By Pam Martens and Russ Martens: July 10, 2023 ~
Jamie Dimon Being Sworn In at House Financial Services Committee Hearing, May 27, 2021
For months now, the largest federally-insured bank in the United States, JPMorgan Chase, represented by WilmerHale, a law firm with more than 1,000 attorneys, has been attempting to bamboozle the American people with the narrative that it engaged in no wrongdoing when it provided millions of dollars in cold, hard cash to child sex-trafficker Jeffrey Epstein for more than a decade – without following the legal mandate of reporting this suspicious account activity to law enforcement. Internal emails produced in discovery in two lawsuits against the bank in federal court in Manhattan show that the bank was well aware that Epstein was a known sexual predator of children as it doled out all of this cash – at times reaching $40,000 to $80,000 per month.
The legal narrative that the WilmerHale attorneys crafted for the public and the media is this: a sole former employee of the bank – Jes Staley – is responsible for all of the bank’s wrongdoing involving Epstein, never mind that the bank was all too willing to take the lucrative business deals and clients that came its way from Epstein via Staley, as also documented in internal emails. To get headlines promoting this narrative, the bank has made a big deal of suing Staley on the premise that it wants to recover its legal costs by clawing back his compensation.
Victims of Epstein had filed a class action lawsuit against the bank last year. The bank offered a settlement of $290 million in that matter in June, which is pending a final fairness hearing. The bank did not acknowledge wrongdoing. (See our report here for the $87 million in legal fees under the settlement for the plaintiffs’ attorneys and the onerous terms for Epstein’s victims.) The second Epstein-related lawsuit against the bank, which is ongoing, was filed by the Attorney General of the U.S. Virgin Islands, where Epstein built a private island compound and engaged in sex trafficking of underage girls.
Given how much time and space media outlets in New York and London have devoted to spinning this tale about Staley (who is certainly not an innocent character by any means, but hardly the mastermind), thinking Americans must ask themselves, why is there now a total news blackouts when a new lawsuit has been filed against JPMorgan Chase with a highly credible bombshell theory of the case: that the same members of JPMorgan’s Board of Directors who brought its Chairman and CEO to power, Jamie Dimon, were also, verifiably, engaged in business with Jeffrey Epstein. (This is not the first time that a major scandal involving JPMorgan Chase has received a news blackout by mainstream media.)
This latest lawsuit brought by two pension funds that owned shares of JPMorgan Chase names both Dimon and Staley as defendants, as well as current and former members of JPMorgan Chase’s Board of Directors. It has been brought by a prominent class action law firm on behalf of shareholders of the bank. The lawsuit’s theory of the case is that specific members of the Board of JPMorgan Chase “put their heads in the sand” and ignored that the bank had become a cash conduit for Jeffrey Epstein’s child sex trafficking ring because they were hoping that their own business ties to Epstein “would go unnoticed.” (We might add an attendant thesis: that Dimon takes very good care of his Board in return for them taking very good care of him.)
A current member of the JPMorgan Chase Board at the time of the filing of the lawsuit who is alleged to have had business ties to Epstein, James S. Crown, will not be able to be deposed by the plaintiffs’ attorneys. He died in a single car accident on a private race track 16 days ago, at age 70 – after serving on JPMorgan Chase’s Board and those of two of its predecessor banks for 32 consecutive years. (See our previous report on the undisclosed conflicts between Crown and JPMorgan Chase.)
The Board members’ business ties to Epstein arise through two specific events: the merger of Bank One (formerly Banc One) with JPMorgan Chase in 2004 – with a number of Bank One Board Members, along with its then CEO, Jamie Dimon, moving from Bank One to JPMorgan Chase. The second key factor is that billionaire and retailing titan, Leslie Wexner, founder of The Limited and Bath & Body Works (and prior corporate owner of Victoria’s Secret), had made Epstein his financial advisor and given him power of attorney in approximately 1986. Wexner had been on the Board of Banc One from at least 1986 to 1991.
