JPMorgan client with dementia who signed over his fortune to bank to handle and lost a staggering $50 MILLION sues the bank after being forced to move in with relatives

America’s largest bank has been accused of allowing an elderly client to lose his entire $50 million fortune by promoting high-risk investments despite his obvious signs of dementia.

Peter Delger, 86, has owned luxury homes in Boston, Palm Beach and Paris after founding an energy company and a successful investing career.

But he was forced to move in with relatives after losing all but $1.5 million after five years at JPMorgan due to bad investments, fees and interest on debt.

The bank forced him to sign a “big boy letter” certifying his ability to make risky investment decisions in difficult markets.

But he was sued for ignoring the deteriorating condition of the man, who was already hospitalized with delirium and memory loss and told one doctor he could “hear someone talking to him from his stomach.”

“We were 100 percent confident that they would manage our assets,” said his 76-year-old wife Yun. Bloomberg.

“We didn’t expect them to make us a fortune, but at least they would provide us with comfort.”

Delger is descended from New York magnate Peter Delger, who made his fortune in breweries in the 19th century.

But Delger Jr. made his fortune in Boston by building a nationwide network of insulation contractors.

He sold the company to Honeywell in 1995 and began a successful investment career focusing on biotechnology companies, Korean real estate and complex energy-based securities called master limited partnerships (MLPs).

JPMorgan capitalized on his success by providing him with a $6 million line of credit and convincing him to transfer his portfolio to the bank and its MLP specialists in 2015.

Delger offered to invest $33 million in the MLP, but the bank’s rules said clients should place no more than five percent of their wealth in risky and volatile investments.

But given his background as a successful businessman, the bank considered him a “sophisticated investor” who was legally allowed to make risky bets.

James Baker, now the bank’s president, told colleagues that Delger was worth between $90 million and $100 million, and the firm agreed to allow a $33 million investment if he signed a letter releasing them from liability.

A colleague in Baker’s office told his team that Delger would “sign any letter we write,” and the head of the firm’s private bank in Boston wrote, “Hurray!” at the celebration when they received his letter in October of that year.

But Delger was worth only half what the bank thought and was already showing clear signs of decline, having signed the letter just three days after being diagnosed with paranoid thinking, cognitive deficits and dementia.

He already had $17 million in debt to the bank, and his portfolio lost 19 percent over the next three months.

He paid up to $400,000 a year in interest and $250,000 in consulting fees and lost another $1 million in 2016 when a currency debt swap the bank advised him to take went bust.

MLPs fell another 17 percent in 2017, but the bank offered an upbeat outlook on their prospects and tried to keep it from paying off its debts to them without backing down from raising rates.

“Customer is currently nearly $14 million in debt and we don’t want to change prices and risk the customer paying the full amount,” one wrote.

Delger had never used a computer, and Baker visited him at his Palm Beach home to talk about his investments.

Yoon said she never understood these discussions and later asked her husband about them.

“I said, ‘Peter, you understand what he’s saying,'” she told Bloomberg.

‘He said no.’ I told him I never understood what he was talking about. Now it seems to me that we were both dumber and dumber.

“I didn’t want to help people who my husband has dementia.

“We don’t want to talk about it.”

The psychiatrist told them that Delger’s dementia had been progressing for five years by that point and would have been obvious to any observer.

“By this time, Peter was showing signs of memory loss, poor judgment, difficulty with abstract thinking and confusion,” wrote doctor Dale Panzer.

By the end of 2019, the portfolio had just $20 million and Dolger owed the bank $10 million, but he received another optimistic outlook for the coming year.

Instead, another $4 million was lost in the first two months when the Covid pandemic hit, slashing oil demand.

Millions more were lost in the March 24 market crash, reducing the investment to $4.1 million.

With oil prices still falling and insolvency only a couple of hours away, Yun stepped in and sold the rest of the portfolio a few days later to pay off his debts.

They were left with just $1.5 million of their once vast fortune and were forced to move in with Yoon’s daughter in New Jersey.

The bank denies malpractice and has countersued the couple, claiming they warned Delger of the risks he was exposed to.

“JPMorgan has repeatedly encouraged Mr. Doelger to diversify and reduce his overall risks,” the company said in a statement.

“Mr. Delger signed an agreement submitted to Mr. Delger and his personal counsel acknowledging this advice and confirming that he was ‘financially knowledgeable and sophisticated’ and ‘fully aware of concentration risk.’

And he denies ever noticing anything wrong with his client.

“No one at JPMorgan ever noticed any signs of cognitive decline in Mr. Doelger while working with him, and neither Mr. Doelger, his personal advisors, nor members of his family ever told JPMorgan prior to this legal dispute that that Mr Dölger is suffering from any cognitive decline.’

Banks are not required to set age limits for those they classify as sophisticated investors, although they must watch for signs of vulnerability.

But the case has sparked demands for reform from campaigners.

“This case calls for greater attention to how cognitive decline affects older adults’ ability to make financial decisions and manage their finances independently,” said Naomi Karp, a former analyst at the Consumer Financial Protection Bureau.

“We need to place more responsibility on financial firms as they are well placed to spot the warning signs.”

JP Morgan has acknowledged that Dolger cannot testify in the upcoming court cases, and the couple is represented by attorney James Serritella, Yoon’s son-in-law.

“I was horrified by what I saw,” he said.

“I don’t believe Peter understood it all the way he was made to understand it.

“Peter trusted people: ‘I don’t need to know all the ins and outs because I trust you.’

“So this whole concept of the sophisticated guy, we totally disagree with that.”