For nearly a decade, executives at JPMorgan Chase had been capable of keep away from questions on their determination to maintain Jeffrey Epstein on as a shopper whereas the convicted intercourse offender allegedly trafficked and abused dozens of teenage women.

Now, greater than 20 workers on the US financial institution, together with star managers, are having their communications scrutinised in two lawsuits, and a few are set to testify underneath oath about their alleged involvement.

As extra senior employees get dragged in, legal professionals for JPMorgan are attempting to stop chief government Jamie Dimon from being deposed within the fits introduced by an alleged Epstein sufferer and the US Virgin Islands, the place the disgraced financier had a house.

On the coronary heart of the circumstances are a trove of emails between JPMorgan workers that present the fullest image up to now of the financial institution’s inner deliberations over its relationship with Epstein, who died by suicide in 2019 whereas awaiting trial.

And newly redacted excerpts of 1,200 emails between Epstein and Jes Staley, then a senior personal banker at JPMorgan earlier than changing into Barclays’ chief government, have piled renewed stress on the board of the UK financial institution.

The Barclays board had backed Staley earlier than he was pressured to resign due to the emails, a few of which contained unexplained references to “Snow White” and “Magnificence and the Beast”, whereas others would ultimately be proven to include what the US Virgin Islands lawsuit describes as “images of younger ladies in seductive poses”.

JPMorgan’s Epstein drawback

Senior JPMorgan figures reminiscent of Mary Erdoes — the pinnacle of the financial institution’s $4tn asset and wealth administration enterprise — may face hours of questioning this month, in accordance with courtroom filings, because the circumstances transfer nearer to trial.

Erdoes, a 27-year JPMorgan veteran and one in all Dimon’s prime lieutenants, is the highest-ranking particular person inside the financial institution set to be deposed, having held senior supervisory roles and led the division which managed Epstein’s cash.

“Mary has at all times acted with the best ranges of integrity and professionalism and she or he knowledgeable this shopper 10 years in the past that his relationship with our agency was being terminated,” mentioned JPMorgan in an announcement.

At difficulty in each circumstances is whether or not JPMorgan is responsible for facilitating Epstein’s sexual abuse by failing to identify and act on purple flags. The financial institution’s legal professionals have described the Virgin Islands grievance as “meritless”, and the alleged Epstein sufferer’s grievance as “directed on the unsuitable get together”.

Tons of of hundreds of paperwork detailing inner communications at JPMorgan between 23 members of employees — together with Erdoes — are set to be given to the plaintiffs authorized groups. Legal professionals for all sides are nonetheless arguing over whether or not Dimon’s communications might be handed over. 

The courtroom paperwork have proven proof that JPMorgan executives missed not less than 5 warnings by its danger and compliance groups about Epstein’s hyperlinks to baby trafficking and molestation of younger women.

JPMorgan knew it had an Epstein drawback as early as 2006 when its world company safety division alerted executives to reviews of Epstein’s indictment in Florida on costs of soliciting minors. 

By that time, Epstein had been a shopper for eight years at JPMorgan’s personal financial institution. Regardless of the warning, JPMorgan saved Epstein’s enterprise however categorised his account as “excessive danger”, a tag which requires particular approval.

In 2007, an Epstein sufferer was allegedly paid $10,000 in hush cash after being raped within the US Virgin Islands, which her legal professionals declare Epstein’s accomplices withdrew from JPMorgan in money.

Epstein ended up pleading responsible in 2008 to soliciting prostitution, together with from a minor, and served 13 months in a county jail. It was round that point that one JPMorgan worker wrote in an e mail that Epstein’s estimated $120mn with the financial institution would seemingly go away that yr “as I can’t think about it’ll keep (pending Dimon overview)”.

JPMorgan mentioned the financial institution has “discovered no report of, nor does [Dimon] recall, such a overview”.

Endorsing Epstein

Beginning in 2008, the courtroom filings level to the essential function Staley allegedly performed in defending Epstein’s relationship with JPMorgan.

Staley, a 66-year-old American who labored at JPMorgan for greater than 30 years till 2013, developed ties with Epstein whereas an government at its asset administration operations. Staley later ran JPMorgan’s funding financial institution.

Staley is alleged within the filings to have been concerned in a 2008 determination to keep up Epstein’s accounts, alongside Stephen Cutler, who was then JPMorgan’s basic counsel.

Cutler additionally was included in not less than one “speedy response assembly” over new data relating to Epstein’s human trafficking, the paperwork revealed.

Cutler, who left JPMorgan in 2018, is one other potential witness within the circumstances. He didn’t reply to requests for remark.

A lawyer for Staley, who will not be a defendant within the circumstances, declined to remark.

In 2011, when one of many financial institution’s compliance administrators requested Cutler to reapprove the Epstein relationship, Staley’s endorsement was once more sufficient to guard Epstein’s place at JPMorgan.