Below are excerpts from the new shareholders’ lawsuit that explain the JPMorgan Board members’ business dealings with Epstein:
“These entanglements start no later than the 1980s, when Epstein salvaged a major financing and real estate transaction in which a number of power players in the Columbus, Ohio business community participated. During that period, Wexner worked with prominent local executives, including future JPM [ticker for JPMorgan Chase] directors James S. Crown (Crown) and John W. [Jack] Kessler (Kessler) and the McCoy family (which founded and controlled Bank One Corporation (Bank One), the largest bank in Ohio), to develop an idyllic community called New Albany, Ohio, which sought to house some of the most influential names in American business…” [Wexner and Kessler are still listed as founders of the New Albany Company on its current website. Today, the New Albany community is home to multi-million-dollar estates, including a palatial mansion owned by Wexner.]
“Kessler was a well-connected and prominent corporate lawyer in Columbus, Ohio, who advised on a wide range of deals for Wexner, the McCoys, and the Crowns alike, and enjoyed a seat on the Bank One board…”
“Defendant John W. Kessler (as previously defined, ‘Kessler’) was a director of JPM from 2004 to 2007. Prior to joining JPM’s board, Kessler served as a director of Bank One from 1995 to 2004. From 1998 to present, he has been the chairman of the New Albany Company. Kessler also served on the board of Wexner’s company, Abercrombie & Fitch…”
“Epstein was given a partnership interest in the New Albany project for a nominal investment. Epstein promptly re-organized and restructured the New Albany development project so it could take hold, be completed, and ultimately flourish.”
As to what the Board knew or should have known about Epstein during the 15 years that he maintained over four dozen accounts at the bank (from 1998 to at least 2013), internal emails produced in the earlier two lawsuits show that the General Counsel of the bank, Stephen Cutler – who was the former Director of Enforcement for the Securities and Exchange Commission – was well aware of the reputational risk that Epstein’s accounts presented to the bank but some higher authority prevented Cutler from firing Epstein as a client. The new lawsuit has this to say on that subject:
“An internal March 2011 report explained that a company named ‘MC2 Model Management and Jeffrey Epstein engaged in racketeering that involved luring in minor children for sexual play for money,’ and that MC2 Model Management’s owner was a ‘frequent passenger on Epstein’s private jet and often visited Epstein in jail.’
“On July 20, 2011, JPM’s General Counsel Cutler emailed [JPMorgan executives] Staley and [Mary] Erdoes, among others, writing of Epstein: ‘This is not an honorable person in any way. He should not be a client.’ The next day, Cutler emailed Erdoes again, describing Epstein as: ‘Not a person we should do business with, period.’ Nevertheless, Epstein’s accounts with the bank remained open and functional.
“JPM continued doing business with Epstein personally until 2013, and potentially continued to engage with Epstein related entities until his death in jail in 2019. In fact, the Company actively concealed Epstein’s crimes by failing to file any legally required Suspicious Activity Reports (‘SARs’), which are mandated for large cash withdrawals and other suspicious transactions.”
Dimon’s partially redacted deposition transcript, conducted jointly by attorneys for the earlier two lawsuits, has been made public. In the deposition, Dimon stated that he wasn’t aware of who Epstein was or that he had accounts at the bank until Epstein’s arrest on federal sex trafficking charges in 2019. (Epstein died on August 10, 2019 while awaiting trial in his Manhattan jail cell. His death was ruled a suicide by the Medical Examiner.)
Dimon testified under oath as follows during his deposition:
“I don’t recall knowing anything about Jeffrey Epstein until the stories broke sometime in 2019. And I was surprised that I didn’t even — had never even heard of the guy, pretty much, and how involved he was with so many people.”
The plaintiffs’ lawyers in the latest lawsuit make it clear in their amended complaint that they don’t find Dimon’s position about his unawareness of Epstein to be plausible. We agree.
Dimon states in his deposition that General Counsel Cutler’s office was next door to Dimon’s and that Jes Staley’s office was just a few hundred feet away. Both Staley and Cutler reported directly to Dimon. The public is being asked to believe that a former SEC enforcement chief would ignore his duty to report his concerns to both Dimon, as CEO, and the Board of Directors at the earliest possible moment that he became aware of Epstein’s massive cash withdrawals from his accounts at the bank — given Epstein’s well-publicized history as a sexual predator of underage girls and registered sex offender status.
As for Staley, the Wall Street Journal reported in May that Staley has stated in legal documents filed with the court that “Dimon communicated with him when Epstein was arrested in 2006 and in 2008 when Epstein pleaded guilty. Staley also said that Dimon communicated with him various times about whether to maintain Epstein as a client through 2012.”
