The V.I. Attorney General’s Office is seeking to amend its complaint against JPMorgan Chase to add a charge that the bank obstructed enforcement of the federal Trafficking Victims Protection Act in its business dealings with the late disgraced financier Jeffrey Epstein.
JPMorgan opposed the motion in a response Tuesday, saying the government missed the court’s Jan. 11 deadline to further amend its complaint and lacks standing to do so in its “parens patriae” capacity, under which a state has third-party standing to bring a lawsuit when it implicates its interests for the well-being of its citizens.
The V.I. government alleges that “JP Morgan’s obstruction … directly, proximately, and foreseeably harmed women and girls in the Virgin Islands by directly resulting in them being caused to engage in commercial sex acts and in other ways.”
The filings are the latest in a flurry of activity in the case, including a third-party suit by JPMorgan against its former executive, James “Jes” Staley, asking the New York court to make him pay if the plaintiffs prevail in their suits against the bank.
Staley handled Epstein’s 50-plus accounts and is at the center of the government’s complaint and another brought by anonymous Epstein victim Jane Doe 1, who also has filed suit against Deutsche Bank, where Epstein took his business after Staley moved to BlueMountain Capital in 2013 and then to Barclays Bank in 2015. The cases have been consolidated by U.S. District Judge Jed S. Rakoff.
The suits allege that JPMorgan ignored red flags concerning Epstein, his accounts, and Staley’s close relationship with the wealthy financier, a convicted sex offender whose primary residence was Little St. James, his private island estate located off St. Thomas.
Epstein was found dead by apparent suicide in August 2019 in his New York City jail cell where he was being held on federal human trafficking charges. Those charges stemmed from investigations into his controversial 2008 non-prosecution agreement with federal prosecutors in Florida, under which he pled guilty to state charges of soliciting and procuring a minor for prostitution, despite evidence that dozens more girls were involved. He served 13 months in a work-release program at the offices of a foundation he started, made payments to victims, and became a registered sex offender.
Staley exchanged approximately 1,200 emails with Epstein from his JPMorgan email account between 2008 and 2013, none of which was flagged in connection with risk reviews of the financier’s accounts, according to the USVI’s complaint.
The V.I. government has alleged that those emails included photos of young women in provocative poses, discussed Epstein’s provision of services to Staley during his travel to Little St. James and elsewhere — on dates that closely corresponded with Epstein’s payments to the same young woman from his JPMorgan accounts — and discussed young women or girls procured by Epstein using the names of Disney princesses.
For his part, Staley on Thursday filed a motion to have his case heard separately, citing an inability to comply with the court’s deadlines for discovery and the trial date of Oct. 23. JPMorgan opposed that request in a reply on Friday.
A Case for Second Count
In an order March 20, Judge Rakoff said Count 1 of the V.I. government’s first amended complaint — that JPMorgan Chase knowingly benefitted from participating in a sex-trafficking venture in violation of the federal Trafficking Victims Protection Act, or TVPA — would remain but dismissed two counts under the Virgin Islands’ Criminally Influenced and Corrupt Organizations Act, and another under the territory’s Consumer Fraud and Deceptive Business Practices Act.
In its motion to file a second amended complaint on Monday, the V.I. government now seeks to add a count that the bank obstructed enforcement of the TVPA, noting that the judge in his March order allowed that charge to stand in Doe’s suit against JPMorgan.
The bank argues that the government is belatedly piggybacking on Doe’s complaint.
The “USVI’s motion for leave to amend comes far too late,” according to JPMorgan’s reply. It provided 100,000 pages of documents in 2021 when subpoenaed in the USVI’s lawsuit against Epstein’s estate, which was settled in December for $105 million, then was contacted by the government with “suggestions” the bank may have violated the territory’s CICO act, it said.
“JPMC was in the process of explaining to USVI why those since-dismissed allegations lacked merit, when it was sued by Jane Doe 1 for alleged violations of the TVPA in the now-consolidated case. USVI then followed Doe’s lead, filing suit in this Court, alleging (for the first time) a TVPA violation,” the reply stated.
“Now, months after this Court’s January 11, 2023 deadline to file an Amended Complaint, USVI once again tries to jump on the bandwagon. This is an inordinate delay for which USVI has not met its burden to satisfactorily explain,” the bank stated, saying the government had the same facts for its proposed new claim when it filed its initial complaint on Dec. 27, and its first amended complaint on Jan. 10.
“At the very latest, USVI should have sought leave to amend immediately after January 13, 2023, when Doe asserted her claim alleging obstruction of the TVPA. Yet USVI inexplicably waited months — while JPMC’s motion to dismiss was briefed and argued — before it sought to assert its copycat claim. Indeed, USVI waited to piggyback on Doe’s obstruction claim until after the Court’s denial of JPMC’s motion to dismiss that count in Doe. USVI has offered no satisfactory explanation for its monthslong delay,” according to the reply.
