury College, Peter set up shop in Boston and in the 1970s founded a company that helped homeowners lower energy bills by scrutinizing attic insulation and windows. The venture grew into a nationwide network of contractors before Peter sold it to Honeywell in 1995. He reaped an eight-figure payout, according to court documents filed by JPMorgan. He and Yoon married in 2000.

Peter loaded his portfolio with various assets: pre-IPO shares in biotech companies, an MIT professor’s high-frequency-trading fund, Korean real estate and municipal bonds. He also began dabbling in securities known as master limited partnerships, or MLPs. The investments, which trade on exchanges, focus on natural resources such as oil and gas.

Goldman Alums
MLPs can be notoriously mercurial. They offer significant cash payouts and tax advantages, but the Securities and Exchange Commission warns they are also “acutely sensitive” to oil and gas prices.

Peter invested in MLPs through a Lehman Brothers subsidiary. After that firm’s collapse, JPMorgan became custodian. He opened a brokerage account there and secured a $6 million credit line, using some of it to ramp up investments. From 2009 through 2014, his bets on MLPs outperformed the S&P 500, generating tens of millions of dollars in gains and cementing a strategy that he sought to continue, JPMorgan said in court documents. While keeping their upscale condo in Boston, the Doelgers bought a $7 million Palm Beach mansion and a Paris apartment and held memberships at four private clubs, the bank said.

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.”

Swap Gone Wrong
Yoon said she once thought the money she and her husband were living off of came from profits generated by MLPs but that she later learned they were spending their capital. Their complaint filed with the court also describes other drags on their finances. In some years, they paid more than $400,000 in interest on the JPMorgan loans and at times more than $250,000 in advisory fees to the bank and Chickasaw.

Representatives for Chickasaw, which managed the MLPs, didn’t respond to messages seeking comment.

In 2016, Baker introduced Peter to an adviser at JPMorgan who worked on foreign currencies. She offered Peter a way to potentially minimize his monthly interest payments through a transaction swapping his debt for debt in euros. JPMorgan was the dealer for the swap, and the counterparty — taking the opposite side. The bank has said it explicitly disclosed that it wasn’t acting as a fiduciary in the transaction. Peter had successfully entered into a swap before, but this bet soon turned against him. By the time he terminated it several months later, he owed JPMorgan more than $1 million, according to the couple’s complaint.

After a rebound in 2016, the MLPs tumbled further. When the portfolio came close to a margin call in 2017, JPMorgan advised the Doelgers to transfer all the funds in their savings — about $1.5 million — to a money-market account at the bank so it could be used as collateral, according to their complaint. At the end of the year, the MLPs were down 17%. JPMorgan predicted there was potential for strong returns in 2018.

Baker said in his court declaration that he periodically urged the Doelgers to pay down their debt and reduce their MLPs. But in early 2018, employees at the firm worried Peter might actually do it, and internal communications show they sought to head it off. That May, his loans were due to reprice after a series of Federal Reserve interest rate hikes.

“The client currently has almost $14MM outstanding and we do not want to change pricing and risk the client paying down the entirety of the line,” a bank employee wrote in an internal document filed with the court. The bank left his rate unchanged, and he kept the loan. The document doesn’t indicate that Baker was involved.

Meanwhile, Peter’s mental health was deteriorating. Yoon recalled a time when her husband seemed to annoy Baker by repeatedly asking the same question during a phone call, even after Baker already answered it. Yoon said she apologized, telling Baker her husband was having trouble remembering things. From then on, Yoon said her husband mostly listened while she conferred with Baker on a speaker phone. The couple withdrew from socializing, mostly staying home. They put their Palm Beach mansion on the market.

“I didn’t want to volunteer to people that my husband has dementia,” Yoon said in the interview. “We don’t want to talk about it.”

Baker said in his declaration that the first time he learned of Peter’s cognitive troubles was when the family moved to sue.

Panicked Sale
By the end of 2019, Yoon was added as a co-owner of the account and the MLP portfolio was worth $20 million. The balance on the Doelgers’ loans was almost $10 million. The year-end report from JPMorgan said the MLP investments “remain solid with stable and growing cash flows, healthy balance sheets, visible growth opportunities.”

By then, Peter’s dementia had been progressing for half a decade, according to a psychiatrist hired by the Doelgers. By the latter half of 2019, at the very latest, his condition would have been apparent to JPMorgan’s representatives. “By this time, Peter was exhibiting signs including memory loss, poor judgment, difficulty with abstract thinking, and confusion, among others,” the doctor, Dale Panzer, wrote.

Yoon grew alarmed when the Covid-19 pandemic hit in 2020 and sent oil prices into a dive. The portfolio’s value dropped to $16 million in the first two months of the year. When she turned to Baker for advice on whether to sell or take other steps, he reiterated the advisers’ recommendation that they stay in, according to the couple’s complaint. On March 9, the Doelgers’ MLP investments lost 24% in a single day and Baker informed them there would be a margin call. He allegedly suggested selling $7.1 million to pay down their debt, which they did. The portfolio was now down to $4.1 million. According to the complaint, the bank recommended staying in the market, with Baker suggesting the portfolio could still generate $550,000 in annual income.

Days later, with the oil market still tumbling, Yoon panicked. She sold the remaining assets to pay off their loans.

That left them with $400,000 from their MLPs and $1.1 million in another account. Had they stayed in the market, they would’ve lost another $500,000, triggering a margin call, Yoon said.

‘I Trust You’
Finra, the brokerage regulator, doesn’t have an age limit for what it considers sophisticated investors. Its rules broadly require firms to be vigilant in watching for signs that any customers may be vulnerable. Companies such as JPMorgan adopt policies, including systems for flagging concerns about clients’ cognition. There’s no indication that authorities are examining how JPMorgan or its employees handled the Doelgers.

The couple put their Boston home up for sale and moved in with Yoon’s daughter in New Jersey. It was then that family members began investigating. “I was horrified by what I saw,” said James Serritella, Yoon’s son-in-law and the lawyer representing the couple.

The lawsuit he filed for the couple alleges that JPMorgan overstated Peter’s wealth and investing prowess in a rush to reel in a whale of a client, then kept him in MLPs and borrowing money to reap high management fees and interest.

“I don’t believe Peter understood this stuff the way they made him out to understand it,” Serritella told Bloomberg. “Peter trusted people: ‘I don’t need to know all the ins-and-outs because I trust you.’ So this whole construct of the sophisticated guy, we strongly disagree with that.”

Peter keeps getting worse. He has trouble walking and naps much of the time. Yoon said she visited a few assisted-living facilities. None are places she would like for her and her husband. They’re trying to sell their last property, the apartment in Paris, to afford more.

“He deserved to have a comfortable life,” she said. “We had a comfortable life.”

This article was provided by Bloomberg News.