The public relations offensive mounted by the bank offers the narrative that there is no internal email or document that links Dimon to knowledge of Epstein. That is far from accurate. During Dimon’s deposition, the well-known lawyer, David Boies, of law firm Boies, Schiller & Flexner LLP, introduced an email directly referring to a scheduled Epstein meeting with Dimon. (Boies is one of the lawyers representing Epstein’s victims in the recently settled case against the bank.) The deposition exchange went as follows:
Boies: “On February 26, 2010, Lesley Groff [an Epstein staffer] writes Mr. Epstein on the subject of, Jes [Staley] and Jamie. ‘Shall I have Lynn prepare heavy snacks for your evening appointments with [redacted], Jes Staley and Jamie Dimon? Or is this to be a nice, sit-down dinner at 9 p.m.?’ And Mr. Epstein replies, ‘Snacks.’ ”
Dimon responds in the deposition: “I have never had an appointment with Jeff Epstein. I’ve never met Jeff Epstein. I never knew Jeff Epstein. I never went to Jeff Epstein’s house. I never had a meal with Jeff Epstein. I have no idea what they’re referring to here.”
Adding to the culpability of JPMorgan’s Board of Directors is the simple fact that they have not fired Dimon, as either Chairman or CEO, despite the unprecedented crime spree that has ensued as he sat at the helm of the bank. Under Dimon, the bank has been charged with an unprecedented five felony counts by the U.S. Department of Justice – admitting to all of them – and a broader rap sheet that looks like that of an organized crime family.
Raising even more suspicions of the Board’s own culpability is that after the bank’s two most recent admissions to felony charges, Dimon was financially rewarded by the Board. See our report: After JPMorgan Chase Admits to Its 4th and 5th Felony Charge, Its Board Gives a $50 Million Bonus to Its CEO, Jamie Dimon.
A serious problem for finally rooting out the full scope of the Epstein/JPMorgan corruption is that all of these lawsuits are before the same Judge: Jed Rakoff of the U.S. District Court for the Southern District of New York. Rakoff called the Epstein victims’ lawsuit that was settled for $290 million in June “a really fine settlement,” while ignoring its onerous terms for the victims, removal of liability for attorneys on both sides, and sweeping release of victim claims prior to finding out if they would get a dime from the settlement. There also appears to be a secret side agreement in a “Term Sheet” that is referenced in the settlement but we could not locate on the docket. We emailed Bradley Edwards, one of the lead attorneys for the victim plaintiffs, asking where this “Term Sheet” side agreement was located on the court docket, and received no response, despite providing a 48-hour response window.
Judge Rakoff also has an uncanny ability to be assigned highly sensitive corruption cases involving JPMorgan Chase while signing off on broad protective orders that seal from public view the dirty underbelly details. For example, in November of 2021, a former attorney and compliance officer of JPMorgan Chase, Shaquala Williams, charged in a lawsuit in Rakoff’s court that the bank was keeping two sets of books while dodging the requirements of a non-prosecution agreement with the U.S. Department of Justice. Williams also charged that a “high risk” former government official, tied in unexplained ways to Jamie Dimon, was being improperly paid by the bank through an “emergency payment method.” Deposition testimony identified at least one of those former government officials that was receiving improper payments to be Tony Blair, the former Prime Minister of the U.K. (See our report: JPMorgan Chase Quietly Settles Whistleblower Case Involving Charges of Keeping Two Sets of Books and Improper Payments to Tony Blair.)
Given this history, it’s going to take an extraordinary effort by the remaining litigants to bring this global banking behemoth to justice.
Editor’s Note: The Editor of Wall Street On Parade, Pam Martens, worked at two large Wall Street firms for 21 years; she has done extensive research and writing about Wall Street since 2006, bringing her knowledge of how Wall Street functions to a cumulative 38 years. In her opinion, this is the most corrupt era, by far, in Wall Street history, even dramatically eclipsing the corruption that brought on the 1929 stock market crash. If you agree, please call your U.S. Senators’ offices today and demand immediate public hearings on why the U.S. Department of Justice has not brought a criminal case against JPMorgan Chase for its dealings with Epstein and why the DOJ is leaving it to the U.S. Virgin Islands to bring a civil case in Rakoff’s potentially compromised courtroom.
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