For nearly a decade, executives at JPMorgan Chase have been in a position to keep away from questions on their choice to maintain Jeffrey Epstein on as a consumer whereas the convicted intercourse offender allegedly trafficked and abused dozens of teenage ladies.

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, attorneys 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 instances are a trove of emails between JPMorgan workers that present the fullest image thus far of the financial institution’s inside 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 non-public banker at JPMorgan earlier than changing into Barclays’ chief government, have piled renewed strain 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 comprise what the US Virgin Islands lawsuit describes as “photographs of younger girls in seductive poses”.

JPMorgan’s Epstein drawback

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

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

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

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

Tons of of 1000’s of paperwork detailing inside communications at JPMorgan between 23 members of employees — together with Erdoes — are set to be given to the plaintiffs authorized groups. Attorneys 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 at the very least 5 warnings by its threat and compliance groups about Epstein’s hyperlinks to baby trafficking and molestation of younger ladies.

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

By that time, Epstein had been a consumer for eight years at JPMorgan’s non-public financial institution. Regardless of the warning, JPMorgan saved Epstein’s enterprise however categorized his account as “excessive threat”, 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 attorneys 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 electronic mail that Epstein’s estimated $120mn with the financial institution would probably depart that 12 months “as I can’t think about it can keep (pending Dimon evaluation)”.

JPMorgan stated the financial institution has “discovered no document of, nor does [Dimon] recall, such a evaluation”.

Endorsing Epstein

Beginning in 2008, the courtroom filings level to the essential position 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 choice to keep up Epstein’s accounts, alongside Stephen Cutler, who was then JPMorgan’s basic counsel.

Cutler additionally was included in at the very least one “speedy response assembly” over new data concerning Epstein’s human trafficking, the paperwork revealed.

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

A lawyer for Staley, who will not be a defendant within the instances, 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 towards Epstein, JPMorgan concluded there have been “no materials updates” and that Staley had “mentioned the subject with Jeffrey Epstein who replied there was no reality to the allegations, no proof and was not anticipating any issues”.

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

JPMorgan saved Epstein on as a consumer for 2 extra years, till he was flagged once more in 2013. Epstein used accounts at JPMorgan to pay at the very least 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 facet of the Atlantic, the lawsuits’ revelations have renewed scrutiny of Barclays’ board, particularly its chair Nigel Higgins.

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

Conscious of the potential harm of enjoying 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 have been “pleasant” outdoors of labor.

However the financial institution modified that description in 2019, when the UK Monetary Conduct Authority made contemporary enquiries following extra media studies 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 folks stated.

The supervisors strongly indicated to Higgins they felt Staley’s place was not tenable, in response to folks 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 folks added.

Barclays spent the following two months — January and February — scrutinising the massive quantity of emails given to the financial institution by the FCA, with the help of legislation agency Clifford Likelihood. The legislation 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 evaluation targeted on two questions: was there proof of impropriety and was Staley “sufficiently” sincere 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 gentle of the knowledge that has since been revealed.

When Staley was interviewed, he stated he didn’t bear in mind what the “Snow White” electronic mail was in reference to, a place he nonetheless maintains, in response to an individual accustomed to his considering.

The financial institution decided the messages themselves, whereas regarding, have been inconclusive and never direct proof of impropriety. There was no “smoking gun”, one individual remembers, and so they judged that Staley had been sincere. 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 folks stated.

Nonetheless, folks accustomed to the file of emails the financial institution obtained from the FCA say that it didn’t comprise the photographs of younger girls. 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 girl with an japanese European surname,” it alleged.

In late August that 12 months, the lawsuit states Staley instructed 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 japanese European lady he paid in January 2009.”

With out that context, Higgins has stated the emails didn’t appear as problematic and the board was making choices with out all of the obtainable data, stated folks accustomed to his considering.

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