A great-granddaughter of oil baron John D. Rockefeller is suing JPMorgan Chase, claiming the big bank nearly wiped out her multimillion-dollar trust fund — with investments made in the 1960s and ’70s.
Lucy Waletzky, a Sleepy Hollow psychiatrist and big-bucks backer of Gov. Andrew Cuomo, says the bankers who administered the trust left by her grandfather John D. Rockefeller Jr. — son of the Standard Oil founder — sold off the family’s oil stocks in order to win fees from corporations like Boeing.
Her $2 million account would have topped $24 million had the bankers held on to her family’s stocks, she argues in Manhattan Supreme Court filings.
Instead they sold them off “to gain power and influence over corporations by buying significant equity positions, often gaining seats on these companies’ boards, and then using this influence to cause the corporations to transact business with the banks,” the suit charges.
JPMorgan swapped the family holdings for shares in Boeing, Texas Instruments and 19 other companies in the ’60s and ’70s, even though Standard Oil stocks were surging at the time.
Following the purchases, JPMorgan reaped fees from those corporations, including through a revolving $200 million line of credit with Boeing, the suit alleges.
All the stocks were eventually sold at a loss.
But Waletzky, 77, didn’t learn about the depletion until the bank gave her an accounting of her trust in 2012.
“The trustee owed to the trust and Dr. Waletzky a fiduciary duty, including an undivided and undiluted loyalty that requires the trustee to avoid self-dealing,” the heiress says in court papers.
Waletzky, a philanthropist who serves on numerous boards, including as chair of the state Council of Parks, showered Cuomo with $50,000 in contributions over the past two years.
She also single-handedly funded the governor’s Women’s Equality Party, according to Crain’s. The party got just over the 50,000 votes needed to stay as a ballot line for the next four years, Crain’s reported in January.
A judge ruled last week that Waletzky’s suit could proceed after JPMorgan lawyers claimed all they could find to explain the decades of transactions were 88 pages in an old file room.
The bank offered another defense that didn’t seem to sway the judge. Waletzky “is also a beneficiary under a separate trust established in 1934 also by her grandfather John D. Rockefeller Jr., under which [she] and her daughter receive multi-million dollar distributions annually,” lawyers argued.
In her decision, Judge Rita Mella said that JPMorgan must provide more information about its handling of the trust to determine whether the bank violated its “unwavering duty of complete loyalty” to Waletzky.
“A fiduciary’s actions motivated by an interest to benefit itself, even if indirectly, at the expense of the trust constitutes self-dealing,” she wrote
If Waletzky wins the suit she could collect the estimated value of her trust had the bank kept her family’s stocks. The bankers would also have to return fees charged for administering her trust and cover her legal costs.
The heiress’s attorney, Thomas J. Wiegand, called the interim ruling “through and well reasoned.’
“We look forward to moving ahead with the litigation,” Wiegand said.
A JPMorgan spokesman declined to comment.