Most of us have, at some point or another, associated ourselves with the wrong person. Maybe you hung out with the wrong crowd in high school. Perhaps you made friends with the local neighborhood bully to avoid getting teased. Or maybe that guy you always used to smile at on the bus is now doing hard time for stealing an old lady's purse.
But has a friendship ever cost you $190 million?
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That's what the U.S. Virgin Islands is seeking from JP Morgan Chase (JPM) -). The territory claims that JP Morgan -- the largest bank in the U.S. with about $4 trillion in assets -- benefited from its purported relationship with Jeffrey Epstein.
While Epstein, a financier and infamously well-connected sex offender, was found dead in his New York City jail cell in 2019, his connection to the banking world goes back decades. He got his start in finance at now-defunct firm Bear Stearns in 1978 as a junior assistant to a floor trader.
He worked his way up and eventually started his own financial consulting firm which afforded him opportunity and access to myriad powerful figures including, allegedly, former presidents, crown princes, and negotiators with readily open pockets. He was a client of JP Morgan's for over 10 years until the bank cut ties with him in 2013, five years after he was convicted of procuring prostitution from a minor.
A recent report from the New York Times suggests JP Morgan acted as an advisor for Epstein and consulted him on a variety of matters, "including a potential meeting between Chinese officials and executives of the nation’s largest bank, business deals that Mr. Staley [a former JP Morgan Chase executive] was working on, a potential promotion for Mr. Staley and the fallout from the 2008 financial crisis."
Now, the U.S. Virgin Islands are alleging similar assertions, claiming the bank was instrumental in facilitating some of Epstein's most crucial business deals.
According to a document filed in Manhattan federal court, the bank allowed Epstein to establish a sex trafficking operation in the territory.
"These sets of recommendations aim to address the same core problem: JPMorgan’s knowledge of and failure to report Epstein’s trafficking because it lacked the economic incentive and motivation to place compliance with the law and prevention of trafficking ahead of its own profits," the document reads.
The USVI is seeking $150 million in civil penalties from the bank. It will seek an additional $40 million, alleging that Epstein's connections to high-profile individuals profited JP Morgan directly. The document reads:
In addition, Epstein referred many ultra-high net worth clients to the bank, including Sergey Brin, Bill Gates, Leslie Wexner, Glenn Dubin, and the USVI will prove, also conservatively, that those clients generated an additional $20 million in fees. Thus, the USVI conservatively estimates that until Epstein’s exit from the Bank at the end of 2013, JPMorgan received at least $40 million from its relationship with Epstein. This does not include the difficult to quantify value of Epstein introducing JPMorgan to high profile individuals, such as Prince Andrew, Ehud Barack, and Lord Peter Mandelson, connecting JPMorgan with the Gates Foundation, or consulting services that Epstein provided to the Bank including related to the Highbridge acquisition.
In June, JP Morgan Chase paid a $290 settlement to Epstein's victims through a class-action lawsuit, though it did not admit fault or liability in the role it played by facilitating Epstein's business.
Epstein's Connection to USVI Runs Deep
Jeffrey Epstein owned two private island in the U.S. Virgin Islands known as Grand Saint James and Little Saint James (also informally referred to as "orgy island"). The islands included at least one mansion, several guest houses, an amphitheater and other bizarre amenities.
Some of the high-profile guests who have visited Little Saint James Island include the above-mentioned Jes Staley. Former employees at the island also allege seeing Victoria's Secret models there, Prince Andrew, Duke of York, and Bill Clinton, though this has been disputed.
"We are pursuing this enforcement action because JPMorgan Chase’s institutional failure enabled Jeffrey Epstein’s sex trafficking, and JPMorgan Chase must make significant changes to detect, report and stop human trafficking," U.S. Virgin Islands Attorney General Ariel Smith said in a statement.
The USVI also wants JP Morgan Chase to set a new framework of policies and regulations that will prevent human trafficking incidents in the future. Some of these rules may include segmenting business and compliance and instituting a new compliance consultant independent of the bank.
A trial has been scheduled for October 23. JP Morgan Chase denies wrongdoing.
"Had the firm believed he was engaged in an ongoing sex trafficking operation, Epstein would not have been retained as client," a JPMorgan Chase spokesperson said in a statement. "In hindsight, we regret he was ever a client."
