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The Widow, the Bank, and the $8B Verdict (dmagazine.com)
59 points by ALee 11 months ago | hide | past | web | favorite | 34 comments

> 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.

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.


The estate was intestate. How would Bitcoin have helped?

Take the keys from the cold storage in the safe in the deceased's office, and the bitcoin are now yours. /s

Then a probate judge will issue a bench warrant for your arrest.

I have no idea what you're talking about your honor. What's a bitcoin? I never saw any bits of any coins and the safe has a combination lock, not a key, how could I take the key?

My original post wasn't being serious (hence the /s), but if there's no proof of you taking them and no activity on the blockchain for the wallet, there's not much that can be done.

> if there's no proof of you taking them and no activity on the blockchain for the wallet, there's not much that can be done

This attitude is the principal reason Bitcoin, specifically, is probably fucked.

One of the key points of Bitcoin (and hard money philosophy in general) is that the idea of a separately-existing title is a bug, not a feature. When you start with the assertion that privkey is equivalent to ownership, you can build abstractions on top using computer code rather that legal code. Without this assertion, software abstractions cannot be built as the software's reasoning can always be invalidated by an external court complaint.

In terms of abstractions, the analogous scenarios for the estate planning case:

1. Private keys secret-split between individual heirs and dead-man's switch - beneficiary.

2. Private key mutually secret-split between heirs - work it out, possibly escalating to probate.

3. Private key sitting around on paper waiting to be picked up by whomever discovers it - same as cash sitting around.

4. Private key known only to decedent - value escheats to the void (or the currency itself, depending on your interpretation).

The question whether Bitcoin specifically is fucked is whether it is strong enough to survive the inevitable clash with the traditional [0] legal system that will insist on destroying one of its core properties. Morons that brazenly advocate stealing cryptocurrency don't help, but a lack of them wouldn't mean the state would remain uninvolved, either.

[0] Yes, "the" legal system is one of many possible legal systems. The philosophy of common law asserts that it's inevitable and manifest. But it's anything but.

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.

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.

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.

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?

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.

> 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.

Greed, incompetence, greed, a culture inured to fraud if at all possible, and greed. With a liberal dose of "even if we have to pay up it'll never make a dent in the revenue stream, so who gives a rat-f*?"

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".

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.

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.

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.

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.

> 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.

>>> 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.

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?

>>> 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.”

That is the exact passage I had quoted.

The problems here are only first-world due to the number of zeros at the end of the dollar-amounts.

Many other estates with independent administrators and much less value end up similarly screwed up, but don't end up with eye-popping verdicts because no one has enough money left to fight the administrator.

It just so happens that these folks did. It is a total shame that it takes this much money to fight, but one can hope that this big of a verdict makes some of the smaller fish rethink their strategies.

One can hope, anyway.

That's the most shocking thing for me. A bank will try to screw you every way possible. I guess, they want year-end-bonuses and by the time lawsuits are filed no one will care.

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

First world problems until the bank got involved and took away the "first world problem" thing from them.

The bank got involved at their joint invitation. That doesn't excuse anything the bank did but they really should have been able to work this out amongst themselves. Just to see the 'children' (well, they behave like children anyway) bicker over the perceived use of airmiles without any proof whatsoever in an estate of this magnitude sets the tone nicely.

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

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

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)

The airlines miles were just an example. There was much more.

> 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.

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.

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