In 2006, court papers say, bank staffers noted financier was withdrawing USD 750000 a year in cash
By guest author Khadeeja Safdar and David Benoit from the Wall Street Journal
Updated April 12, 2023
JPMorgan Chase JPM -0.16%decrease; red down pointing triangle & Co. employees internally flagged Jeffrey Epstein’s large cash withdrawals two years before he was convicted of soliciting a minor for prostitution, according to new court papers filed Wednesday.
A JPMorgan risk-management team in 2006 noted that Epstein “routinely” made cash withdrawals of USD 40000 to USD 80,000 several times a month, the U.S. Virgin Islands said in an amended lawsuit against the bank. At the time, Epstein was pulling more than USD 750000 a year in cash from the bank, according to the lawsuit.
Epstein was first charged with a sex crime in 2006. He pleaded guilty to solicitation of prostitution with a minor in 2008 and spent about 13 months in prison. JPMorgan continued providing services to Epstein until 2013, when it says it closed his accounts. Epstein died in jail of an apparent suicide in 2019 while awaiting trial on federal sex-trafficking charges.
The U.S. Virgin Islands sued JPMorgan late last year in a Manhattan federal court, saying the bank facilitated Epstein’s alleged sex trafficking. The suit alleges the financier used the bank to pay his victims with cash and wire transfers, transactions that should have been concerning to the bank. Another lawsuit filed by an unnamed woman who accused Epstein of sexual abuse also accuses the bank of failing to monitor his transactions. The cases are running together in Manhattan federal court.
Banks are required to file suspicious-activity reports on sizable cash withdrawals and transactions that could indicate crimes such as money laundering. JPMorgan, the U.S. Virgin Islands says, had information that could have flagged Epstein’s alleged crimes to law enforcement sooner.
Lawyers have questioned several JPMorgan employees so far in this case, including Mary Erdoes, its head of asset and wealth management. Her deposition hasn’t been released publicly, but Wednesday’s court filing sheds light on its contents.
Ms. Erdoes said in a deposition that JPMorgan executives knew as far back as 2006 that Epstein was accused of paying cash to have underage girls and young women brought to his home, according to the filing.
The filing alleges that Epstein’s behaviour was so widely known at the bank that his interest in girls was the subject of jokes. In 2008, the filing says, Ms. Erdoes received an email asking whether Epstein was at an event with pop star Miley Cyrus, a minor at the time.
Ms. Erdoes and a JPMorgan spokeswoman declined to comment. The bank previously has said Ms. Erdoes wouldn’t overrule the bank’s compliance officials to protect a customer and “has only one recollection of formally meeting with [Epstein], which was the day she fired him as a client.”
The bank has denied that it aided Epstein and has sought to shift the focus to former executive Jes Staley. In a lawsuit against Mr. Staley last month, JPMorgan said the former executive “affirmatively misrepresented the true facts of his and Epstein’s personal interactions.”
Mr. Staley has said he never knew about Epstein’s alleged crimes. His lawyer has declined to comment about the allegations in the JPMorgan lawsuit.
In 2010, JPMorgan compliance officials decided that Epstein “should go,” according to the Wednesday filing, and raised questions about Epstein’s behaviour.
A senior compliance official in 2011 voiced concerns about extending Epstein a loan in relation to a modelling agency that had been accused of bringing underage girls into the U.S.
According to court papers, the official noted that Epstein was no longer managing retail billionaire Leslie Wexner’s money and questioned whether he had any clients at all. “I would like to know if in fact he is managing anyone’s money at this point or is it all his money,” the official wrote.
The compliance officer also said that Epstein had sponsored accounts and credit cards for two 18-year-olds in 2004, one of whom was named regularly in media reports about Epstein’s “escapades,” according to the filing. That woman had received USD 450000 from Epstein, the complaint said.
Epstein deposited hundreds of thousands of dollars into the accounts of one known victim and another unnamed “recruiter” after he pleaded guilty in 2008, the U.S. Virgin Islands claimed in its amended lawsuit.
The compliance department flagged other payments Epstein made to women, the suit says. One official referred to Epstein as a “Sugar Daddy!”
The bank, according to court papers, was told the cash was being used for fuel and landing fees for Epstein’s private planes. Yet withdrawals continued while Epstein was in prison, the filing said.
Appeared in the April 13, 2023, print edition as ‘JPMorgan Staffers Flagged Epstein’.