Regardless of new baby trafficking allegations in opposition to Epstein, JPMorgan concluded there have been “no materials updates” and that Staley had “mentioned the subject with Jeffrey Epstein who replied there was no fact to the allegations, no proof and was not anticipating any issues”.

Simply weeks after that recent sign-off on Epstein in 2011, JPMorgan’s company safety division flagged extra information tales connecting him with baby trafficking and molesting underage women.

JPMorgan saved Epstein on as a shopper for 2 extra years, till he was flagged once more in 2013. Epstein used accounts at JPMorgan to pay not less than 20 of his victims, the Virgin Islands alleges.

Staley left JPMorgan simply months earlier than Epstein’s relationship with the financial institution resulted in 2013, becoming a member of hedge fund BlueMountain Capital earlier than later taking up at Barclays in 2015.

Barclay’s Staley drawback

On the opposite aspect of the Atlantic, the lawsuits’ revelations have renewed scrutiny of Barclays’ board, specifically its chair Nigel Higgins.

Barclays knew about Staley’s shut relationship with Epstein when it named him CEO and required him to completely disclose his historical past with the intercourse offender, in accordance with a number of individuals concerned in his recruitment.

Conscious of the potential injury of taking part in down the connection, Barclays had caught to a rigorously crafted line — each with regulators and in public statements — that Staley and Epstein had a “shut skilled relationship” and had been “pleasant” exterior of labor.

However the financial institution modified that description in 2019, when the UK Monetary Conduct Authority made recent enquiries following extra media reviews linking the pair and after it obtained from US regulators the cache of 1,200 emails. In a letter to the FCA, drafted by basic counsel Bob Hoyt, now at HSBC, and signed by Higgins, it as a substitute asserted that the pair didn’t have a detailed skilled relationship.

It was this that prompted the UK regulator to launch a full inquiry into whether or not Staley had been “full and frank”: the emails it had seen didn’t tally with a merely skilled relationship, shut or not. Barclays declined to remark and a spokesperson for HSBC declined to touch upon Hoyt’s behalf.

In early December 2019, Higgins was summoned at 24 hours discover to see Mark Carney, then governor of the Financial institution of England, Andrew Bailey of the FCA, who has since succeeded Carney, and Sam Woods of the Prudential Regulation Authority, the individuals mentioned.

The supervisors strongly indicated to Higgins they felt Staley’s place was now not tenable, in accordance with individuals briefed on the report the chair made again to the board. Carney requested about succession planning and who would take over if he stepped down, the individuals added.

Barclays spent the following two months — January and February — scrutinising the big quantity of emails given to the financial institution by the FCA, with the help of regulation agency Clifford Likelihood. The regulation agency carried out interviews and produced a report for the board, which included essentially the most controversial emails in an appendix.

The remit of the board’s overview centered on two questions: was there proof of impropriety and was Staley “sufficiently” trustworthy and clear in regards to the extent of the connection when he joined the financial institution in 2015 and subsequently in 2019.

The method didn’t ask the board to make a judgment on the appropriateness of his ties to Epstein in mild of the data that has since been revealed.

When Staley was interviewed, he mentioned he didn’t bear in mind what the “Snow White” e mail was in reference to, a place he nonetheless maintains, in accordance with an individual aware of his pondering.

The financial institution decided the messages themselves, whereas regarding, had been inconclusive and never direct proof of impropriety. There was no “smoking gun”, one particular person remembers, and so they judged that Staley had been trustworthy. They resolved to again him.

Moreover, the board felt that with out proof of what the emails meant, or proof that Staley knew of Epstein’s crimes, they’d no trigger to take away their CEO, one of many individuals mentioned.

Nonetheless, individuals aware of the file of emails the financial institution obtained from the FCA say that it didn’t include the images of younger ladies. Nor was the financial institution conscious of the allegedly co-ordinated timing of wire transfers after emails between Staley and Epstein.

For instance, the grievance alleges that Staley deliberate to remain at Epstein’s Palm Seaside, Florida residence in early 2009. At across the time of the scheduled go to, “Epstein wired $2,000 from his JPMorgan account to a lady with an jap European surname,” it alleged.

In late August that yr, the lawsuit states Staley informed Epstein he was visiting the UK. “Epstein inquired whether or not Staley would want something whereas in London, and Staley replied, ‘Yep’. On 31 August 2009, Epstein wired $3,000 from his JPMorgan account to the identical jap European lady he paid in January 2009.”

With out that context, Higgins has mentioned the emails didn’t appear as problematic and the board was making choices with out all of the out there data, mentioned individuals aware of his pondering.

“I definitely wouldn’t have put my title to these statements supporting Staley had I seen them,” mentioned one former board member. “Higgins needs to be requested critical questions on his judgment at this level.”