Front Burner - Why JPMorgan is being sued over ties to Jeffrey Epstein

Episode Date: May 26, 2023

It’s been nearly four years since Jeffrey Epstein died in jail while awaiting trial on sex-trafficking charges. Yet more of his ties to the world’s rich and powerful are still being uncovered, and attempts to obtain some measure of accountability continue. One route is through Epstein’s former bank, JPMorgan Chase & Co., which is currently embroiled in two lawsuits, including one from the U.S. Virgin Islands, where Epstein kept an estate. The Virgin Islands has issued subpoenas to a number of billionaires in connection with the case – including Google co-founder Sergey Brin, and more recently, embattled Tesla CEO Elon Musk. And there are new revelations about Epstein’s relationship with Microsoft co-founder, Bill Gates. Today, Wall Street Journal reporter David Benoit speaks with guest host Alex Panetta about these lawsuits, Epstein’s history with America’s biggest bank and what we’re still learning about the convicted sex offender’s web, years after his death. For transcripts of this series, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Alex Panetta. It's been nearly four years since Jeffrey Epstein died in a New York jail. Yet even in death, we're still learning more about his connections to the world's richest and most powerful people.

And attempts to obtain some measure of accountability continue. One route, it's through Epstein's former bank, JPMorgan Chase. The bank is currently embroiled in two lawsuits, one from an accuser of Epstein's, and another from the U.S. Virgin Islands, where he kept an estate. The Virgin Islands has issued subpoenas to a number of billionaires in connection with the case, including Google co-founder Sergey Brin, and more recently to embattled Tesla CEO Elon Musk. And now there are new revelations about Epstein's relationship with Microsoft co-founder Bill Gates. So today, I'm speaking with Wall Street Journal reporter David Benoit about these lawsuits, about Epstein's history with America's biggest bank, and what we're still learning about the sex offenders network years after his death. Hi, David. Hey, Alex. Thanks for having me.

Oh, good to have you here. So, okay, before we dive into the details, maybe can you just start by telling me briefly, why is the U.S. Virgin Islands suing J.P. Morgan, the bank? What are they alleging here? So this goes back to the time when Jeffrey Epstein was a client of the bank up until the years of 2013. And what the US Virgin Islands government is saying is, you as a bank should have looked at his transactions, you should have seen him moving cash around, you should have seen what was public about him. And we would have been able to uncover his crimes, his alleged crimes, earlier than we did. And because you guys failed as a bank, we are coming after you to recoup some money. Interesting. And the bank is saying the lawsuits are misplaced, right? What's the bank's take on this?

Yeah. So the bank is saying, look, we regret having a relationship with Epstein now, everything we know. But we could not have known what was going on. It was not our responsibility. In fact, it actually says, hey, U.S. Virgin Islands, you as a government should have seen just as much as we saw. So the legal question of this is open-ended. I don't know how that's going to end, but it doesn't look great for the bank, what's coming out. Yeah, not only that, the bank also faces another lawsuit, if I understand correctly, from a Jane Doe. What's that about? Pretty much the same sort of allegations, and they're actually, now the suits are sort of combined in court. A victim of Jeffrey Epstein, an anonymous victim, says sort of the same thing.

Like, hey, you were his bank and he helped you and you helped him. And he committed all these crimes of abusing young girls and women for all these years because no one stopped him. So let's talk about the cash. I mean, what do we know about the kind of money that Jeffrey Epstein was keeping at J.P. Morgan? Sure. So it's still a little bit murky how much money he really kept there. The big tell here is that he was a client of the J.P. Morgan private bank. And that is the part of the bank that serves the wealthiest of the wealthy. So generally, you have to have 10 million and up. That's notiest of the wealthy. So generally, you have to have $10 million and up. That's not like a hard and fast rule.

But you have to have a lot of money there. And then the other thing we can see is he had pretty close connections to the top executives at JP Morgan. And that's a sign that he was clearly an important client. He was bringing them important people. He helped them land a big deal at one point and they paid him money for it. He was clearly a wealthy person for the bank and an important client. So let's talk about his relationships. Those relationships with some at the bank seem to go beyond just the professional white glove service you get when you have millions of dollars. So what have you learned about his friendship, in particular with the former JP Morgan executive Jess Staley?

