A look into Jeffrey Epstein's impact on the banking industry

January 4, 2024 1:22 PM

The first batch of court documents naming numerous figures tied to Jeffrey Epstein was released Wednesday, as part of New York Southern District Judge Loretta Preska's December order unsealing filings in a prior defamation case against Epstein's accomplice Ghislaine Maxwell. But word about the banking community's ties with Epstein has been trickling out for more than two years.

Executives at JPMorgan Chase, Deutsche Bank and Barclays have faced considerable blowback from federal regulators after the organizations continued to keep Epstein on as a client for years after he was was convicted in 2008 of procuring a child for prostitution and of soliciting a prostitute.

Read on for a compilation of stories following banks' involvements with Epstein.

Barclays Chief Executive Officer Jes Staley (pictured) stepped down amid a U.K. regulatory probe into how he characterized his past ties to the financier and sex offender Jeffrey Epstein.

Francesca Volpi/Bloomberg

Jes Staley to step down as Barclays CEO amid Epstein probe

Article by Bloomberg News

(Bloomberg) Barclays Chief Executive Officer Jes Staley is stepping down amid a U.K. regulatory probe into how he characterized his past ties to the financier and sex offender Jeffrey Epstein.

Staley, 64, is leaving immediately, according to a statement released back in 2021. C.S. Venkatakrishnan, who was promoted last year to run the Barclays markets division and was previously chief risk officer, will replace him as CEO.

Before the announcement, regulators told Barclays the preliminary findings of a two-year investigation into how Staley explained his long-running relationship with Epstein to the bank. "In view of those conclusions, and Mr. Staley's intention to contest them, the board and Mr. Staley have agreed that he will step down from his role as group chief executive and as a director of Barclays," the lender said in a statement. "The board is disappointed at this outcome." The findings have not yet been made public.

Staley's surprise departure caps a tumultuous six years atop the British lender. He fended off a prior regulatory probe and a campaign by an activist shareholder to unseat him over his strategy to bolster Barclays' investment bank. The Epstein probe has cast a shadow over Staley even as his firm enjoyed record results.

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Andrey Rudakov/Bloomberg

How Deutsche Bank botched AML compliance in the Jeffrey Epstein case

BankThink by Ross Delston and Tim Dunfey

Most of us would like to think that "character is destiny." Maybe, but more often biography is destiny. If you know enough about someone's past behavior, you're in a good position to predict what they'll do next.

Jeffrey Epstein was accused and convicted of sex trafficking over a period of years. After he was convicted, and despite the bank's knowledge of his chronic and criminal behavior, Epstein became a client at Deutsche Bank. And then, after he became a client, Epstein tripped multiple red flags during his five-year relationship with the bank. Were the fees generated worth the $150 million fine, attendant legal costs and impugned reputation?

We know so much about Epstein's financial dealings thanks to the July 2020 New York State Department of Financial Services order, which provides a devastating amount of detail on the bank's long relationship with Epstein. Epstein is referred to in the order as "a wealthy financier with hundreds of millions of dollars in assets and an extensive network of friends and connections that included prominent financial institutions, politicians, royalty, and billionaires."

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A villa on Little St. James Island, owned by fund manager Jeffrey Epstein, in St. Thomas, U.S. Virgin Islands.

Marco Bello/Bloomberg

Virgin Islands sues JPMorgan for facilitating Epstein abuse

Article by Ava Benny-Morrison

(Bloomberg) The U.S. Virgin Islands is suing JPMorgan Chase for "turning a blind eye" to former client Jeffrey Epstein's sex trafficking on his private island there.

U.S. Virgin Islands Attorney General Denise George said her suit filed in late December 2022 in Manhattan federal court was part of an "ongoing effort" to hold accountable those who facilitated Epstein's activities. Epstein brought many of his victims to his villa on Little St. James, the private island he owned.

"Human trafficking was the principal business of the accounts Epstein maintained at JPMorgan," the complaint states.

JPMorgan didn't immediately respond to requests for comment.

