The V.I. government’s lawsuit against JPMorgan Chase over its business dealings with convicted sex offender Jeffrey Epstein is a “masterclass in deflection” and should be dismissed, attorneys for the bank said in a court filing Wednesday.
Key to their argument is the fact that the V.I. government, through its Economic Development Commission, granted Epstein lucrative benefits during the same period that it is accusing JPMorgan Chase of helping to further the wealthy financier’s sex trafficking scheme.
The bank contends that, having won a $105 million settlement in its lawsuit against Epstein’s estate in November, the V.I. Attorney General’s Office “now casts afield for deeper pockets,” despite the USVI government itself having afforded Epstein, a notorious sex offender, lucrative financial perquisites as a beneficiary of the territory’s EDC program.
“But this suit involves neither Epstein’s estate, nor his businesses, nor his victims. Rather, USVI’s lawsuit against JPMorgan Chase Bank, N.A., which terminated its banking relationship with Epstein ten years ago, involves none of the right parties, is legally meritless, and should be dismissed,” according to a memorandum of law submitted with the motion to dismiss in federal court in Manhattan.
“USVI’s lawsuit is a masterclass in deflection that seeks to hold JPMC responsible for not sleuthing out Epstein’s crimes over a decade ago. Yet USVI had access at the time to the same information, allegations, and rumors about Epstein on which it alleges JPMC should have acted,” according to the memorandum.
“Indeed, as a law-enforcement agency, USVI had access to much more, along with the investigative advantage of physical proximity to Epstein’s crimes. USVI did nothing to stop Epstein during this period, notwithstanding the fact that he registered with the USVI as a Tier 1 sex offender. To the contrary, during the same period, USVI granted Epstein and his businesses lucrative privileges and massive tax incentives,” it states.
A Web of Shell Companies
The V.I. government’s 34-page first amended complaint, filed in January after the initial suit was filed in December, claims JPMorgan turned a blind eye to evidence of human trafficking over more than a decade of doing business with Epstein because of his wealth and the deals and clients he brought and promised to bring to the bank.
Epstein, 66, was found dead by apparent suicide in August 2019 in his New York jail cell where he was being held on federal human trafficking charges. At the time of his death his U.S. Virgin Islands estate was valued at more than $577 million, according to court records.
His primary residence was Little St. James, his private island off St. Thomas where for years he trafficked in girls and young women and ran a complex web of shell companies registered in the USVI that enabled his crimes, those court documents allege.
The V.I. government’s amended complaint against JPMorgan focuses on one man in particular, former CEO of private banking James “Jes” Staley, who it says exchanged approximately 1,200 emails with Epstein from his JPMorgan email account between 2008 and 2013.
“These communications show a close personal relationship and ‘profound’ friendship between the two men and even suggest that Staley may have been involved in Epstein’s sex-trafficking operation. They also reveal that Staley corresponded with Epstein while Epstein was incarcerated and visited Epstein’s Virgin Islands residence on multiple occasions,” it reads.
None of the emails between Epstein and Staley were flagged in connection with risk reviews of Epstein’s accounts, which numbered at least 50 and involved large cash transactions, the amended complaint alleges.
“Moreover, JP Morgan allowed Staley to remain a decision-maker on Epstein’s accounts. JPMorgan even tasked Staley to discuss the human trafficking allegations with Epstein,” it says.
Staley left JPMorgan in 2013, the same year the bank cut its ties with Epstein. At the time of Epstein’s death, he was the CEO of Barclays; however, he stepped down from that position in November 2021 after British financial regulators concluded an investigation into his characterization of his relationship with Epstein, it says.
The court on Monday granted the V.I. government’s motion to request documents from Barclays concerning Staley’s relationship with Epstein.
The suit against JPMorgan alleges that the bank violated the Trafficking Victims Protection Act, the Virgin Islands Criminally Influenced and Corrupt Organizations Act, and the Virgin Islands Consumer Fraud and Deceptive Business Practices Act. The Attorney General’s Office is seeking penalties and damages to the V.I. government and for the bank to turn over its profits from its business with Epstein and his companies.
Epstein companies and non-profit organizations that had accounts with JPMorgan included the 2013 Butterfly Trust; Coatue Enterprises LLC; the C.O.U.Q. Foundation; Enhanced Education; Financial Trust Company, Inc.; HBRK Associates, Inc.; Hyperion Air, Inc; JEGE, Inc.; JEGE, LLC; NES, LLC; Plan D, LLC; Southern Financial, LLC; and Southern Trust Company, according to the suit.