The V.I. government asserts in its 43-page motion that because the additional claim is based on the same alleged facts in its first amended complaint, it “does not either require JPMorgan to expend additional resources on discovery or trial preparation or delay the resolution of this action.” It also notes that Doe already is litigating the obstruction claim “based on the same alleged facts in her case that is scheduled for a consolidated trial with this case.”
Moreover, the government alleges that within three days of the judge’s March 20 order dismissing its CICO claim but upholding Doe’s TVPA obstruction claim, it asked JPMorgan’s consent “to amend to conform its remaining TVPA claim with Doe’s remaining TVPA claims based on the same fact allegations.” The bank refused, it said, so the USVI has sought leave of the court.
“The Government thus acted with diligence. Moreover, even if it had not, it still should be granted leave to amend because JPMorgan cannot show prejudice,” according to the government’s memorandum of law in support of the second amended complaint.
Some New Details
The government’s latest motion, while still heavily redacted, contains some new information, including JPMorgan’s 2011 review of Epstein’s accounts that noted, “A few news stories during 2010 connects Jeffrey Epstein to human trafficking. The coverage team . . . all met to discuss the situation and agreed to enhance monitoring and document a discussion with the client.”
They called on non other than Staley to do so, according to the motion, who “discussed the topic with Jeffrey Epstein who replied there was no truth to the allegations, no evidence and was not expecting any problems. We will continue to monitor the accounts and cash usage closely going forward.”
In March 2011, JP Morgan’s Global Corporate Security Division reported that “Numerous articles detail various law enforcement agencies investigating Jeffrey Epstein for allegedly participating, directly or indirectly, in child trafficking and molesting underage girls. Jeffrey Epstein has settled a dozen civil lawsuits out of court from his victims regarding solicitation for an undisclosed amount,” according to the government’s motion.
Additionally, it claims the bank’s anti-money laundering director in August 2011 flagged an account relating to Ghislaine Maxwell — Epstein’s former companion who in 2021 was sentenced to 20 years in prison for conspiring with him to sexually abuse minors.
Maxwell wanted to set up an account for her “personal recruitment consulting business,” it says. “In an internal email, JPMorgan’s AML Director asked: ‘What does she mean by personal recruitment?? Are you sure this will have nothing to do with Jeffrey? If you want to proceed, I suggest that we flag this as a High Risk Client.'”
Despite these communications, the bank did not terminate its relationship with Epstein until 2013, the government asserts. “[T]he frequency of Epstein’s payments and the fact that the vast majority of account activity was payments to women and cash withdrawals rather than business activity should have been enough to trigger action,” the motion states.
Yet, “even as late as May 2013 — mere months before JP Morgan terminated Epstein’s account — JP Morgan provided lines of credit to Epstein of up to $50 million,” it says.
The motion also offers additional details regarding Staley’s communications with Epstein.
In an email it says the married father of two daughters sent to Epstein on Nov. 1, 2009, when Epstein was incarcerated and Staley was presumably visiting Little St. James, he wrote, “So when all hell breaks lo[o]se, and the world is crumbling, I will come here, and be at peace. Presently, I’m in the hot tub with a glass of white wine. This is an amazing place. Truly amazing. Next time, we’re here together. I owe you much. And I deeply appreciate our friendship. I have few so profound.”
On Dec. 4, 2009, Staley told Epstein via email, “I realize the danger in sending this email. But it was great to be able, today, to give you, in New York City, a long heartfelt, hug,” according to the motion.
The next day, “Epstein wrote to Staley, ‘you were with Larry, and I had to put up with . . .’ and attached a picture of a young woman. Staley quipped, ‘don’t tell me a French wine.’ Epstein replied, ‘always thoughts of alcohol,'” the motion states.
On Dec. 20, 2009, the government says Epstein sent an email to Staley that was blank except for a picture of a young woman.
On Jan. 15, 2010, Staley emailed Epstein, referring to Little St. James, “Arrived at your harbor. Someday, we have to do this together,” according to the motion.
In July 2010, “Staley sent an email to Epstein, saying: ‘Maybe they’re tracking u? That was fun. Say hi to Snow White,'” the motion states. “Epstein responded: ‘[W]hat character would you like next?’ When Staley said ‘Beauty and the Beast’, Epstein replied: ‘well one side is available.'”
Both JPMorgan and Deutsche Bank have denied wrongdoing, with JPMorgan stating that the V.I. government’s claims against it “strain credulity.”
