LOS ANGELES (Legal Newsline) - It’s been a year since Larry Miceli sued one of the four largest banks in the United States for allegedly allowing his former bookkeeper to funnel more than $1 million in checks into an account she opened fraudulently, and he says he’s still angry.
Miceli, the owner and operator of LM Auto Wholesale in southern California, filed his lawsuit against JPMorgan Chase Bank, along with former employee Jennifer Osborn, in Los Angeles County Superior Court in April 2014.
According to the seven-page complaint, Chase “failed to adhere to its own banking policies, failed to exercise ordinary care and failed to act in accordance with reasonable commercial standards of the banking business.”
As an automobile wholesaler, LM Auto brokers the sale of cars in its inventory. In particular, LM Auto buys and sells luxury cars. Typically, it buys cars from dealers at a discount rate and then sells them at auction.
Miceli hired Osborn in 2008. At the time, she was a single mother looking for better working conditions, he said.
“She came highly recommended,” Miceli said, noting that she previously worked at one of the largest Mini Cooper dealerships in the United States.
“But she wanted to work Monday through Friday, no weekends. Dealerships here, in California, are practically open 24/7, so she was working all the time and it just wasn’t conducive to raising a child.
“So, I had her come work for me.”
After nearly three years as his bookkeeper, Osborn began stealing from him.
“I was crushed,” Miceli said of when he made the discovery. “She was like a daughter in a manner of speaking. My wife helped her with her child. We felt very betrayed.”
The worst part: he didn’t find out until January 2014. By then, Osborn had stolen nearly $1.5 million.
“She confessed,” Miceli said, adding that she is currently in jail.
“Obviously I was and still am upset, given that she was a trusted employee. But it was the manner in which she was able to steal from me is what bothers me the most.”
In August 2010, Osborn went to a Chase branch in Torrance and opened up a checking account under the name “Jennifer Osborn dba Osborn LM Auto.”
According to Miceli’s lawsuit, Chase opened up the account without running the normal procedures and following its own guidelines, which were established to prevent fraud and ensure that all transactions are true and legal.
“She had absolutely no documentation to go with it,” Miceli said. “She didn’t have a tax ID number, no corroborating paperwork. They just let her open the account.”
Once the account was established, Osborn, who was not an authorized signatory on the company’s banking account, began depositing checks written to LM Auto Wholesale.
Basically, she would steal one of every 10 or so incoming checks, Miceli explained.
“She’d deposit that one check and leave that car off the books,” he said.
According to the complaint, from August 2010 until Jan. 10, 2014 Osborn deposited more than 200 checks, more than 80 of which were deposited without even being endorsed.
Seventy-five checks, Miceli noted, were approved by bank managers.
“Let’s say the bank caught it with the first couple of checks, then all of this never would’ve happened,” he said. “But they did nothing.”
After discovering what happened, Miceli immediately confronted Chase, fully expecting them to refund his money -- since it was obtained fraudulently.
But the bank quickly “lawyered up,” he said.
“The public has a right to know; their money isn’t safe,” he continued. “I thought the bank was there to protect us from this not happening. But they’re basically saying it was my fault, that I should’ve caught it earlier and they have no culpability. And I just think it’s wrong. I hope no one ever has to go through this.”
Miceli said he was forced to liquidate his retirement in order to pay off debts to dealers, which he incurred as a result of Osborn’s skimming.
“I owed $739,000 to a BMW store and $50,000 to a Chevy store, just to name a couple,” he said. “But I paid everyone.”
He said he had to, for the sake of his pride, reputation and the future of his business.
“This is very much a face-to-face business,” Miceli explained. “It took me a lot of years to foster the relationships I have, and I wasn’t going to lose that.
“I know more than one person who would have filed for bankruptcy. But I managed to get back on my feet, and I think, in the end, I’m respected even more as a small businessman.”
Suzanne Alexander, who manages media relations for JPMorgan Chase in California, said in an email that the bank has no comment on the matter.
An attorney for Chase also could not be reached for comment.
However, in a 64-page deposition taken in October and provided to Legal Newsline, Chase’s own market manager for Orange County, Morris Churchill, admitted that the bank did not follow any of its internal procedures for deposits.
Miceli is seeking recovery of his lost funds, attorneys’ fees and costs of the litigation.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.