The Southern Trust Company was central to the V.I. government’s suit against the Epstein estate, which settled the matter while not admitting any wrongdoing.
Under the territory’s EDC program, Southern Trust received a 10-year package of economic incentives starting in 2013 that included a 90 percent exemption from income taxes and 100 percent exemptions from gross receipts, excise, and withholding taxes in the Virgin Islands. However, it was little more than a shell company for Epstein’s sex-trafficking scheme, the government alleged in a second amended complaint filed in the government’s case against the estate just hours before a settlement was announced Nov. 30.
As part of its settlement with the V.I. government, the estate will refund some $80 million it reaped from those tax benefits.
‘All of USVI’s Claims Fail’
In its 26-page response, JPMorgan alleges that the Attorney General’s Office lacks standing in its suit against the bank, lacks injury to any quasi-sovereign interest to support standing, and fails to allege that the bank knowingly benefitted from or participated in a sex-trafficking venture.
“USVI’s territorial law racketeering and unfair competition claims fail because USVI law does not apply to JPMC’s alleged conduct in New York, and both claims are also insufficiently pled and time-barred. USVI’s racketeering claims also fail because USVI lacks standing to bring a claim predicated on a federal banking law violation,” according to the memorandum.
“Indeed, USVI’s allegations that JPMC acted with the requisite willfulness to criminally violate federal banking law strain credulity — and are undermined by the USVI’s own allegations,” it states, with the remainder of the sentence redacted.
“Despite the fact that Epstein was a registered Tier 1 sex offender in the Virgin Islands, it is not clear what, if any, diligence the EDC conducted into [Southern Trust Company] or Epstein before granting these privileges,” the memorandum states.
“USVI now alleges that JPMC failed to fulfill an unspecified duty to detect and report Epstein’s sex trafficking,” and that he used his accounts with the bank to further his scheme, yet its complaint merely points to public records and reports about Epstein — “information to which USVI also had access when it granted Epstein-related entities economic benefits,” it says.
“Moreover, while the Complaint asserts that ‘damages [were] incurred’ until August 2019, it never explains how or why this was possible six years after JPMC decided to terminate its relationship with Epstein,” the memorandum states.
Additionally, the Trafficking Victims Protection Act, which criminalizes sex trafficking and authorizes a state attorney general to bring a civil case as a third party if they believe that an interest of the residents of that state has been threatened or adversely affected, “does not apply retroactively to conduct preceding its 2018 enactment,” it says.
The complaint also “does not allege that Epstein’s victims included any USVI residents, but even if it did, USVI would still need to articulate how JPMC’s conduct directly or indirectly injured a ‘substantial’ portion of its population,” according to the memorandum. Rather, the government’s suit makes only “vague and conclusory references to serious harm to the Virgin Islands and its residents.”
Governor Blindsided
The V.I. government’s suit has been consolidated for pretrial purposes with two others brought as class actions in November in federal court in Manhattan by an alleged victim of Epstein: Jane Doe 1 v. Deutsche Bank, and Doe 1 v. JPMorgan Chase & Co.
It was first brought by then V.I. Attorney General Denise George, who was subsequently fired Dec. 30 — just days after filing the JPMorgan suit — by Gov. Albert Bryan Jr., who was chair of the EDC at the time Epstein’s Southern Trust Company was granted benefits. The AG’s Office is currently represented by George’s former deputy, Carol Thomas-Jacobs, who filed the first amended complaint on Jan. 10.
Among the reasons for George’s dismissal was that he was blindsided by her filing suit against JPMorgan Chase, Bryan told the Source in an interview following his State of the Territory Address in January.
“First and foremost, you know, I can’t have an attorney general that’s launching civil suits that I don’t know about,” he said. “I have to put on the record, no one in the Virgin Islands is really overly occupied with Epstein, his estate or his bad doings,” he added.
“I personally, and I’m sure many other Virgin Islanders alike, don’t like our name being associated with Jeffrey Epstein and child pornography. You know, why are we going down that rabbit hole? And the irony to me was, you know, four years ago everybody was scrambling not to have been on Jeffrey Epstein’s receiving end of donations,” Bryan said.
“Now we’re suing him for the same dirty money. That seems a little awkward, right? I mean, that’s inconsistent. And I just want to get us away from that. That’s not the light we want to be seen. If we never mention Jeffrey Epstein again, it would be good for me,” he said.
JPMorgan is represented by the law firm of Wilmer Cutler Pickering Hale and Dorr LLP.
