JPMorgan has sued its former senior executive Jes Staley, claiming that he “concealed his personal activities” with Jeffrey Epstein and exposed them to potential liability.
Shortly after the filing of the lawsuit, a federal judge turned his attention to the bank’s most senior executive: CEO Jamie Dimon, granting a motion for the Virgin Islands government to scrutinize his possible ties to the Epstein matter.
JPMorgan insists that Dimon never made any decisions related to Epstein’s account, but that Staley may have inappropriately exposed them to liability.
Senior U.S. District Judge Jed Rakoff, a storied foe of powerful Wall Street figures, rejected JPMorgan’s arguments about Dimon, largely without explanation in a short, handwritten ruling.
“Served his own and Epstein’s interests”
Staley, who is Barclays former CEO, has been dogged by scandal regarding his relationship with Epstein. He once served in top JPMorgan positions — leading its asset management and investment banking businesses — and then, he resigned from Barclays amid scrutiny of his 1,200 emails with Epstein that suggested the pair had a cozy relationship.
Some of those messages spilled into the public domain as the Virgin Islands has pursued a lawsuit seeking to hold JPMorgan liable for “complicity” with Jeffrey Epstein.
JPMorgan Chase (JPMC) insists that, if the allegations are true, Staley left them in the dark and “served his own and Epstein’s interests.”
“While JPMC held discussions regarding Epstein, Staley was apparently in regular contact with Epstein,” the bank claims in Wednesday’s lawsuit, adding that the executive “never disclosed to anyone” the alleged conduct that filled the Virgin Islands lawsuit.
The megabank, which is the largest in the world by market capitalization, does not detail those allegations explicitly in its complaint, except by reference to the Virgin Islands government’s claims.
On Feb. 15, 2023, the Virgin Islands unsealed some of those blockbuster revelations.
“Between 2008 and 2012, Staley exchanged approximately 1,200 emails with Epstein from his JP Morgan email account,” the government’s lawsuit alleges. “These communications show a close personal relationship and ‘profound’ friendship between the two men and even suggest that Staley may have been involved in Epstein’s sex-trafficking operation.”
Staley apparently sent one of those emails from Epstein’s Little St. James on Nov. 1, 2009, when Epstein was incarcerated in Florida after pleading guilty to soliciting prostitution from a minor.
“So when all hell breaks lo[o]se, and the world is crumbling, I will come here, and be at peace,” the email said, according to the lawsuit. “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.”
“Hi to Snow White”
A month later, the Virgin Islands government says, Staley followed up with another message: “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.”
The lawsuit also contains redacted photographs of a young woman, attached to messages Epstein sent to Staley.
In 2010, the men exchanged what came to be known as their “Snow White” emails.
“Say hi to Snow White,” Staley told Epstein that July.
“[W]hat character would you like next?” Epstein is quoted responding.
Staley answered “Beauty and the Beast,” and Epstein replied: “well one side is available,” according to the lawsuit.
When the emails were first publicized, a lawyer for Staley, Kathleen Harris, reportedly referred to the emails as innocuous and said Staley was not involved with Epstein’s alleged crimes.
“We wish to make it expressly clear that our client had no involvement in any of the alleged crimes committed by Mr. Epstein, and code words were never used by Mr. Staley in any communications with Mr. Epstein, ever.”
If JPMorgan is found liable in the Virgin Islands lawsuit, the bank wants Staley to indemnify them. The bank also seeks “all compensation paid to Staley during the time period of his disloyalty, from at least 2006 through 2013,” plus punitive damages.
Former federal prosecutor Mitchell Epner says that if it wants to pass the buck to Staley, JPMorgan may have a tough row to hoe.
“This is a very difficult argument to make,” said Epner, a partner at Rottenberg Lipman Rich PC. “As the CEO of two of the most important wings of JPMorgan, Mr. Staley would have had virtually limitless authority to engage in travel and entertainment in pursuit of high-net worth individuals to be clients of JPM. JPM also contends that it knew nothing about Mr. Staley’s involvement with Jeffrey Epstein, which Mr. Staley might be able to rebut by showing that he made disclosures to the bank about these matters.”
As for the Dimon ruling, Epner noted, it amounts to a “bad day for JPMorgan.” He noted that only the bank’s brief opposing discovery from Dimon is public.
JPMorgan tried to convince Rakoff that the Virgin Islands filed the motion “for the improper purpose of drawing press attention to its specious and unnecessary arguments” in generating headlines about Dimon.
“Having unloaded all of that rhetorical firepower, JP Morgan was shot down by Judge Rakoff, who implicitly rejected these arguments in ordering that the discovery be provided,” Epner noted. “Beyond the access to additional materials, this will aid the Virgin Islands in gaining leverage over JPM in this litigation, because the Court has already rejected JPM’s primary narrative about the case.”
Read the lawsuit here.
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