© Reuters. FILE PHOTO: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar
By Nupur Anand, Lananh Nguyen, Luc Cohen and Jonathan Stempel
NEW YORK (Reuters) -JPMorgan Chase agreed to pay about $290 million to settle a class action lawsuit by Jeffrey Epstein’s victims, resolving a large part of litigation over the bank’s relationship with the disgraced financier.
Monday’s settlement follows months of embarrassing disclosures that JPMorgan (NYSE:) ignored internal warnings and overlooked red flags about Epstein because he had been a valuable client.
Epstein was a JPMorgan client from 1998 to 2013 and was kept on even after being arrested in 2006 on prostitution-related charges and pleading guilty two years later.
Monday’s accord would resolve claims against the largest U.S. bank by potentially more than 100 victims, led by a former ballet dancer known as Jane Doe 1, who said Epstein abused them when they were young women and teenage girls.
Epstein killed himself at age 66 in a Manhattan jail cell in August 2019 while awaiting trial on sex trafficking charges.
“It could be that the bank doesn’t want this to stay in the press,” said Carliss Chatman, a professor at Washington and Lee University School of Law in Virginia. “At a time Americans are questioning the banking system, associating Chase with human trafficking is not good for business.”
Davia Temin, chief executive of crisis management firm Temin and Co, said settling rather than fighting to the end sends “the right message across Wall Street.”
The settlement of the civil case requires approval by U.S. District Judge Jed Rakoff in Manhattan.
“Any association with (Epstein) was a mistake and we regret it,” JPMorgan said in a statement. “We would never have continued to do business with him if we believed he was using our bank in any way to help commit heinous crimes.”
Monday’s settlement came 3-1/2 weeks after Deutsche Bank (ETR:), where Epstein was a client from 2013 to 2018, agreed to pay $75 million to end a similar lawsuit by Epstein victims.
“Deutsche Bank’s settlement … likely created momentum,” said Adam Zimmerman, a law professor who recently accepted a position at the University of Southern California. “A settlement with Epstein’s victims frees JPMorgan to begin to turn the page and change the narrative.”
The $290 million settlement amount was confirmed by David Boies, a lawyer for Epstein’s victims.
JPMorgan did not admit wrongdoing in agreeing to settle, according to a person familiar with the matter, who spoke on condition of anonymity.
“The settlements signal that financial institutions have an important role to play in spotting and shutting down sex trafficking,” Sigrid McCawley, a lawyer for victims in both lawsuits, said in a statement.
POINTING THE FINGER
JPMorgan still faces a lawsuit by the government of the U.S. Virgin Islands, where Epstein owned two neighboring islands and was suspected of abusing victims in his mansion.
It is also suing former executive Jes Staley for shepherding Epstein’s relationship with the bank and concealing what he knew about his former friend.
JPMorgan wants Staley to cover its losses in both lawsuits and forfeit eight years of pay.
Last month, Rakoff said JPMorgan could be liable to Epstein’s victims if they could show Staley had firsthand knowledge that Epstein ran a sex-trafficking venture.
Staley left JPMorgan in 2013 and was later Barclays (LON:)’ chief executive for six years.
He testified under oath on Saturday, two weeks after JPMorgan Chief Executive Jamie Dimon, in his own deposition, denied discussing Epstein’s accounts.
In a statement, the U.S. Virgin Islands said it “will continue to proceed with its enforcement action to ensure full accountability for JPMorgan’s violations of law.”
The territory’s case is the largest remaining over Epstein, following civil lawsuits against his estate and the conviction of former girlfriend Ghislaine Maxwell for aiding his abuses. Maxwell is appealing her conviction and 20-year prison sentence.
Lawyers for Staley did not respond to requests for comment.
Staley has said he regretted befriending Epstein but denied knowing about his sex trafficking. It wasn’t clear whether his June 10 deposition was a factor in Monday’s settlement.
“Chase’s defense has been that Staley was a lone wolf and this wasn’t Chase’s culture, but more evidence had been coming out that may make it harder for Chase to point the finger at him,” Chatman said.
Another key JPMorgan executive who has been a focus of the litigation is Mary Erdoes, its asset and wealth management chief.
Epstein’s victims have portrayed her in court filings as a key defender of keeping Epstein as a client, including after former general counsel Stephen Cutler told her and Staley in 2011 the bank should terminate the relationship.
Dimon said in his deposition that Cutler had authority to override Erdoes and Staley and fire Epstein. Cutler was not immediately available for comment on Monday.
“While we regret any association with Jeffrey Epstein, we would never have continued to business with him if we believed he was using our bank to commit heinous crimes,” a JPMorgan spokesperson said when asked about Erdoes’ involvement. “In fact, Mary Erdoes and others exited him as a client six years before he was charged with human trafficking.”
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