
The Widow, the Bank, and the $8B Verdict - ALee
https://www.dmagazine.com/publications/d-magazine/2018/january/jo-hopper-jpmorgan-chase-lawsuit/
======
lobe
> Once the children discovered the estate’s money was being used to pay the
> bank’s lawyers in the legal fight, they asked for the bank to stop using the
> account. JPMorgan did not comply. Eventually, the account was drained of all
> but $100, just enough to keep the account open. Then JPMorgan made its own
> novel legal move. The estate, as administered by the bank, took out a loan,
> from JPMorgan, for more than $900,000. The bank, in other words, loaned
> itself money, indebting the estate in the process.

Wow, just wow. Usually when I read articles about an investment bank doing
something dodgy, I can play devil's advocate and talk it through from their
point of view. But this time I am struggling to do that. So many things were
done that were not just morally wrong, but legally too. I struggle to believe
there was no one at JP who didn't point this out.

~~~
jjeaff
I would guess the thinking of the bank was that they were paying legal fees
due to infighting of the family members. Something that, if true, would make
sense to pay out of the estate funds. But, assuming it is proven that a lot of
the problems were due to incompetence on the part of chase, that is a
different story and seems like theft.

So to me, the use of the funds for legal fees is not in and of itself an
issue.

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tomohawk
This is why it is so important to have a will and other documents (such as
advanced directives) in order, and to make family members aware of all the
arrangements.

There are all kinds of sharks in the financial and legal industry that prey on
unprepared people.

I and people I know have been screwed by these types, and it always comes down
to not having a will. If you don't have a will, you're subjecting those you
care for to dealing with these sharks. Don't do that to them.

~~~
user5994461
You might have missed the part where the widow and the children couldn't agree
on who gets what at any point in the last 10 years. They sued each other and
sued the bank instead of splitting the estate.

As always, the sharks are in the family. Your descendant would rather have the
whole fortune dilapidated than miss a dollar of it.

~~~
FireBeyond
Yeah, my (effective) mother in law had this issue with her father and his
(second) wife.

He died without a legal will (what he did write was hand written, holes so
large you could drive a truck through, and un-witnessed). Though the estate
was modest (maybe $400K in home, vehicles, stocks) and could easily have been
divided pretty equitably with the second wife (who was pretty recently married
to him), the two of them's inability to get along, and always think that the
other was plotting against them...

lead to long drown out probate court challenges, and in the end they walked
away with less than $100K between them, burning the rest in the process.

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jnwatson
The odd thing about this case is how there wasn’t anything unusual about the
estate.

Heirs disagree all the time. That’s the point of hiring an independent
administrator.

How could the bank have screwed this up so badly?

~~~
jVinc
They started with a small screw-up. (Favoring the widow in order to close an
investment account). Then let on with a slightly larger screw-up (Favoring the
children in order to get back at the widow for closing that account). Then
made the huge screw-up of trying to break the law and force the widow to sell
the house. Then they made the gigantic mistake of using up the estate to fight
both sides in court. Then they made the mind-blowingly huge mistake of
indebting the estate to themselves to keep that fight going.

It's just one long series of someone screwing up badly and thinking "wait!? I
can fix this, I've got a crazy idea that just might work", then proceeding to
fuck up even more. Though with the lengthy timescale it would not at all
surprise me if someone got promoted several times for the (prior to the
verdict) "great" handling of the afairs. Whoever went to the boss saying "yea,
we drained the entire estate into legal fees for our-selves, and now we're
even indebting it while keeping both sides fighting" would have at the time
been seen by them as a candidate for employee of the year.

The 8 billion is outrageous and far too much, but I would love to live in a
world where they actually had to pay that amount. Maybe not all to the
victims, but most of it to some charities and non-profit organisations
fighting for citizens rights against banks. It would seriously send a signal
that all this kind of just horrible behavior on the part of the banks isn't
profitable in the long run, and could potentially blow your entire
organisation out of the water. Making things like moral codes and proper
training actually matter to them. As it is, they'll likely just pay a couple
of million and scrug it off as an ok attempt at stealing from their clients.
The 99 other cases where it actually worked will foot the bill for this time
when it failed.

~~~
teh_klev
> screwing up badly and thinking "wait!? I can fix this, I've got a crazy idea
> that just might work"

Reminds me of that scene at the end of American Made, where Monty Schafer
drops by a colleague's office and says (paraphrased) _" Here's an idea, let's
sell arms to Iran"_.

In other words: _we 're gonna need a bigger shovel._

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razorunreal
I wonder if it would be possible to have a clause in your will stating that if
any family member sues any other family member, the whole lot goes to charity.
Bonus points if you can get a legal professional to utter the words "and you
can all eat shit".

------
jacquesm
First world problems, 6700 putters and 900 bottles of fine wine.

That said, the bank behaved in a terrible way, but the most important takeaway
is that if you have any wealth at all make sure you leave a properly signed
and witnessed will.

