The proposed deal settles a suit brought by Epstein’s victims who were sexually abused by him over claims the bank ignored warnings about him
JPMorgan Chase has agreed to settle a lawsuit which accused the Wall Street giant of having facilitated financier Jeffrey Epstein’s sex trafficking enterprise.
It’s a deal that demonstrates the significance of compliance failures in the financial world.
The suit was filed last November by an unidentified woman on behalf of victims who were sexually abused by Epstein over a 15-year period when they were teenage girls and young women. The suit claimed the bank turned a blind eye toward Epstein’s conduct. It also alleged that the bank didn’t comply with federal laws for years while it provided services to him and benefited from his business.
One of the lead attorneys for the victims, David Boies, the chairman of Boies Schiller Flexner, said the bank agreed to pay $290 million to settle the lawsuit.
Epstein killed himself in August 2019 in a Manhattan jail cell.
The complaint by the victims said the bank had overlooked red flags in Epstein’s activity because it wanted to keep him on as a wealthy client and maintain access to the even wealthier people Epstein was connected to.
They state that JPMorgan ignored repeated warnings that Epstein had been trafficking teenage girls and young women for sex – even after he registered as a sex offender and pleaded guilty in a 2008 Florida case to soliciting prostitution from a teenage girl.
JPMorgan provided banking services for Mr. Epstein from roughly 1998 to 2013. Court documents reveal that bank employees had filed numerous suspicious-activity reports (SARs) about Epstein’s repeated large cash withdrawals and that Epstein was designated a “high risk client” in 2006. But the bank kept him on as a customer despite media reports detailing allegations of his sexual abuse of teenage girls and evidence that some of the cash withdrawals were for payments to dozens of young women.
Epstein’s bankers are paying for their lack of compliance. Epstein’s victims just negotiated a $75m settlement with Deutsche Bank, which succeeded JPMorgan as Epstein’s banker. Deutsche also paid a $150 million fine to New York regulators in 2020 over allegations that it failed to sufficiently oversee its financial dealings with the disgraced financier among other compliance failures.
JP Morgan stated that Epstein committed “heinous crimes” and “any association with him was a mistake and we regret it.”
The bank still faces a related lawsuit by the government of the US Virgin Islands, which contends that JPMorgan should pay it damages for enabling Epstein to set up a sex-trafficking operation on his private island residence off St. Thomas. But JPMorgan is arguing that government officials there worked with Epstein for nearly 20 years, providing him with tax breaks and a boutique banking licence.
Either way, as Sigrid McCawley, one of the lawyers for the victims is quoted as saying, “The settlements signal that financial institutions have an important role to play in spotting and shutting down sex trafficking.”
Read about the Deutsche Bank case here.
