Dive Brief:
- The U.S. Virgin Islands is seeking $190 million in damages from JPMorgan Chase over allegations the bank allowed former client Jeffrey Epstein to set up a sex trafficking operation there, according to a document filed Friday in Manhattan federal court.
- The American territory, where the late convicted sex offender owned an island, is seeking at least $150 million in civil penalties from the firm, and another $40 million it claims JPMorgan generated in fees tied to its relationship with Epstein, who, according to the filing, referred “many ultra-high net worth clients” to the bank.
- The New York City-based bank last month agreed to pay Epstein’s victims $290 million in a settlement of a class-action lawsuit.
Dive Insight:
“We are pursuing this enforcement action because JPMorgan Chase’s institutional failure enabled Jeffrey Epstein’s sex trafficking, and JPMorgan Chase must make significant changes to detect, report and stop human trafficking,” U.S. Virgin Islands Attorney General Ariel Smith said in a statement sent Friday to Banking Dive.
In addition to the monetary damages, the U.S. territory wants JPMorgan to implement new policies to prevent human trafficking, such as separating its business and compliance functions and designating an independent compliance consultant, Smith’s office said.
“These sets of recommendations aim to address the same core problem: JPMorgan’s knowledge of and failure to report Epstein’s trafficking because it lacked the economic incentive and motivation to place compliance with the law and prevention of trafficking ahead of its own profits,” Smith said in Friday’s filing.
As the case heads toward a scheduled Oct. 23 trial, the bank could be in the midst of settlement negotiations with the U.S. territory, CNBC reported.
In a statement provided to the outlet, JPMorgan spokesperson Patricia Wexler said the filing “does not reflect the nature of settlement conversations.”
“As for the USVI’s misdirected damages theories, they are not well founded and are being challenged by JPM in court,” she said.
The U.S. territory is also seeking an unspecified amount in further compensatory damages for Epstein’s victims, beyond what the bank agreed to pay last month, according to the filing.
Without admitting any wrongdoing, JPMorgan reached an agreement to pay $290 million to victims of Epstein in a deal that settles a suit filed in November by an unidentified woman on behalf of victims who claim the bank had knowledge of Epstein’s illegal sex trafficking activity in the early 2000s.
“The parties believe this settlement is in the best interests of all parties, especially the survivors who were the victims of Epstein’s terrible abuse,” the bank said in a statement last month.
JPMorgan isn’t the only bank to reach a settlement with victims regarding its connection to the late financier.
Deutsche Bank, which brought Epstein on as a client following the 2013 dissolution of his relationship with JPMorgan, agreed in May to settle an alleged Epstein victim’s class-action lawsuit for $75 million.
“We acknowledge our error of onboarding Epstein in 2013 and the weaknesses in our processes, and have learnt from our mistakes and shortcomings,” Deutsche Bank said at the time.
Epstein died in a Manhattan jail cell in August 2019.