According to the suit, JPMorgan concealed "wire and cash transactions that raised suspicion of a criminal enterprise whose currency was the sexual servitude" of women and girls in the Virgin Islands. George also claims JPMorgan's willingness to do business with Epstein unfairly enriched it at the expense of other banks.

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Protesters hold up an image of Jeffrey Epstein at a federal courthouse in New York in July 2019.

Stephanie Keith/Photographer: Stephanie Keith/Ge

Deutsche Bank settlement on Epstein oversight to be approved

Article by Bob Van Voris

(Bloomberg) A judge said he would approve Deutsche Bank's $26.3 million settlement of a lawsuit that accused the bank of misleading investors about how thoroughly it vetted clients, including Jeffrey Epstein and Russian tycoons.

U.S. District Judge Jed Rakoff in February of last year said he would allow the settlement to go forward, finding it "fair, adequate and reasonable." The judge said he would issue an order finalizing his approval in the next day or two as he considers whether to grant a fee request of one-third of the settlement to lawyers for the shareholders.

Rakoff's approval resolves a class action filed in 2020 over the bank's anti-money-laundering and "know your customer" systems. In the suit, the plaintiffs cited Deutsche Bank's business relationship with Epstein, Russians including the billionaire Roman Abramovich and what they called "other unsavory high-net-worth individuals and their affiliated companies." They used Epstein's name more than 100 times and called him "a particularly egregious example."

In the settlement, the bank denied wrongdoing.

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Day Two Of The World Economic Forum (WEF) 2020

Because of his "faithless service," JPMorgan Chase's lawsuit says, the company is entitled to recover all compensation paid to Jes Staley — once its private banking chief — between 2006 and 2013.

Simon Dawson/Bloomberg

JPMorgan sues Jes Staley for any damages tied to Epstein case

Article by Hannah Levitt and Ava Benny-Morrison

(Bloomberg) JPMorgan Chase is suing Jes Staley to hold the former executive responsible for any damages stemming from lawsuits accusing the bank of facilitating Jeffrey Epstein's sex trafficking.

The bank filed a third-party complaint against Staley in Manhattan federal court last year, arguing he should be held liable if allegations about his relationship with Epstein are shown to be true.

JPMorgan also brought separate claims against Staley for breaching his duty to the bank. Because of his "faithless service," the bank said it was entitled to recover all compensation paid to Staley between 2006 and 2013.

Staley's lawyer didn't immediately respond to a request for comment. Staley has previously denied involvement in Epstein's sex trafficking.

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Louis Lanzano/Bloomberg

JPMorgan, Deutsche Bank win several Epstein-claim dismissals

Article by Ava Benny-Morrison

(Bloomberg) JPMorgan Chase and Deutsche Bank AG won the dismissal of several claims filed against them over their ties to Jeffrey Epstein, though the lawsuits were allowed to proceed in narrower form.

U.S. District Judge Jed Rakoff in March tossed the majority of the claims filed against the banks in proposed class actions filed by an Epstein victim identified only as Jane Doe. The Manhattan federal judge also threw out three of the four claims filed against JPMorgan in a separate suit by the U.S. Virgin Islands.

Rakoff allowed Doe to proceed with one of her key claims — that the banks knowingly benefited from Epstein's sex-trafficking scheme by providing him with financial services. But the judge dismissed the top counts in the suits accusing the banks of participating in Epstein's crimes.

Rakoff didn't provide the reasoning behind his four-page ruling, saying a fuller opinion would follow in due course. In the Deutsche Bank case, Rakoff dismissed eight counts but allowed four claims to proceed, including that the bank failed to exercise reasonable care to prevent physical harm. Rakoff threw out six of the 10 claims against JPMorgan.

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Daniel Tepper/Bloomberg

JPMorgan reaches agreement to settle with Epstein victim

Article by Hannah Levitt and Ava Benny-Morrison

(Bloomberg) --JPMorgan Chase has agreed to settle a lawsuit alleging it knowingly benefited from former client Jeffrey Epstein's sex trafficking.

