Did JPMorgan Go Easy on Alleged Sex Trafficker Jeffrey Epstein?

Everyone on Wall Street who knew disgraced financier Jeffrey Epstein is busy distancing themselves from the convicted pedophile, who died of an apparent suicide Saturday in a federal jail cell in New York City, where he was awaiting trial on sex trafficking charges. The lurid case involving underage girls has name-checked politicians, a prince, and a number of billionaires — most of whom likely wish they’d never met the man.

Then there’s JPMorgan Chase, which is pushing back against a New York Times report on Thursday that the bank refused to break ties with Epstein a decade ago, even though its compliance staff recommended doing so. The bank finally quit doing business with Epstein, who was a private banking client of JPMorgan, in 2013.

JPMorgan is connected to Epstein through two former high-level executives and — according to the Times — one current one.

In 2008, Epstein was charged with sexual offenses with minors and pled guilty to soliciting prostitution in a Florida court. The next year JPMorgan’s compliance officers “recommended that the bank cut its ties to the financier … because his accounts posed unacceptable legal and reputational risks,” the Times reported. 

A multi-year review the bank conducted at the behest of the Comptroller of the Currency in the post-Madoff era had flagged “Epstein’s accounts … as potentially problematic,” the Times wrote. 

The stunning revelation in the story was that Mary Erdoes— who is the head of JPMorgan’s asset management division and widely considered a potential successor to CEO Jamie Dimon— stepped in to keep Epstein as a client, according to six people the Times spoke with.  

Joseph Evangelisti, a JPMorgan spokesman, said the Times has it wrong. 

“Mary would never overrule our compliance team or other controls functions to retain a customer,” he told the Times. “She has only one recollection of formally meeting with the customer, which was the day she fired him as a client.”

Epstein had been kept on as a client, according to the Times report, because he helped recruit wealthy people to JPMorgan’s private-banking division.

The report said that an internal debate at the bank over the issue was so heated that one compliance officer quit. The matter finally came to a head in 2013, according to the Times, when the Comptroller of the Currency “publicly ordered the bank to improve its processes for detecting money laundering and rigorously scrutinizing customers.”

Epstein was kicked out of JPMorgan that year, around the same time two of his most important connections to JPMorgan also left: Jes Staley, who by then was the CEO of JPMorgan’s investment bank, and Glenn Dubin, then head of hedge fund Highbridge Capital, which JPMorgan owns.

Between 2001 and 2009, Staley — Epstein’s most powerful connection at JPMorgan — had been running JPMorgan’s asset management division, the job Erdoes landed when Staley was promoted to run the investment bank. Staley is now the CEO of Barclays Bank.  

Staley’s signature achievement at JPMorgan was the 2004 majority stake the bank took in Highbridge Capital, which it now owns outright. Today Highbridge is a $25 billion juggernaut and a pillar of the bank’s asset management division.

Epstein, it turns out, was partially responsible for making that deal happen. In 1998, according to an individual familiar with the matter, he had introduced Staley to Dubin, the co-founder of Highbridge. 

When JPMorgan took its undisclosed stake in Highbridge, the hedge fund gave Epstein a $15 million fee for “brokering” the deal, though people inside Highbridge questioned what he did to earn that fee, according to a person familiar with the transaction. (Highbridge declined to comment on the fees, saying the deal’s terms are private. The Wall Street Journal earlier reported the fee.)

Dubin had become close with Epstein through his wife, Eva Andersson-Dubin, a former Miss Sweden and model turned doctor-philanthropist who had been Epstein’s girlfriend in the 1980s. (Epstein was also an investor in Highbridge until Dubin left in 2013.) The Dubins apparently had a relationship with Epstein well beyond finance, even reportedly spending Thanksgiving with him after he was released from prison.

On Friday, Dubin’s name surfaced once again in the Epstein case, when documents in the defamation suit by Virginia Giuffre — one of Epstein’s alleged victims — against Ghislaine Maxwell, the British socialite accused of soliciting the underage girls for Epstein’s sexual pleasure, were unsealed. Among the trove of documents was a 2016 deposition of Giuffre. In it, she claimed that Dubin was the first person besides Epstein she was forced to have sex with — in 2001.

The Dubins broke off with Epstein after his recent arrest, publicly denouncing him.

“Glenn and Eva Dubin are outraged by the allegations against them in the unsealed court records and categorically reject them,” a spokeswoman for the couple told Institutional Investor on Saturday.