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Charlotte Amalie
Wednesday, June 19, 2024
HomeNewsLocal newsJPMorgan Defense Just 'Hyperbolic Conspiracy Theories,' AG Alleges

JPMorgan Defense Just ‘Hyperbolic Conspiracy Theories,’ AG Alleges

A judge has ruled that the V.I. government's lawsuit against JPMorgan Chase Bank over its dealings with Jeffrey Epstein may proceed on one count. (Shutterstock image)
(Shutterstock image)

JPMorgan Chase is trying to deflect blame — and smear the V.I. government and its current and former employees in the process — in its defense against the USVI’s lawsuit alleging the bank aided Jeffrey Epstein’s sex-trafficking scheme, the V.I. Attorney General’s Office said in a court filing Tuesday.

The filing comes in response to JPMorgan’s opposition to the government’s motion to strike the bank’s affirmative defenses, which allege that the USVI is equally culpable because it gave Epstein’s companies lucrative tax breaks and actively facilitated and benefitted from his activities.

“For two decades, and for long after JPMC exited Epstein as a client [in 2013], the entity that most directly failed to protect public safety and most actively facilitated and benefited from Epstein’s continued criminal activity was the plaintiff in this case — the USVI government itself,” JPMorgan alleged in its opposition to the government’s motion, filed May 23 in Manhattan federal court and updated on May 25.

Epstein, who died by apparent suicide in August 2019 while in custody in New York on federal sex trafficking charges, declared his private island estate off St. Thomas as his primary residence and moved his sex offender registration from Florida to the USVI following his release from a Florida prison in 2009 after serving 13 months for procuring a minor for prostitution.

The government alleges in its motion that it is acting in a public enforcement capacity and seeking relief to the territory’s injury that would be unavailable to individual plaintiffs, and that affirmative defenses are not permitted in such cases.

U.S. District Court Judge Jed S. Rakoff had not ruled on the government’s motion as of Wednesday.

JPMorgan ‘Doubles Down’

Rakoff denied, in part, JPMorgan’s motion to dismiss the case on May 8, allowing the government’s suit to proceed on a claim that the bank violated the Trafficking Victims Protection Act.

“After the Court denied its motions to dismiss, JPMorgan answered the Government’s Complaint in part by trying to deflect blame and distract attention from its own conduct through affirmative defenses based on equitable and fault-shifting doctrines,” according to Tuesday’s motion. “In its Opposition, JPMorgan doubles down on its efforts to distract and deflect.”

The bank alleges that the V.I. government had a quid pro quo with Epstein after he moved to the territory in 2009, after doing business in the USVI since 1999.

Despite his sex offender status, the V.I. government awarded his companies lucrative tax benefits through the Economic Development Authority and turned a blind eye to — or even aided — his misdeeds as he gave to charitable causes as well as local Democratic political campaigns, JPMorgan alleges in its heavily redacted opposition filing.

“USVI protected Epstein, fostering the perfect conditions for Epstein’s criminal conduct to continue undetected. Rather than stop him, they helped him,” according to the bank’s opposition.

A First Lady’s Connections   

The primary conduit for spreading Epstein’s money and influence throughout the USVI government was then First Lady Cecile de Jongh, wife of then Gov. John de Jongh Jr, the bank alleges. As office manager for Epstein’s Southern Trust Company from 2007 to 2015 — the same company at the center of the government’s suit against Epstein’s estate that was settled in November for $105 million plus half the proceeds of the sale of his islands — she connected him to power and influence in the Virgin Islands, according to the opposition filing.

On May 23, Rakoff granted JPMorgan’s motion that the Epstein estate produce all email correspondence in its possession containing Cecile de Jongh in the to/from/cc line, and all documents that hit on the search terms “Cecile,” “CDJ” or “De Jongh” not already captured in prior productions by the estate.

“Lest there be doubt that Epstein’s goal was to gain influence, First Lady de Jongh explicitly advised Epstein on how to buy control of the USVI political class,” the bank alleges, citing an email where she outlined the “VI Political Landscape,” and another telling him how to vote and whom to support. At her suggestion, he explored paying monthly retainers to local politicians to ensure their “loyalty and access” and that he “consider putting Celestino [White] on some sort of monthly retainer. That is what will get you his loyalty and access,” according to the opposition filing.

