By Pam Martens and Russ Martens: August 3, 2022 ~
Playing out in a federal courtroom in Chicago have been JPMorgan traders telling a jury that it was standard operating procedure at the bank to rig precious metals markets in order to make huge profits for their trading desk. That case is U.S. v. Smith in the Northern District Court in Chicago. (Case number 1:19-cr-00669.)
Now there may be more explosive revelations spilling out against JPMorgan Chase in the Southern District Court in Manhattan beginning this fall. That case is Shaquala Williams v JPMorgan Chase. (Case number 1:21-cv-0932.) Last week, Judge Jed Rakoff, who is overseeing the Williams case, ruled that JPMorgan’s motion for dismissal would not prevail on Williams’ claim for retaliatory dismissal and ruled that a jury trial would begin on November 7. (Judge Rakoff did dismiss the Williams’ claim that the bank’s actions had adversely affected a job offer.)
Williams is an attorney who previously worked as a compliance official at JPMorgan Chase. She is suing the bank for retaliating against her protected whistleblowing activities by terminating her employment after she raised concerns about improper activities at the bank.
One of those improper activities involves Tony Blair, who served as Prime Minister of the U.K. from 1997 to 2007. Blair started taking down big bucks from JPMorgan not long after leaving his post as Prime Minister. JPMorgan Chase issued a press release on January 10, 2008, announcing that Blair was being hired as a “senior advisor” and would be joining JPMorgan’s International Council.
Williams is a financial crimes compliance professional with more than a decade of experience at multiple global banks. Part of Williams’ role at JPMorgan Chase was to make sure that the bank was in compliance with a non-prosecution agreement the bank had signed with the Justice Department in 2016. (The bank has admitted to an unprecedented five criminal felony counts since 2014 and received deferred-prosecution agreements for those.) All of these frauds occurred while Jamie Dimon was Chairman and CEO of the bank.
Not only are this many felony charges unprecedented at a U.S. megabank, but the failure of federal regulators and the Board of Directors of JPMorgan Chase to demand that Dimon step down is equally unprecedented.
The 2016 non-prosecution agreement that Williams was supervising compliance with for the bank stemmed from charges brought by the Justice Department that JPMorgan’s Asia subsidiary had engaged in quid pro quo agreements with Chinese officials to obtain investment-banking business and had falsified internal documents to cover up the activities. The quid pro quo agreements resulted in the bank putting the children of high Chinese government officials on its payroll in order to further its business interests in China.
In exchange for avoiding prosecution, the Justice Department required JPMorgan to create compliance controls around third-party payments. Williams alleges, among numerous other serious charges, that the so-called third-party payment controls were a sham and that when she blew the whistle to her superiors at the bank, the bank retaliated against her by firing her in October 2019.
The lawsuit uses the term “TPI” for Third-Party Intermediaries and defines it as follows:
“The purported purpose of JPMorgan’s TPI program was to detect, prevent, and deter JPMorgan personnel and non-client third parties such as agents, consultants, vendors, and suppliers, from engaging in corrupt behavior to obtain or secure business or government action on the Bank’s behalf.”
Williams defines a person known as TPI1 as follows in her complaint:
“…a former government official (‘TPI1’) was a high risk JPMorgan third-party intermediary for Jamie Dimon (‘Dimon’), JPMorgan’s Chief Executive Officer. The Bank processed the invoices for TPI1 through the ‘emergency payment method.’ The Bank’s policies made clear that the ‘emergency payment method’ should be used for urgent payments critical to the day-to-day operations of Chase such as emergency utility bills ‘to prevent the lights from going out.’ The TPI1 invoices did not satisfy this standard, thus leaving the payment method open to unchecked corrupt payments and violations of the Bank’s accounting controls, the NPA [non-prosecution agreement], SEC Order, SEC rules and regulations, and provisions of Federal law relating to fraud against shareholders. Further, the payments as reflected in the general ledger did not correspond with management’s general or specific authorization for the invoice payments, thereby creating inaccurate records that also constituted violations of the NPA, the SEC Order, SEC rules and regulations and/or provisions of Federal law relating to fraud against shareholders.”
A noteworthy part of the Justice Department’s November 17, 2016 non-prosecution agreement with JPMorgan Chase reads as follows:
“In addition, during the Term of the Agreement, should the Company or JPMC learn of credible evidence or allegations of actual or potentially corrupt payments, false books, records, and accounts, or the failure to implement adequate internal accounting controls, the Company or JPMC shall promptly report such evidence or allegations to the Offices [the ‘Offices’ are defined as the Department of Justice Criminal Division and the U.S. Attorney’s Office for the Eastern District of New York]….”
If the bank did not itself report these questionable third-party payments and then fired one of its own compliance officials for reporting the payments to her superiors, that might be a serious problem between JPMorgan Chase and prosecutors at the Justice Department.
Page 157 of Williams’ deposition, now part of the public court record, contains the following revelations about Tony Blair: (“Q” represents a question from the attorney for JPMorgan; “A” represents the answer from Williams.)
Q: “Did you ever allege a failure of accounting controls?
A: “That’s correct.
Q: “In what respect?
A: “So in — in terms — well, we can just use the Tony Blair example as one example of this. He has — he was paid using an emergency payment method that the global suppliers’ services team, Tim Napier, escalated to me and it didn’t meet any of the criteria for that method, and the CFO signed off on all of his invoices for the wet signature, and at an institution like this it’s very odd that she’s not approving something like this through a system. And at the time the CFO was Marianne Lake and it seemed — or not seemed, this is actually what was happening, Mr. Blair — Mr. Blair’s expenses as a TPI were being paid through this method as an emergency where it should have just been a typical TPI salary payment and that payment method was wide open for anyone to use; as long as they knew where it was, they could just click through it and pay whoever they wanted for whatever they wanted…”
Jamie Dimon cannot be happy about the outcome of this case going to trial in a courtroom open to reporters. It’s bad enough that two trial lawyers have written a book comparing Dimon’s leadership of the bank to the Gambino crime family, and Bloomberg News spilling the secrets coming out of the Chicago precious metals trial, but now Dimon is likely to see new headlines linking his name to questionable payments to Tony Blair and unknown others.
Dimon also can’t be happy that his bank has been paying big bucks to the Big Law firm, Morgan Lewis, to stop the Williams case from going to trial. Morgan Lewis has 2200 lawyers in 31 offices around the world. Representing Williams is the law firm, Vladeck, Raskin & Clark, which has 10 lawyers in one office in New York.
Will this case be a triumph for David v Goliath? Will truth and justice prevail? Or will Williams take a quiet settlement between now and November 7? Stay tuned.