(Bloomberg) -- Jennifer Sharkey, the ex-JPMorgan Chase & Co. wealth manager who claims she was fired in 2009 for raising red flags of fraud and money laundering about a bank client, was let go for a much simpler reason, her former boss testified.
"In the end, it was the fact she lied to me," Leslie Lassiter told jurors in Manhattan federal court Wednesday. "It’s hard to have somebody working for you who you can’t trust. That’s pretty fundamental in a bank."
Lassiter, a key witness for JPMorgan Chase in its defense of Sharkey’s whistle-blower suit, said she lied about contacts with the representative of a different wealthy customer. The client’s office manager called to complain that Sharkey hadn’t returned her calls and to ask if the wealth manager was just "a phantom," according to Lassiter, who is one of three JPMorgan employees named as defendants in Sharkey’s suit, alongside the bank.
Lassiter said she assigned the client, referred to in the trial only as "Client H," to Sharkey, who’d been promoted from private banker to private wealth manager in 2008. Client H had about $25 million managed by the bank, she said. Lassiter told jurors she asked Sharkey at least a half dozen times whether she’d been in contact with Client H or his office, and that Sharkey gave her reassurances.
"‘Don’t worry, I’m on it. Taken care of,’" Sharkey said, according to Lassiter.
Lassiter said she then got a call from Client H’s office manager, known in the trial as "Manager T," who said Sharkey didn’t return her calls. Manager T asked if she needed to pull her boss’s money out of JPMorgan Chase to get her attention, Lassiter testified.
Lassiter then discussed Manager T’s call with Sharkey, in a meeting on July 21, 2009. Sharkey admitted she’d never contacted Manager T, according to Lassiter.
Lassiter also faulted Sharkey for a "casual" approach to her work and her inability to wrap up required "Know Your Customer" processes on client accounts. Sharkey was fired Aug. 5.
Under questioning by Sharkey’s lawyer, Lassiter testified that Sharkey had been promoted to private wealth manager about a year before she was fired. Sharkey was responsible for bringing in more than 50 new clients with more than $100 million in assets.
Lassiter took the stand Wednesday, after Sharkey spent the previous day testifying that the bank fired her not over Client H, but for raising red flags about "Client A," a diamond seller and founder of a telephone calling-card business whom she suspected of fraud and money laundering. Sharkey cited Client A’s work in the jewelry business, news articles about his company’s bankruptcy in the 1990s, tax liens, Client A’s trading in the escrow account of a law firm and his failure to produce requested documents to the bank among the risk factors the bank had identified.
U.S. District Judge Denise Cote, who’s overseeing the trial, told lawyers outside the jury’s presence Tuesday that there is "no evidence of any criminal activity" by Client A or other bank clients involved in the case.
Sharkey told the jury of five women and three men on Tuesday that she was let go after telling superiors she planned to send out letters terminating the bank’s relationship with Client A, who had about $14 million under management.
"I was fired the next day," Sharkey said.
Lassiter testified that after Sharkey was fired, Client A remained with JPMorgan Chase and that the bank gave him final approval about five months later. Client A is still a customer of JPMorgan Chase.
Sharkey claims JPMorgan Chase violated whistle-blower protections in the 2002 Sarbanes-Oxley Act and is seeking back pay, compensation for her emotional distress and reinstatement to her job. It’s rare for a bank to go to trial over such allegations.
After Lassiter finished testifying Thursday, Sharkey’s lawyers called Steve Grande, a JPMorgan human resources manager. Grande testified that he met with a crying Sharkey the day she was fired. He told her she could stay on the payroll for 60 days if she waived her right to sue the bank.
If Sharkey refused the deal, her U5, a form filed publicly with the Financial Industry Regulatory Authority, would reflect she’d been fired for misconduct, Grande said. If she agreed and waived her right to sue, there would be no misconduct claim. Sharkey refused.
Both sides concluded their cases on Thursday. The jury will begin deliberations after closing arguments Nov. 6.
The case is Sharkey v. JPMorgan Chase & Co., 10-cv-03824, U.S. District Court, Southern District of New York (Manhattan).
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