Column: Jeffrey Epstein reaches from the grave to expose how JPMorgan profited from his sex trafficking

You can place the top executives of JPMorgan Chase & Co. high on the list of people who wish they had never heard the name Jeffrey Epstein.

The giant bank has been struggling for years with accusations that it was complicit with Epstein’s horrific criminal record of sex trafficking and sex slavery.

In June, for example, the company agreed to pay $290 million to settle a class-action lawsuit with potentially more than 100 plaintiffs claiming they were Epstein’s victims.

In doing so, the bank acknowledged that its association with Epstein “was a mistake and we regret it,” JPMorgan spokeswoman Patricia Wexler told me by email. “We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes.”

The statement continued, “We all now understand that Epstein’s behavior was monstrous, and we believe this settlement was in the best interest of all parties, especially the survivors, who suffered unimaginable abuse at the hands of this man.”

In settling, however, JPMorgan didn’t admit liability for Epstein’s crimes. You can judge for yourself whether $290 million isn’t a handsome settlement in a case in which a defendant denies liability, even for a bank as big as JPMorgan, which reported a profit of $37.7 billion last year on $128.7 billion in revenue. (The agreement is awaiting final approval from U.S. District Judge Jed S. Rakoff.)

That settlement left JPMorgan still facing a possible reckoning in federal court due to a lawsuit brought by the U.S. Virgin Islands, a Caribbean territory where Epstein owned an island reportedly used as a trafficking site.

The bank finally disposed of that threat Tuesday, when it reached a $75-million settlement with the territory, including $55 million that will be used to augment the islands’ law enforcement capabilities and help charities devoted to assisting crime victims. Of the total, $20 million will go to lawyer fees.

The territory brought the suit, says Ariel Smith, its attorney general, to “put Wall Street’s executives on notice that they can no longer profit from or participate in human trafficking, and they must report its signs as federal law requires. Simply put, children’s safety depends on Wall Street executives following the law.”

The law at issue is the federal Trafficking Victims Protection Act of 2000, which aimed to ease the prosecution of slavery in all forms to prevent the practice and protect potential victims.

The Virgin Islands asserted that JPMorgan — and Deutsche Bank, which took on Epstein as a client after Morgan dumped him in 2013 — obstructed the law, in part by failing to promptly file “suspicious activity reports” with banking authorities; had the banks followed the rules, the territory says, government authorities might have been alerted to Epstein’s crimes much sooner than they were.

Business

Column: Wells Fargo got slammed with a $3.7-billion penalty. So why doesn’t it sound sorry?

Wells Fargo’s use of corporatespeak to pretend it did nothing wrong reflects a tendency of American business regulators to go easy on big companies caught violating the law.

Dec. 28, 2022

The territory originally sought a penalty of at least $150 million to give JPMorgan, not to mention other banks, the economic incentive in the future “to place compliance with the law and prevention of trafficking ahead of its own profits,” Smith said.

According to documents unearthed by the Virgin Islands during pretrial discovery, those profits were copious. The territory said it could prove that JPMorgan collected $40 million in fees through its relationship with Epstein, including $20 million from Epstein himself and another $20 million from clients he brought the bank, including Google co-founder Sergey Brin, Bill Gates and Leslie Wexner, the founder of the Limited. (A spokesman for Gates says he never became a client of JPMorgan.)

That points to the main issue here: bringing financial institutions to book for facilitating wrongdoing by their clients.

This is not the first time that JPMorgan has been accused of allowing criminal activities to take place in front of its eyes. In 2014, the bank paid a $1.7-billion federal penalty and was forced to admit its responsibility for allowing Bernie Madoff to conduct his Ponzi scheme as a bank client.

“JPMorgan, because of its unique vantage point as [Madoff’s] banker, had reason to be suspicious about Madoff,” then-U.S. Atty. Preet Bharara of New York said at the time. Its own bankers had noticed that Madoff’s trading and profit claims were suspect, but it never informed government regulators and failed to file a suspicious activity report that would have alerted the authorities.

Morgan is not necessarily alone in turning a blind eye to wrongdoing by its clients. Banks and other financial institutions have the vantage point that Bharara spoke of that would expose scams and schemes before they could victimize innocent people if the banks would only speak up. Instead, it’s all too common for these institutions to act as though they’re mere conduits for financial transactions, rather than crucial players — participants in all but name.

That’s certainly the case with Epstein, who died in police custody, apparently by his own hand, in 2019 while facing federal sex trafficking charges.

“Cash was the lifeblood of Epstein’s operation,” Judge Rakoff observed in May in explaining his decision to allow the lawsuits by the Virgin Islands and the Epstein victims to go forward against JPMorgan and Deutsche Bank. The cash, it goes without saying, passed through the banks’ fingers.

Business

JPMorgan’s Jamie Dimon is fed up with you ‘lazy’ investors voting against him

You might think that the chairman and CEO of a major bank that had just pleaded guilty to a federal felony charge and has paid out more than $20 billion in legal settlements in recent years would show a little humility.

May 29, 2015

JPMorgan’s $290-million settlement and a separate $75-million agreement by Deutsche Bank will close the victims’ cases, assuming Rakoff approves them.

The crux of JPMorgan’s defense against the Virgin Islands lawsuit was that the wrongdoing was perpetrated by one individual. That’s James E. “Jes” Staley, who in a 33-year career with the bank rose to become chief executive of its corporate and investment banking unit and an oft-mentioned successor to Chairman and CEO Jamie Dimon.

