Hernan E. Arbizu former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges

former J.P. Morgan Chase & Co. (JPM) private banker was arrested in Argentina on criminal charges in connection with the alleged embezzlement of nearly $5.4 million from clients.According to an indictment unsealed Monday, Hernan E. Arbizu, a former vice president and senior private banker, was charged with embezzlement by a bank officer, bank fraud, identity theft and 12 counts of wire fraud.
Arbizu, 41 years old, was arrested in Buenos Aires on Monday. He remains in custody in Argentina pending extradition.Arbizu, who was originally charged in a criminal complaint in May, faces up to 30 years in prison on each count of wire fraud, bank fraud and embezzlement.At one point, Arbizu was the relationship manager responsible for maintaining and developing private banking relationships in Latin America, according to court papers.Prosecutors allege that Arbizu caused about $5.38 million in unauthorized wire transfers from accounts held at UBS AG (UBS) and J.P. Morgan between March 2007 and April 2008, including nearly $2.8 million in four transactions on April 15, 2008, according to the indictment.
The government also alleges Arbizu used the names and account numbers of J.P. Morgan and UBS customers without their authorization to initiate the transfers, according to court papers.The criminal investigation is being handled by the U.S. Attorney's office in Manhattan and the Federal Bureau of Investigation.In June, J.P. Morgan sued Arbizu, who at one point managed more than $200 million in client assets, in U.S. District Court in Manhattan, alleging he stole confidential and proprietary information about the bank and its clients. The bank also filed a claim against him with the Financial Industry Regulatory Authority.In its suit, J.P. Morgan claimed it discovered in May that Arbizu engaged in unauthorized wire transfers between a JPMorgan client's account and accounts at other firms.
J.P. Morgan also alleged Arbizu copied, downloaded and collected proprietary and confidential information and materials belonging to JPMorgan and its clients, including names, addresses, Social Security numbers and client financial information.
The bank said he fled to Argentina and was subsequently terminated, according to the lawsuit."We appreciate the cooperation and the prompt joint action of the Argentine and American authorities," J.P. Morgan said in a statement Tuesday. The bank declined further comment due to pending litigation against Arbizu in the U.S.