V.I. May Add Charge in JPMorgan Suit Over Epstein Dealings, Judge Rules

The U.S. District Court for the Southern District of New York in Manhattan, where the V.I. government's case against JPMorgan Chase Bank is being heard. (Shutterstock image)
The U.S. District Court for the Southern District of New York in Manhattan, where the V.I. government’s case against JPMorgan Chase Bank is being heard. (Shutterstock image)

The V.I. Attorney General’s Office may amend its complaint against JPMorgan Chase to add a claim that the bank obstructed enforcement of the federal Trafficking Victims Protection Act in its business dealings with the late disgraced financier Jeffrey Epstein, the judge overseeing the case ruled Monday.

In a related order, U.S. District Judge Jed S. Rakoff rejected a bid by onetime JPMorgan executive James “Jes” Staley — faced with a third-party lawsuit by his former employer, to hold him accountable for damages should the plaintiffs prevail — to have his case heard separately.

Staley handled Epstein’s 50-plus JPMorgan accounts and is at the center of the V.I. government’s complaint and another brought against the bank by anonymous Epstein victim Jane Doe 1, who also has filed suit against Deutsche Bank, where Epstein took his business after Staley moved to BlueMountain Capital in 2013 and then to Barclays Bank in 2015.

The cases have been consolidated for trial purposes by Rakoff, and in Monday’s ruling, he dismissed Staley’s claims that the court’s deadlines for discovery and the trial date would create an undue burden. However, he did modify the pretrial schedule, adding an additional seven weeks for discovery by Staley’s attorneys to July 18.

The trial date of Oct. 23 — already extended six weeks from the original date of Sept. 5 to accommodate Staley — remains unchanged, Rakoff ruled.

JPMorgan had opposed the V.I. government’s motion to amend its complaint, which Rakoff had allowed to proceed on one count — that JPMorgan Chase knowingly benefitted from participating in a sex-trafficking venture in violation of the federal Trafficking Victims Protection Act, or TVPA — in an order March 20 regarding the bank’s motion to dismiss the cases.

In his ruling Monday, Rakoff agreed with the bank that the government could have included the obstruction charge when it filed its initial complaint on Dec. 27 and then amended that complaint on Jan. 10.

“At the same time, however, there does not appear to be a good reason to deny the USVI the leave that it seeks,” the judge wrote, noting that many of JPMorgan’s arguments simply rehash points it made against Doe’s obstruction claim and the USVI’s other claims, which the court rejected when it denied in part the bank’s motion to dismiss the cases.

“The USVI’s delay in pleading an obstruction claim did indeed deny JPMorgan an opportunity to attack that claim in its motion to dismiss. But JPMorgan’s response to this motion suggests that it would not have made any credible arguments that were not already before the Court,” Rakoff ruled.

“For the foregoing reasons, the Court hereby grants the USVI’s motion to amend its complaint. The USVI’s Second Amended Complaint will hereafter be the operative complaint in this case,” he wrote.

As for Staley, Rakoff said he is central to the allegations against JPMorgan, and therefore it makes no sense to hear the bank’s suit against him separately.

“Though not always identified by name, Staley is a key figure in the allegations made in the plaintiff’s and co-plaintiff’s complaints, as well as the sole defendant named in the third-party complaint filed by defendant JPMorgan Chase Bank, N.A.,” Rakoff wrote.

“Regardless of any putative severance, he and the facts relating to him will therefore be a prominent focus of the trial of the underlying case between plaintiff Jane Doe 1, co-plaintiff the Government of the United States Virgin Islands, and JPMorgan. Under these circumstances, it would make no sense to sever the case against Staley,” the judge ruled.

He also noted that Staley is represented by a 400-attorney law firm — Williams & Connolly of Washington, D.C., “recognized as one of the world’s premier litigation firms” — and expressed doubt that the timeline will present a burden. Indeed, the former CEO’s lead attorney is Brendan Sullivan Jr., who represented Lt. Col. Oliver North in the wake of the Iran-Contra scandal of the late 1980s, as well the lacrosse players in the Duke University rape case, among many other high-profile cases.

Both Doe and the V.I. government allege that Staley enjoyed a “profound friendship” with Epstein, a convicted sex offender whose main residence was Little St. James, his private island estate located just off St. Thomas. According to court documents, that relationship continued up until Epstein’s death by apparent suicide in August 2019 in his New York City jail cell, where he was being held on federal human trafficking charges.

Those charges stemmed from investigations into Epstein’s controversial 2008 non-prosecution agreement with federal prosecutors in Florida, under which he pled guilty to state charges of soliciting and procuring a minor for prostitution, despite evidence that dozens more girls were involved.

Doe had also sought to have Staley’s case severed from the rest on the ground that JPMorgan’s “true reason for bringing Staley into the lawsuit is to harass and intimidate not only Jane Doe but also other Epstein victims” by “forc[ing] her to share private medical records and her most intimate communications with one of her abusers.”

However, Rakoff found that “aside from the fact that JPMorgan unequivocally denies this unsupported accusation about why it sued Staley, Jane Doe 1 cannot have been blind to the fact that in bringing a lawsuit that accuses JPMorgan of facilitating Mr. Epstein’s alleged sex trafficking of her and others, sensitive matters would necessarily have to be the subject of discovery,” he said.

“The proper way to handle this is by making such discovery subject to confidential treatment, and, indeed, JP Morgan represents that it ‘has therefore agreed to every request to make matters confidential’ made by Jane Doe,” Rakoff ruled.

Both JPMorgan and Deutsche Bank have denied wrongdoing, with JPMorgan stating that the V.I. government’s claims against it “strain credulity.”