Staley, who left JPMorgan in 2013 and subsequently became CEO of Barclays Bank, had earlier been CEO of Morgan’s asset management business. That purportedly first brought him into contact with Epstein, who became a highly valued client. Staley resigned from Barclays in 2021, after British authorities concluded that he hadn’t given them a complete picture of his relationship with Epstein.

Their conclusion resembles JPMorgan’s argument. The bank says that Staley never told anyone there “that he had witnessed, was aware of, or participated in” Epstein’s sex trafficking.

Why, the bank says, Staley even signed the bank’s code of conduct every year, in which he agreed to meet its “highest ethical standards,” comply with all legal and regulatory requirements, and refrain from any conduct that could “reflect adversely” on his employer. In other words, don’t blame JPMorgan.

If there’s a better indication that corporate codes of conduct are designed more to shield corporations from legal liability than to hold their employees to the highest ethical standards, I can’t imagine it.

Business

The Madoff settlement is an enormous win for a guilty JPMorgan

Let’s get a few points straight regarding the federal government’s “big” $2-billion-plus settlement with JPMorgan Chase over the bank’s complicity in the Madoff case. -- First, JPMorgan, where Madoff kept his major bank accounts and which profited handsomely off its relationship in numerous ways, knew Madoff was crooked.

Jan. 7, 2014

The bank sued Staley in March, accusing him ofconcealing what he knew about Epstein; Staley said that although he was friendly with Epstein, he knew nothing about his crimes. (The bank announced a settlement with Staley Tuesday, on confidential terms.)

For all that, Morgan’s defense warranted a handful of, shall we say, quibbles.

First and foremost, Epstein’s criminality was no secret to JPMorgan or anyone else in the world, certainly not after 2006, when Epstein was charged in Florida with soliciting an underage prostitute; he pleaded guilty in 2008 and was sentenced to 18 months in jail and served more than a year.

By then, he had been sued twice for $50 million each by anonymous plaintiffs who accused him of keeping them as sex slaves. Both cases were dismissed, but they painted a picture of a sex maniac who kept young women for his own pleasure and that of well-placed friends. Further allegations were aired in the press during the ensuing years.

Internal JPMorgan emails obtained by the Virgin Islands in pretrial discovery revealed that compliance executives at the firm’s private bank unit, which handled the richest clients, were becoming increasingly agitated over the bank’s relationship with Epstein.

The executives were fully alive to the nature of his activities and repulsed by the bank’s role in funneling cash from his accounts to women identified as his “friends,” in sums of tens of thousands of dollars at a time. A huge portion of these payments, they noted, went to women with Eastern European names, a red flag for human trafficking investigators.

Business

Bottom line on JPMorgan’s $13-billion settlement: not nearly enough

The headline number on the big JPMorgan Chase legal settlement with state and federal regulators hasn’t changed in the weeks since the negotiations over the deal first broke into the open: $13 billion.

Nov. 19, 2013

They were especially concerned because the bank was leading an anti-human trafficking initiative in the banking industry, from which it hoped to garner some positive PR.

One compliance officer wrote to another in 2010 about his fear that the bank’s “touting of good will on [human trafficking]” would fall flat if critics pointed out that JPMorgan was the bank for “Epstein, a known child sleaze.”

Although bank policy required account managers to obtain explanations from clients for large cash withdrawals and “assess the plausibility of these explanations,” Epstein’s contacts at JPMorgan waved his explanations through, even when they were transparently absurd.

Asked about a string of withdrawals of $20,000 to $40,000 at a time, Epstein explained them as “fuel payments in foreign countries” for his private plane. Yet at the time he was under house arrest and not permitted to travel abroad.

Epstein’s behavior, including his predilection for sex with minors, was so well known around the JPMorgan water cooler that it became a running joke in the office. After visiting the house of another client, a top executive of the bank’s asset and wealth management unit reported to the unit’s chief executive that it “reminded me of JE’s house, except it was more tasteful, and fewer nymphettes.”

The compliance executives’ pleas for JPMorgan to drop Epstein as a client were consistently rejected by his bankers, who were more concerned with toting up the money he brought in as one of their most valuable customers.

According to the documents obtained by the Virgin Islands through discovery, in 2003 Epstein accounted for $8 million in revenue for the wealth management unit, nearly twice the amount coming from the unit’s second-largest client. He was also valued for his connections, which brought new ultrarich clients to the bank.

But Morgan did not “fire” Epstein as a client until 2013, after Staley, who had become his chief contact at the bank, had departed.

It’s entirely fair to say that Epstein would have been brought to justice well before July 2019, when he was arrested on federal sex-trafficking charges, if JPMorgan merely told authorities what it knew and provided them with the documentation of his financial transactions that the bank held in its possession.

That these were “suspicious” as defined by the federal disclosure law is hardly subject to question, since so many of the bank’s own executives knew it. Instead, they kept him on as a valued client until the relationship became utterly untenable. So let’s be clear: As an institution, JPMorgan knew what Epstein was up to and let dollars do its thinking about it.

Will the millions of dollars the bank will have to shell out because it turned a blind eye to Epstein keep it from making the same mistake again? We won’t know unless another scandal erupts — or, more likely, until it erupts.