February 12, 2021 • Karen Demasters
The matriarch of the billionaire Schottenstein family has been awarded $19 million by the Financial Industry Regulatory Authority for illegal trading in her accounts by J.P. Morgan Securities and two of her grandsons, Finra announced Feb. 5.
The compensation is to be paid to Beverley B. Schottenstein, of Bal Harbour, Fla., by J.P. Morgan Securities, and her grandsons, Evan A. Schottenstein and Avi Elliot Schottenstein, who are brothers and were acting as her brokers. The three defendants have denied the allegations that were described in the arbitration award, according to Finra. J.P. Morgan Securities should have flagged the large sales, Finra said. The grandsons worked at J.P.Morgan Securities in New York City.
The Schottenstein family, which is based in Columbus, Ohio, was once on the Forbes list of 100 wealthiest families in the U.S., but has since dropped off the list. In 2015, Forbes set the family’s wealth at $2.7 billion. The Schottensteins headed a fashion, grocery store, retail mall and home building empire that includes retailers, such as DSW and American Eagle. It is now overseeing the merger of Albertson’s and Safeway as the parent company of the two grocery store chains.
The family members are almost as famous for their financial feuds as they are for their financial holdings, frequently making the news because of their squabbles. They are best known in the Columbus area for funding Ohio State University’s basketball arena, the Jerome Schottenstein Center, nicknamed The Schott.
The scheme to sell the assets was uncovered by a granddaughter who saw numerous sales from the account that her grandmother said she had not authorized, Scott Ilgenfritz, a lawyer for the matriarch at Johnson Pope Bokor Ruppel & Burns in Tampa, Fla., said.
In the latest chapter of family feuds, Beverly Schottenstein sought Finra arbitration after she accused the three defendants of financial fraud, abuse of fiduciary duty and fraudulent misrepresentations and omissions.
Finra order J.P. Morgan to pay $8.9 million, Evan Schottenstein to pay $9 million as the chief beneficiary of the scheme, and Avi Schottenstein to pay $620,000. They were also ordered to pay legal fees and Finra hearing costs. Finra is continuing the investigation of the case, Ilgenfritz said.