Yeah. So Jess Staley is sort of the point person on all of this. Staley had been running that private bank that we just talked about when Epstein became a client. They became apparently very close. And we see this in emails that the Virgin Islands released in their lawsuits. They share jokes amongst each other. The Virgin Islands says at one point, Epstein, at two points, Epstein sends Staley a picture

of what they say is a young woman in a provocative pose. Staley visits Epstein when he's serving a prison sentence in 2008 and 2009. Staley visits him. Staley goes to his houses. He goes to the townhouse in New York. He goes to the Virgin Islands, private island. He spends an awful lot of time with Jeffrey Epstein. Well, wow.

I mean, this is a bank executive. I mean, you alluded to the emails and the fact that they sent many emails to one another. According to the lawsuit, Staley sent Epstein one email from a hot tub saying, I owe you so much. I deeply appreciate our friendship. I have few so profound. They also exchanged emails referencing Disney princesses. What was that all about? Yeah. I think it remains a little unclear what this is all about, but you're right. So there's this back and forth that the US Virgin Islands has flagged. And a lot of people are

sort of asking about where Staley sends him a note and says like, that was fun. Say hi to Snow White. And Epstein responds, what character would you like next? And Staley replies, Beauty and the Beast. And now we don't exactly know what that is. The US Virgin Islands sort of implies that that is not a great thing, but it's certainly questionable emailing to someone who is at this point a convicted sex offender and who has been alleged to be trafficking girls as young as 14. Yeah, no kidding. Okay, so I understand that the Jane Doe lawsuit includes an allegation that a powerful, quote, financial executive, the Jane Doe lawsuit includes an allegation that a powerful, quote, financial executive,

end quote, friend of Epstein's sexually assaulted her. So how did that unnamed friend of Epstein's come to be identified as Staley, allegedly? Yes. So this is a little bit complicated in the lawsuit. So that allegation was sitting in the very first Jane Doe lawsuit. And it's just sort of, hey, this happened. What winds up happening is JP Morgan has actually at this point sued Jess Staley inside all of these cases. And they say, look, what's come to light to us is if there was a problem, if we accidentally covered up Jeffrey Epstein's crimes, it wasn't the bank. It was Jess Staley who misled the rest of us.

And as an executive, he breached his duties to us. And as our evidence, this unnamed financial executive is Jess Staley. We have come to believe that this is an allegation of sexual assault against Jess Staley, our former executive. At this point, we should probably note that Jess Staley vehemently denies this allegation. He also says he never knew the extent of Epstein's crimes, that he deeply regrets his relationship with him, but he never understood what was really happening. Just so that I have this straight, J.P. Morgan says they're not liable and that this case should be thrown out. But if they are found liable, it wasn't their fault.

It was Staley's fault. Is that correct? Yeah. Yeah, that's pretty much correct. It's like, hey, if we were to lose this case, you're going to have to go get the money from Jess Daly. Yeah. And just to reemphasize here, Jess Daly is not some low-level banker, some random faceless gnome within the operation, right? Can you give me a sense of his former clout, both at JP Morgan and beyond? Yeah. So Jess Daly, you're right. Jess Daly was a very prominent banker. So he ran the private bank

when he met Epstein. He then ran a bigger division, and then he took over their investment bank, which is among the biggest in the world and a giant part of JP Morgan. At one point, he was viewed as the likely CEO succession candidate for Jamie Dimon. He then left the bank and went on to run Barclays in London, which is one of the biggest banks in England. He actually resigned from that amid questions about his relationship with Epstein and whether he was truthful or not. New information has come to light on which the FCA has made this decision. Why has the FCA decided to launch this probe at this time? You know, I'm not going to go into the issues of why the FCA.

I mean, clearly there's been obviously a lot of press. But I've been very transparent with the bank and very open and willing to discuss the relationship that I had with him. Okay. And this doesn't necessarily end with Jeff Staley, right? You're reporting at the Wall Street Journal that Epstein's relationships and contacts at J.P. Morgan went beyond this one former executive, Staley. What signs have you seen that indicate that other people at the bank may have known that Epstein might have had some, at the very least, distasteful interest in young girls? Yeah, so that's what we sort of set out to determine whether or not this was really right, that it was just a just Staley relationship. And I think we've shown that the relationship was deeper and wider than the bank had previously admitted. So a couple of things we've seen.