When the V.I. Legislature took up a bill to update its sex offender monitoring laws in 2011, de Jongh emailed Epstein the draft language of the proposed legislation, writing, “This is the suggested language; will it work for you?” according to the bank’s filing. “Epstein responded: ‘We should add out of country for more than 7 days, otherwise I could not go for a day trip to Tortola at the last minute.’ And ‘These files could be also accessible by the press. If we are not careful. A list of who I stay with should violate my privacy. Restrict my business and livelihood.’”

Ultimately, the law passed on June 28, 2012, and while Epstein was disappointed, de Jongh “offered comfort: ‘I know this was a horrible week and I am really sorry about how things panned out. Not being able to take someone at their word is incredibly frustrating. However, all is not lost and we will figure something out by coming up with a game plan to get around these obstacles,’” according to the opposition filing.

The bank alleges the first lady then crafted a plan to facilitate Epstein’s easy travel to and from the USVI by working through then Senators Carlton Dowe and Celestino White, writing, “In the meantime, we will work with [then USVI-Attorney General] Vincent [Frazer] to give the discretion for status quo for you — that’s the least he can do.”

JPMorgan is seeking to subpoena White, though it is unclear from the court docket whether it has been successful in serving him.

When Epstein needed visas for three young women he wanted to bring to the territory, de Jongh arranged for him to meet with a local immigration lawyer to assist at least one woman, and contacted the University of the Virgin Islands to see if they could enroll in English as a Second Language classes to obtain student visas, according to the bank’s filing.

“Ultimately UVI structured a bespoke class to enroll victims and provide cover for their presence in the territory — the same year Epstein donated $20,000 to the university through one of his companies,” the filing alleges. When another young woman needed a dental license, “First Lady de Jongh reached out to the Director for the Office of Professional Licensure and Health Planning at the USVI Department of Health regarding a ‘new practice act’ that would have ‘significant changes and allowances for reciprocity,’” the bank alleges. Eventually, the young woman set up a dental practice in the USVI, sharing an office with Epstein’s companies.

De Jongh also eased Epstein’s travel through the St. Thomas airport, where he leased hangar space, the bank alleges, helping foster a relationship with the executive director of the V.I. Port Authority. “Based on his government connections, when traveling through the USVI’s airport accompanied by young women as a registered sex offender, Epstein could count on his ‘great relationship’ with the officials there to avoid scrutiny or detection,” the opposition filing states.

When contacted by the Source last week, Port Authority Executive Carlton Dowe said he would not comment on any private conversations he may have had with Epstein but if compelled, would speak on behalf of the agency’s policies and practices. Efforts to reach de Jongh and others regarding JPMorgan’s allegations were not successful.

‘Hyperbolic Conspiracy Theories’

In its filing Tuesday, the V.I. government called JPMorgan’s opposition to its motion “factually baseless” and an attempt to “publicly and misleadingly set up a strawman that the Government’s conduct and knowledge mirrors JPMorgan’s.”

The bank’s opposition “— including the 114 exhibits attached largely for purposes of attracting media attention — underscores the weaknesses of its legal arguments. A sophisticated, multinational financial organization like JPMorgan may not avoid the consequences of its actions by piecing emails together to concoct hyperbolic conspiracy theories regarding the Government’s conduct,” according to the filing.

The majority of the 114 exhibits attached to JPMorgan’s opposition have been filed under seal, save for a few that are newspaper articles, including one by the Miami Herald in February 2020, shortly after the V.I. government had filed its suit against Epstein’s estate. It raised the question of the territory’s culpability in an interview with then Attorney General Denise George, given the USVI’s ties to Epstein.

“Asked if Southern Trust employees might come under investigation, George said it was too soon to tell,” the article stated. “‘People can only be liable for evidence that leads to them,’ she said. ‘Just because a person may be there and working, it does not mean that they committed a crime.’”

