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Thursday, July 25, 2024
HomeNewsLocal newsV.I.'s $75M Settlement Against JPMorgan Chase Hailed as 'Groundbreaking'

V.I.’s $75M Settlement Against JPMorgan Chase Hailed as ‘Groundbreaking’

The JPMorgan Chase headquarters in Manhattan, New York. (Source photo)
The JPMorgan Chase headquarters in Manhattan, New York. On Tuesday, the USVI announced it has settled its lawsuit against the bank for $75 million. (Source file photo)

The U.S. Virgin Islands on Tuesday reached a $75 million settlement with JPMorgan Chase over the bank’s ties to Jeffrey Epstein in a deal that has been hailed as groundbreaking for its use of the federal Victims Protection Act by a state attorney general.

The agreement comes less than a month before they were to go to trial on Oct. 23 in a lawsuit that exposed embarrassing and lurid details on both sides.

The settlement is far short of the $190 million the V.I. Justice Department had sought, and includes $20 million in legal fees for Motley Rice, the legal firm that represented the USVI in the JPMorgan action and in its suit against Epstein’s estate that saw a $105 million award last November, plus half the proceeds of the sale of his Virgin Islands properties, Little St. James and Great St. James. The islands sold for a combined $60 million in May.

JPMorgan has also settled its third-party lawsuit against its former executive Jes Staley, whom it sought to hold liable for the bank’s long relationship with Epstein but said in a statement that the details of that agreement will remain confidential. Information revealed during the discovery process showed that the two men enjoyed a relationship that strayed far beyond the professional, with Staley accused of active participation in Epstein’s sex-trafficking scheme. The married father of two daughters has denied any wrongdoing.

“JPMorgan Chase believes this settlement is in the best interest of all parties, particularly for those who can benefit from efforts to combat human trafficking, and for survivors who suffer unimaginable abuse at the hands of these criminals,” the bank said.

“While the settlement does not involve admissions of liability, the firm deeply regrets any association with this man, and would never have continued doing business with him if it believed he was using the bank in any way to commit his heinous crimes. The firm will continue to work with law enforcement to combat human trafficking and help to identify improper money movement into the global payments systems,” JPMorgan said.

According to JPMorgan, $30 million of the settlement will support USVI charitable organizations whose work is aimed at addressing social ills, including fighting human trafficking and other sex crimes, and to support survivors on their paths to healing. Another $25 million will go to enhancing the infrastructure and capabilities of law enforcement to prevent and combat human trafficking and other crimes in the territory, it said.

V.I. Attorney General Ariel Smith called Tuesday’s settlement “an historic victory for survivors and for state enforcement, and it should sound the alarm on Wall Street about banks’ responsibilities under the law to detect and prevent human trafficking.”

The suit was groundbreaking for its use of the federal Trafficking Victims Protection Act by a state attorney general, and Smith lauded her colleagues for “tirelessly pursued this enforcement action to make it substantially harder for traffickers to finance their crimes in the future, and we are confident this settlement will help achieve that goal,” she said.

“We are proud to have stood alongside the survivors throughout this litigation, and this settlement reflects our continued commitment to them. With this constructive resolution of this groundbreaking litigation, we look forward to helping our community move forward and to building a new relationship with JPMorgan,” Smith said.

Bridgette Carr, founding director of the Human Trafficking Clinic at the University of Michigan Law School who was among the USVI’s expert witnesses, on Tuesday hailed the settlement.

“Having dedicated my entire career to helping survivors of human trafficking, today’s commitments from JPMorgan Chase — which resulted from the U.S. Virgin Island’s enforcement action — are truly trailblazing. Had the bank implemented these stringent monitoring and reporting requirements sooner, so many young women and girls could have been spared from Jeffery Epstein’s abuse,” Carr said in a statement.

Likewise, Marci Hamilton, founder, CEO, and academic director at CHILD USA, a nonprofit think tank committed to fighting for the civil rights of children, called the settlement a landmark moment.

“The USVI’s first-of-its-kind settlement with JPMorgan Chase serves as a profound, landmark moment for women and girls that have fallen prey to human trafficking across the country and beyond,” Hamilton said in a statement.

“Our nation’s biggest banks have been put on notice. With significant new funding allocated to dramatically increase anti-sex trafficking programming in the USVI — raising the bar in the Caribbean generally — and new commitments from JPMorgan Chase to ensure executives are not laundering money for egregious human trafficking schemes, the USVI ushered in a new era of leadership dedicated to rooting out sexual violence enabled by banks,” said Hamilton.

Jeffrey Epstein's primary residence, his private estate on Little St. James in the U.S. Virgin Islands. (Shutterstock photo)
Little St. James was formerly Jeffrey Epstein’s private island estate in the U.S. Virgin Islands. (Shutterstock photo)

A Tangled Web

Epstein, 66, was found dead by apparent suicide in August 2019 in his New York City jail cell where he was being held on federal sex-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 that allowed him to spend most of his days at his Palm Beach office, made payments to victims, and became a registered sex offender.

