JPMorgan Chase on Wednesday sued Jes Staley, its former private banking chief, saying he concealed knowledge of late convicted sex offender Jeffrey Epstein’s conduct.
The bank is asking a federal court to order Staley to return eight years’ worth of compensation — a sum likely to total more than $80 million, according to Bloomberg.
At the same time, the judge in a related case is adding considerably to JPMorgan’s workload. In a one-sentence order Thursday, U.S. District Judge Jed Rakoff demanded the bank turn over a wider scope of documents — through 2019 — in response to a U.S. Virgin Islands lawsuit against the bank, which faults JPMorgan for failing to report suspicious activities and continuing to provide banking services to Epstein after he was convicted of sex charges in 2008.
JPMorgan last week pushed back against the request, saying it “would increase the number of documents captured” by search terms “from at least 364,000 to at least 694,000.”
“If there were evidence supporting discovery from JPMC from 2014-2019, USVI would have found it” while preparing an earlier case against Epstein’s estate, the bank’s lawyers said last week.
Rakoff did not detail his reasoning for ordering JPMorgan to hand over documents covering the five years preceding Epstein’s 2019 death, during which he was no longer a client of JPMorgan. The bank declined to comment to Bloomberg or Reuters.
‘Acts of disloyalty’
In its lawsuit Wednesday, JPMorgan said Staley’s “acts of disloyalty occurred repeatedly, lasted for years, and persisted despite numerous opportunities to correct them.”
“In light of Staley’s intentional and outrageous conduct in failing to disclose pertinent information and abandoning JPMC’s interests in favor of his own and Epstein’s personal interests, JPMC is entitled to punitive damages,” the bank wrote.
JPMorgan also identified Staley as the figure an alleged Epstein victim, in her own lawsuit, claimed used aggressive force in his sexual assault of her, saying he “had Epstein’s permission to do what he wanted to her.”
"Upon information and belief, Staley is this person, who [Jane Doe 1] described as a 'powerful financial executive' she had historically been afraid to identify," JPMorgan said in its filing Wednesday.
Staley has long contended he didn’t know about Epstein’s conduct. “I thought I knew him well and I didn’t,” Staley said in 2020, according to The Wall Street Journal. “For sure, with hindsight, with what we all know now, I deeply regret having had any relationship with Jeffrey Epstein.”
The suit marks somewhat of a reversal for JPMorgan, which last month said claims that Staley saw Epstein “sexually grabbing” some victims were “unsupported” and “conclusory.” The act of grabbing wouldn’t establish the plaintiff as a sex-trafficking victim, nor would it prove Staley knew she was, JPMorgan argued in February, according to Bloomberg. The bank at that time, however, did call the claims “odious.”
By contrast, JPMorgan on Wednesday acknowledged in a statement that “the plaintiffs have made troubling allegations concerning the conduct of our former employee Jes Staley.”
“If true, he should be held responsible for his actions,” the bank told the Financial Times. “At the time, we could not have imagined any of our employees would engage in the type of conduct alleged.”
A ‘clever move’
Mary Dodge, a professor of criminal justice at the University of Colorado Denver, called JPMorgan’s attempt to deflect focus onto Staley a “clever move.”
“They have decided to displace the blame and publicly fight the allegations, Dodge told Bloomberg. “Staley looks terrible, and they look like the ‘good guys.’”
The USVI suit alludes to correspondence between Staley and Epstein from July 2010, unsealed last month, in which the two reference Disney princesses.
“That was fun,” Staley allegedly wrote. “Say hi to Snow White.”
“[W]hat character would you like next?” Epstein allegedly wrote.
“Beauty and the Beast,” Staley allegedly wrote.
JPMorgan is set Monday to argue motions to dismiss both the USVI and Epstein victim suits. The USVI, in addition to asking Rakoff to order JPMorgan to turn over more documents, has pushed for the bank’s CEO, Jamie Dimon, to be deposed in the case. JPMorgan agreed to let other executives, including asset and wealth management chief Mary Erdoes, be interviewed, but called the request for Dimon a “fishing expedition.”
JPMorgan’s suit against Staley does not specify how it would calculate the compensation it aims to retrieve. Regulatory filings seen by Bloomberg list his pay packages for six years between 2006 and 2013, showing he earned more than $80 million in that time. He almost certainly made more, accounting for stock awards that would have gained value if he held onto them. However, Staley also, presumably, has paid taxes on his earnings.
Epstein was a client of JPMorgan’s from 1998 to 2013, and in that time, Staley rose through the ranks of the bank. He moved from private bank chief to head of JPMorgan’s investment bank in 2009 and was seen as a potential successor to Dimon but was demoted in the wake of the London whale trading scandal and left the bank in 2013 to join a hedge fund.
Staley became CEO of Barclays in 2015 and remained its chief executive until 2021, when he resigned amid an investigation by British regulators into his relationship with Epstein. Epstein died in prison in 2019 while awaiting trial.