JPMorgan profited from Jeffrey Epstein for years despite red flags: NYT report

File image - from New York State Sex Offender Registry - Jeffrey Epstein (via PTI)

JPMorgan Chase, one of the world’s most powerful banks, maintained a lucrative relationship with sex offender Jeffrey Epstein for over a decade despite repeated internal warnings about his suspicious activities and conviction, The New York Times has revealed.

Epstein, who opened his first account at JPMorgan in 1985, was by the early 2000s a “treasured customer” with more than $200 million in deposits, the report said.

He generated millions in fees, topped internal lists of major money makers and was instrumental in orchestrating JPMorgan’s landmark $1.3 billion acquisition of hedge fund Highbridge Capital Management. In return, he pocketed $15 million for brokering the deal, according to the report.

NYT found that the bank opened at least 134 accounts for Epstein, his companies and associates, including for Ghislaine Maxwell, who was later convicted for aiding his trafficking ring. It processed more than $1 billion in wire transfers and cash withdrawals for him, including millions that anti-money laundering (AML) staff flagged as red flags for potential trafficking.

Internal battles

Despite Epstein’s 2008 guilty plea to soliciting sex from a minor and his classification as a Level 3 sex offender, JPMorgan resisted calls to cut ties.

Stephen Cutler, the bank’s general counsel and a former SEC enforcement chief, warned colleagues in 2011: “This is not an honorable person in any way. He should not be a client”.

William Langford, the bank’s head of compliance, raised similar alarms about his cash withdrawals, saying there was “no patience for this.”

Yet Epstein’s defender inside JPMorgan was Jes Staley, then head of the private bank and once seen as heir to CEO Jamie Dimon, the report said.

Staley urged colleagues to trust Epstein, telling them he would trust him “with his daughters,” and remained in frequent contact, at times exchanging messages with apparent sexual undertones, the report claimed.

Even when federal prosecutors in Florida charged Epstein, JPMorgan continued to provide him loans and process transactions. As Cutler later conceded, while Epstein was a reputational threat, he claimed there was “no evidence he was using accounts for criminal purposes”, a caveat that allowed the bank to keep him.

Red flags 

AML staff noted Epstein’s monthly habit of withdrawing tens of thousands in cash. One internal email flagged how he had wired about $450,000 to an 18-year-old, exclaiming: “Sugar Daddy!”, the report said. At least four times in five years, JPMorgan’s senior executives overrode calls to sever ties.

According to NYT, Staley frequently leaked sensitive financial information to Epstein, including details of JPMorgan’s dealings with the Federal Reserve during the 2008 financial crisis. Epstein, in turn, introduced Staley to ultra-wealthy potential clients such as Sergey Brin of Google and Emirati tycoon Sultan Ahmed bin Sulayem.

Dimon’s role 

CEO Jamie Dimon has maintained under oath that he did not recall knowing Epstein was a client until 2019, when Epstein’s arrest on new trafficking charges made headlines. Yet internal emails suggest decisions to retain Epstein were often referred for “pending Dimon review”, according to the report.

David Boies, lawyer for Epstein’s victims, remarked: “Either Dimon knew and lied under oath or his subordinates kept him in the dark. Neither is good.”

A costly relationship

In 2013, as regulators tightened scrutiny on anti-money-laundering failures, JPMorgan finally cut ties with Epstein. Following this, he shifted $176 million to Deutsche Bank, which itself later faced fines and lawsuits over its ties to him. But even after the official split, JPMorgan bankers continued to interact with Epstein through another client, billionaire Leon Black.

The report said that despite the troubling relationship with Epstein, the fallout for the bank has been limited. "In 2023, it paid $290 million to settle a lawsuit brought by roughly 200 of Epstein’s victims and an additional $75 million to resolve related litigation brought by the US Virgin Islands, where many of Epstein’s crimes took place," the report said.

It added the JPMorgan did not face any regulatory action and none of its executives were fired from their jobs.