JPMorgan sues former executive over Epstein ties, demands eight years of pay

Mere weeks after JPMorgan Chase & Co defended Jes Staley against accusations he knew about Jeffrey Epstein’s sex crimes, the bank is accusing the former senior executive of deception — blaming him for its dealings with Epstein and seeking to recoup eight years of compensation.

The firm’s sudden turn against its former private banking chief — who went on to run Barclays — unfolded at federal court in Manhattan this week. JPMorgan accused him of concealing an “inappropriate relationship” with Epstein and vouching for the sex offender’s character to keep him as a client.

JPMorgan accused Staley of concealing an “inappropriate relationship” with Epstein and vouching for the sex offender’s character to keep him as a client.Credit: Bloomberg

The bank’s court filings demand Staley hand over all of his compensation from 2006 through 2013 — a figure surpassing $US80 million ($121 million). They also argue he should bear the cost of any payouts in two lawsuits accusing the lender of facilitating Epstein’s crimes.

“Staley’s acts of disloyalty occurred repeatedly, lasted for years, and persisted despite numerous opportunities to correct them,” JPMorgan wrote.

The biggest US bank noted that one of Epstein’s alleged victims described “a powerful financial executive” who used aggressive force in a sexual assault of her. “Upon information and belief, Staley is this person,” JPMorgan said.

His attorney declined to comment on the filing. The banker has consistently denied knowledge of Epstein’s abuse.

Plaintiffs have been ratcheting up pressure on the firm in recent months, publicly revealing more details in their complaints and seeking more information on communications between company officials. They have even sought to question chief executive officer Jamie Dimon — an effort the bank is fighting.

Pointing at Staley now is a “clever move” by JPMorgan, said Mary Dodge, a professor of criminal justice at the University of Colorado Denver School of Public Affairs. “They have decided to displace the blame and publicly fight the allegations. Staley looks terrible, and they look like the ‘good guys.’”

The US Virgin Islands and a group of alleged Epstein victims led by a plaintiff identified as Jane Doe 1 sued the firm last year, accusing it of financially enabling his crimes. The bank helped manage Epstein’s wealth for years, even after he pleaded guilty in 2008 to soliciting a minor for prostitution. His relationship with Staley is at the centre of both suits, which claim JPMorgan knew or should have known about the sex offender’s conduct but kept him as a client anyway.

A complaint filed this year alleged Staley frequently visited Epstein’s properties, including his New York townhouse massage room, a “stash house” apartment on Manhattan’s Upper East Side and a US Virgin Islands estate. The banker allegedly met many of Epstein’s trafficking victims and saw him “sexually grabbing” some, their suit claims.

Snippets of the pair’s alleged correspondence were included in a filing unsealed last month, containing references that have become fodder for conjecture. For example, the USVI alleges that in July 2010, Staley and Epstein discussed Disney princesses:

“That was fun,” Staley allegedly wrote. “Say hi to Snow White.”

“[W]hat character would you like next?” Epstein allegedly responded.

“Beauty and the Beast,” Staley wrote back.

Until this week, the bank defended Staley, who left in 2013.

It pushed back in February, for example, on allegations he witnessed Epstein’s grabbing, calling the claims “unsupported” and “conclusory”. While “odious,” the bank argued, such groping wouldn’t establish she was a sex-trafficking victim, much less that Staley knew she was.

The bank struck a different tone this week, arguing that “if the allegations of Doe and the USVI are true, Staley repeatedly abandoned the interests of JPMC and served his own and Epstein’s interests”.

The filing shows the bank is concerned some allegations may indeed be accurate, said Robert Mass, a former Goldman Sachs Group compliance executive. “That being the case, they want their employees, clients and regulators to know that this behaviour was both not something that they supported and something that they think is reprehensible.”

Until this week, JPMorgan had defended Staley, who left in 2013.Credit: Bloomberg

Staley joined JPMorgan in 1979, rising through its investment bank before moving over to run the private banking division in 1999. He soon took over asset management at well, overseeing the two businesses for nearly a decade — a period in which JPMorgan bought Bank One and Dimon took over the combined firm.

In 2009, Dimon picked Staley to lead JPMorgan’s investment bank. At the time it was considered a promotion as well as a signal to investors that he could one day succeed Dimon atop the firm. That was short-lived: fewer than three years later, Staley was demoted as part of a reshuffle in the wake of JPMorgan’s London Whale trading loss. Within months, he quit to join hedge fund BlueMountain Capital.

Staley reemerged in the banking world in 2015, when he was appointed CEO of Barclays. He held the post for six years, surviving a run-in with British regulators who said he repeatedly and improperly tried to uncover the identity of a whistleblower.

When his ties to Epstein first came to the fore in 2019, Staley volunteered to tell Barclays’s board his side of the story. Later that year, UK regulators opened their own inquiry. After authorities presented their preliminary findings to the board, Staley abruptly stepped down — but he’s still contesting the findings.

JPMorgan’s court filings don’t specify how it would tally Staley’s past compensation. Decade-old regulatory filings list his pay packages for all but two years from 2006 through 2013, showing he earned over $US80 million in that period, and potentially significantly more. Awards included stock, which would have gained value if he held onto it, but he also would have paid taxes on his income.

“In light of Staley’s intentional and outrageous conduct in failing to disclose pertinent information and abandoning JPMC’s interests in favour of his own and Epstein’s personal interests, JPMC is entitled to punitive damages,” the bank wrote.

Meanwhile, it has moved to dismiss both lawsuits and is set to argue its motions on Monday before US District Judge Jed Rakoff in Manhattan.

Bloomberg

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.