The firm reached an "agreement in principle" to settle the proposed class action filed by an unnamed Epstein victim late last year, JPMorgan said in a statement. The biggest U.S. bank didn't say how much it agreed to pay or any other terms of the agreement.

"We all now understand that Epstein's behavior was monstrous, and we believe this settlement is in the best interest of all parties, especially the survivors, who suffered unimaginable abuse at the hands of this man," the New York-based bank said. "Any association with him was a mistake and we regret it. 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."

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JPMorgan Chase Locations Ahead Of Earnings Figures

JPMorgan Chase has agreed to inform law enforcement when its customers are identified as being involved in human trafficking, according to the Department of Justice in the U.S. Virgin Islands. The commitment is part of the bank's settlement with the U.S. territory, which alleged that JPMorgan facilitated, sustained and hid Jeffrey Epstein's sex crimes.

Michael Nagle/Bloomberg

JPMorgan makes anti-trafficking pledges in latest Epstein settlement

Article by Allissa Kline

JPMorgan Chase's deal to pay $75 million to the U.S. Virgin Islands to settle allegations that it knowingly facilitated, sustained and hid Jeffrey Epstein's sex crimes also includes various commitments to combat human trafficking in the future.

The tentative settlement between the megabank and the U.S. territory's Department of Justice was announced in September, just weeks before the case was scheduled to go to trial in federal court in Manhattan.

The Virgin Islands sued JPMorgan in December, accusing the megabank of turning "a blind eye to evidence of human trafficking over more than a decade" due to Epstein's financial position and certain relationships he pledged to bring to the bank.

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Simon Dawson/Bloomberg

Inside JPMorgan's year of being haunted by Jeffrey Epstein

Article by Hannah Levitt and Ava Benny-Morrison

(Bloomberg) Jamie Dimon wasn't going to be embarrassed into a settlement. As damaging revelations about the extent of JPMorgan Chase's relationship with Jeffrey Epstein trickled out of a lawsuit this year, his bank balked at paying up.

The longtime JPMorgan chief told colleagues he saw the fight as one of "principle." He and others within the bank viewed the plaintiff — the U.S. Virgin Islands, where Epstein had a private island — not as a victim, but instead complicit in the deceased sex offender's crimes.

From the moment a year ago when the firm's top brass was surprised to learn that the territory would be pursuing a claim, through months of U.S. Virgin Islands attorneys taking aim first at Dimon and then one of his top deputies, JPMorgan's leaders were forced to weigh the legal, reputational and emotional concerns of the case. All the while, contents of old emails spilled into public view, chronicling years of close ties to one of this era's most notorious sex offenders.

Ultimately, the $75 million JPMorgan agreed to pay the U.S. Virgin Islands this week is a tiny number for the firm, which generates that much in revenue in about five hours. Even combined with the $290 million settlement it reached with Epstein's victims in June, the total cost barely moves the needle for the biggest and most profitable bank in American history.

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Jeffrey Epstein's Private Island In The Caribbean Has Gone Quiet

Sheet-covered furniture in a gazebo on Little St. James island, on July 10, 2019, a few days after Epstein’s arrest.

Marco Bello/Photographer: Marco Bello/Bloomb

She went after Epstein fortune and JPMorgan. Then she got fired

Article by Ava Benny-Morrison

(Bloomberg) Subject: The Epstein files. Message: Wrap them up — ASAP.

One after another, the texts, calls and emails rolled in.

Denise George knew from the beginning that she was going up against powerful players on Wall Street over their supposed links to Jeffrey Epstein. But she soon sensed that she was also up against forces here at home, in the U.S. Virgin Islands, where the financier seemed to have preyed on women and girls with impunity.

People in St. Thomas wanted the Epstein scandal — and the uncomfortable questions it was raising — to go away, and fast. But George says she needed time. She was fired as attorney general after spending more than three years trying to seek justice.

Correspondence about the case obtained by Bloomberg News underscores the sense of urgency within the local government and the pressure George came under. Hundreds of pages of court documents offer a window into details about Epstein's web of influence in the U.S. territory.

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