Asked if Gov. Albert Bryan Jr., who was chair of the EDA when Epstein was granted benefits in 2012, and other board members should have been aware that Southern Trust Company was not what it purported to be, “George said it appeared the agency had been duped.”

Bryan is scheduled to be deposed by JPMorgan on Tuesday, according to the court docket. He fired George at the end of December, shortly after she filed suit against JPMorgan, and issued a statement a few days later saying she had not consulted with him before suing the bank.

George told the Herald in the 2020 interview that Epstein “made those representations to the EDA, an independent government agency. The EDA relied on those misrepresentations in order to issue the benefits. So there’s not anything on the EDA, it was Southern Trust that made the representations, and that’s what the complaint is saying.”

“George said there was no overt indication that Epstein was doing anything illegal, despite Epstein’s well-publicized legal problems in Palm Beach County, where he initially had been accused by dozens of underage girls of sexual abuse,” the article reads. “Nonetheless, when George became attorney general in April, she says she scoured police and legal records, and there were no complaints filed against him. To now say that the U.S. Virgin Islands didn’t do enough to stop him is unfair, she said.

“How can you blame the Virgin Islands? It’s almost like blaming a victim for something that happened to them. It’s like blaming a homeowner for a burglary because they might have left the window unlocked,” the article quotes George. “Epstein and his enterprise were very, very good at concealing their actions.

“Not only did they elude local authorities, they eluded federal authorities, too,” she told the paper. “Federal authorities are here and human trafficking is a federal offense. That shows you how good they were.”

The Attorney General’s Office has declined to answer questions from the Source about the latest filings, including whether it plans to investigate any of JPMorgan’s allegations against USVI officials, and the impetus for pursuing the case in the first place, but did issue a statement.

“The Virgin Islands Department of Justice is constrained by ethical rules in commenting on pending litigation. However, allegations made in the public forum are merely an obvious attempt to shift blame away from JPMorgan Chase’s conduct in assisting and facilitating Epstein’s human trafficking. Additionally, JPMorgan Chase had a statutory responsibility under federal law to report information in its possession indicative of Epstein’s trafficking, and failed to do so,” the statement said.

The government activity JPMorgan focuses on — provision of airport security; administering notice requirements for sex-offender travel; scheduling university courses — “are precisely the types of discretionary public functions to which the prohibition against equitable and fault-shifting defenses to public enforcement claims applies,” the government said in its filing.

Although JPMorgan seeks to predicate its defense on the fact that prior attorneys general modified Epstein’s notification requirements as a registered sex offender, it fails to advise the court that Virgin Islands law authorizes the attorney general to modify those requirements “at his discretion,” the filing states.

“Activities such as awarding economic development benefits, airport security and provision of classes at universities are also expressly permitted under Virgin Islands law. See, e.g., 29 V.I.C. § 705 (enumerating ‘powers and duties’ of the Economic Development Commission); 29 V.I.C. § 543 (enumerating the ‘powers’ and ‘purposes’ of the Virgin Islands Port Authority); 17 V.I.C. § 454 (enumerating the ‘powers and duties’ of the University). JPMorgan’s argument amounts to little more than an attempt to second-guess the Government’s administration of its laws, which is precisely what is barred in a parens patriae action like this one,” according to the filing.

In short, JPMorgan’s opposition is nothing more than an attempt to shift blame and “to smear the Government and its current and former employees,” the government alleges.

“In light of the substantial evidence of JPMorgan’s knowledge of and participation in Epstein’s trafficking activity, JPMorgan’s attempt to drag the Government into the swamp with it fails miserably. It also provides no justification whatsoever for the equitable and fault-shifting defenses at issue, which should be struck,” the government states.

Related Links:

JPMorgan: Former Executive Should Pay if Epstein Suits Succeed

V.I. May Add Charge in JPMorgan Suit Over Epstein Dealings, Judge Rules

V.I. Seeks New Charge Against JPMorgan Over Epstein Dealings

Judge Denies — In Part — JPMorgan’s Bid to Dismiss Epstein Suit

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