His primary residence was Little St. James, 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, court documents have alleged.

The wealthy financier, who held some 50 JPMorgan accounts, was valued at more than $577 million at the time of his death.

The government alleged in its suit that JPMorgan kept the ultra-wealthy and ultra-connected Epstein as a client from about 1998 to 2013 — despite copious financial evidence of questionable payments to young Eastern European women that it was legally bound to report — because by 2006, when he was under investigation for sex crimes in Florida, Epstein “was too big to fail.”

JPMorgan claimed the U.S. Virgin Islands created a haven for Epstein’s crimes by granting his shell companies lucrative tax breaks totaling some $300 million through its Economic Development Authority and then looking the other way when he traveled to his private island with young women and girls, despite his sex offender status.

Both submitted hundreds upon hundreds of pages of exhibits in support of their arguments before Judge Jed Rakoff, who presided over the case in Manhattan federal court.

The V.I. government has been accused of benefiting from Epstein’s scheme with its lawsuits after itself turning a blind eye to his crimes for years, including in a recent story by Miami Herald reporter Julie K. Brown that detailed his connections to local officials. They included former First Lady Cecile de Jongh, who was his office manager when her husband was governor, and current Gov. Albert Bryan Jr., who was head of the EDA when Epstein was awarded tax benefits and in depositions of V.I. officials in August was said to have tried to ease the travel restrictions for the sex offender.

Bryan’s initial reaction to the suit against JPMorgan Chase was to fire former V.I. Attorney General Denise George when she brought the action last December, but on Tuesday he issued a statement praising the Justice Department.

“This settlement marks a significant step in achieving justice and bringing closure to this matter. Most importantly it guarantees JPMorgan will implement and establish anti-trafficking measures to meet their obligation to detect and report financial patterns associated with human trafficking,” Bryan said.

“I want to express my gratitude to our legal team at the Virgin Islands Department of Justice and all those who have worked tirelessly to bring this lawsuit to a close. Their dedication to pursuing justice has been unwavering, and their efforts have resulted in this historic milestone,” the governor said.

The territory has now secured close to $250 million in settlements, including $62.5 million from Leon Black, 72, a billionaire private equity investor who in January paid the V.I. government to be released from any claims related to the territory’s investigation of Epstein.

Black, who has been accused of a violent rape by one Epstein victim, has denied any wrongdoing, and a spokesperson has said he paid Epstein for legitimate investment services.

“Consistent with settlements reached by major financial institutions, Mr. Black resolved the USVI’s potential claims arising out of the unintended consequences of those payments. There is no suggestion that Mr. Black was aware of any misconduct engaged in by Epstein,” his representative said.

St. Croix attorney Russell Pate, whose practice involves personal injury and consumer protection, on Tuesday offered a different perspective on the USVI’s legal actions amid criticism that the territory has sought to benefit from Epstein’s crimes.

National and international news stories on how the Virgin Islands cozied up to and then profited from Epstein “proves the old truism you can never satisfy the critics. The Miami Herald heavily criticized Florida for doing nothing. And rightly so. The vast majority of Epstein’s abuse was in Florida, with likely over 200 victims — with over 100 identified. Florida then totally botched Epstein’s prosecution. Then Florida did nothing. Florida civil lawyers fought like heck against Epstein for 10 years and caught him in lies and perjury — which they referred to Florida to prosecute. Yet Florida still did nothing. And to date, Florida still has done nothing for the victims,” Pate told the Source.

“New York has the second highest victim count. New York also has done nothing for the victims. However, New York did secure a $150 million fine against Deutsche Bank for its Epstein connections, yet none of that money went to the victims. Where is the article about New York ‘profiting’ from its $150 million fine? Last, Epstein bought the former governor’s ranch in New Mexico — and then bulldozed in a private jet runway. Victims made police complaints there, yet New Mexico has done nothing for the victims,” Pate said.

Meanwhile, the USVI took action, winning the suit against Epstein’s estate and paying more than $120 million to his victims — the vast majority that were never trafficked to the Virgin Islands, Pate noted. Further, JPMorgan Chase settled a class action brought by victims for $290 million that the V.I.’s sister lawsuit against the bank helped make possible, he said.

“The U.S. Virgin Islands is the only state-like jurisdiction to actually go after Epstein’s businesses, colleagues and banks that enabled his predation. Yet, it is criticized too for doing too much? Do we really want our governments to stop protecting people when it’s inconvenient or embarrassing?” asked Pate.

“The embarrassing information for the USVI is now in depositions and papered-up in documents. The USVI sucked it up and did its job to prosecute civilly where it could after Epstein’s death,” said Pate.

Maybe the bigger question that should be asked right now, he said, is why Florida, New York and New Mexico are still doing nothing.

“Are they too embarrassed who may come to light if they finally took action for the victims? Is that why Florida, New York and New Mexico have still turned a blind eye and done nothing for the victims?” said Pate.

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