~~~
kemiller2002
I disagree, it's not "first world problems." Largely the saving grace of the
family was that they are extremely wealthy. They had the money to hire
attorneys to stand up to the bank. In most instances, the bank would have been
able to do what they want, because 99% of the people lack the funds for an
actual legal fight.

What makes the article new worthy is that the bank lost when it overstepped
its bounds, and that this was only possible for someone with an estate of
several million dollars. It shows how biased the American legal system is
against people without money. How did I come to this conclusion? It's simple,
JPMC clearly knows what they are doing when it comes to probate and the legal
system. This wasn't some novel plan they had to make money on estate. They
knew exactly what they were doing and what moves they could play. It was a
shock to them that they lost, and they lost because the plaintiffs had a legal
team that could understand and combat it. Most attorneys couldn't handle a
case like this, and those that do aren't cheap.

~~~
mindslight
JPMorgan was only involved because they were paid $230k to step up as
administrator of the estate, so this malevolent third-party fiduciary
situation could have only happened to a family with enough assets for that
steep administrative fee to make any sense.

I've no idea what probate/intestate law in Texas looks like, but one party
(probably the wife) should have had priority to be the executrix. The children
could have fought her appointment, insisted on court supervision of her
actions, sued the estate to contest disbursals, etc. The wife could have
similarly spent money to defend herself, pay herself an outrageous salary,
etc. But she would have been much less brazen and the end result would have
just been the all-too-common story about one member of a family screwing over
the others.

~~~
user5994461
The story said the wife sued the children and the children sued back the wife.
The members of the family have been at war since the beginning.

~~~
mindslight
> _The [issue] insisted on hiring JPMorgan as an independent administrator in
> part because they wanted someone impartial to handle any disputes that might
> arise... Jo says. “They wanted assurances. So I agreed.”_

I don't see any mention of lawsuits resulting in the involvement of JPMorgan,
only those filed afterwards. The story [0] makes it sound like Jo acquiesced
to hiring an "independent" administrator, which seems to be a case of no good
deed going unpunished.

So I stand by the idea that complications from (seemingly voluntarily) hiring
a third party executor for $230k puts the situation squarely within "first
world problems", meaning caused by out of touch affluence. A family with
lesser means would have had to work it out for themselves, under the pointed
threat of the entire estate being immediately consumed by legal expenses.

[0] Granted, the whole article is in terms of her side of the story.

~~~
user5994461
>>> Lawsuits ensued. Jo sued the bank. The bank sued Jo. Jo sued her
stepchildren. The stepchildren sued Jo. The stepchildren sued the bank. And so
on.

Neither Jo nor the children wanted to negotiate. They forced each other to
have a third party and they fought until there was nothing left to inherit.

A family with lesser means would ruin themselves with a cheaper executor. It's
really common.

~~~
mindslight
That sentence is obviously talking about after JPMorgan was already on board.
Do you have another article that states Jo was forced into nominating JPMorgan
to act as the administrator, or which one of us is having the reading
comprehension fail?

~~~
user5994461
>>> The children, as Jo calls them, even though they were both adults when she
married Max, insisted on hiring JPMorgan as an independent administrator in
part because they wanted someone impartial to handle any disputes that might
arise. “That’s what the children wanted,” Jo says. “They wanted assurances. So
I agreed.”

~~~
mindslight
That is the exact passage I had quoted.

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a2tech
And to believe this all started over a misunderstanding over airline miles.

~~~
throwwwwaway9
Nah, built over years most likely. Like getting divorced because "he throws
his socks on the floor." That's the match that lights the fire of hay gathered
over decades

~~~
a2tech
Yeah there's obviously some tension from the kids and the stepmom. But if you
read the article everything was starting ok enough until the kids thought she
was using his miles which they were entitled too (as an aside, what a stupid
thing to throw a fit over)

~~~
compiler-guy
The airlines miles were just an example. There was much more.

------
woliveirajr
> Still, the verdict did generate some bad publicity for the bank.

And there goes the Streisand effect. $8B isn't something the bank will take
slightly, but the more this case is discussed, more people will hear about it
and (probably) avoid hiring this bank in the future.

I don't think this kind of service is a significant insource for the bank, but
also think it should be much, much cheaper had the bank taken some care with
this case.

~~~
harryh
That's not what the Streisand Effect is.

The Streisand Effect is when an attempt to censor information from becoming
public backfires and instead spreads the information more widely due to public
attention.