One, from our reporting, we found out that Mary Erdos, who took over the private bank in that kind of wealth relationships from Staley, exchanged lots of emails with epstein including talking about raising a big philanthropy fund with him um that she went to the townhouse a couple times uh she had previously said she remembered going once uh she went twice and that that their bankers were there an awful lot visiting with him so this this philanthropy fund epstein was trying to start like this was something that erdos and Staley emailed with him a lot. Like it was clear there were real plans going on for many months. The emails are detailed.

The emails aren't like them brushing him off. Like this was, this is clearly like a real thing they were trying to do with him. And I just think that shows this wasn't just like just Staley's friend that he was watching out for you know the context here for our listeners jeffrey epstein was first charged with a sex crime in 2006 he was first accused of sexually abusing girls as young as 14. He pleaded guilty to solicitation of prostitution with a minor in 2008, spent about 13 months in prison. I mean, was anyone at this bank raising up red flags about Jeffrey Epstein as a client? So you're right. And the bank was well aware of his crimes. So one of the things that the U.S. Virgin Islands focused on a lot was the compliance department inside J.P. Morgan, the people who are supposed to say like,

hey, this client is doing something suspicious. We're indeed saying, hey, this client is doing something suspicious. And we're sort of drowned out essentially is what winds up happening. As early as 2006, when the first allegations surface, it's pointed out that Epstein's withdrawing like thousands of dollars in cash, up to $80,000 at a time in just like humongous amounts in ways that is not normal for a client and is legally supposed to be flagged immediately. At the same time, their executives admitted, we understood that the allegations against him were that he was paying cash to young girls for massages where he sexually assaulted them. So the bank didn't put those things together. And a couple of times over the years throughout,

so that period of 2006 to 2013, when he remains a client, compliance says, we really think we should get rid of this guy. There are questions about it. At one point, the very top lawyer at the bank is asked to re-approve whether Epstein should be a client or not. Who does he turn to to check out the rumors and allegations against Jeffrey Epstein should be a client or not. Who's he turned to to check out the rumors and allegations against Jeffrey Epstein? He asked Jess Staley to go check it out. And what winds up happening is Jess Staley apparently asked Epstein, hey, is this true? And Epstein said, no, it's not true. And Jess Staley went back to the bank and said, he says it's not true. And then they continued banking with him.

If I understand correctly, there's some email with a joke about Miley Cyrus. What was that all about? Yeah. So, right. This is another email that's come out in the court cases in which Mary Erdos, the executive that we talked about earlier, received an email joking that Epstein was at a Miley Cyrus concert. It is clear from what she has said in her deposition, according to the court papers and and from all the other emails and stuff like the very top of the bank knew about what he was accused of knew that he was accused of sexual assault of young girls and knew that he had history of this and they kept meeting with him they kept talking with him about philanthropy they kept talking about

managing his money he kept offering to bring them clients like like all of this could have been known and seen yeah again for context at the time miley cyrus was a minor when they're sending this email uh joking about him going to a concert correct and what and what and what probably had a crowd full of uh young teenagers In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization. Empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix. I've been talking about

money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income? That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Okay, but it wasn't until 2013 that Epstein's relationship with J.P. Morgan ended. So do we know why it ended in 2013 and why it ended when it did? We don't really have a great answer on this. The bank hasn't

really said, and the court documents don't really say, but you're right. So the timeline that we can see is Jess Staley leaves JP Morgan in early 2013. And in the middle of 2013, the bank cuts off its ties. Well, sorry, I should say the bank closes all of Epstein's accounts. Our reporting also shows that that wasn't truly the end, that some of their private bankers continued meeting with him, including going to his New Mexico ranch. So even after they cut him off, they kept working with him, which the bank has said those meetings were all about other clients that he also represented. him, which the bank has said those meetings were all about other clients that he also represented. Okay. Some of the world's richest and most powerful men have been subpoenaed as part of this case. Google co-founder Sergey Brin, Tesla and Twitter boss Elon Musk. What are these subpoenas about? So these subpoenas are the US Virgin Islands asking for more information. One of the

key claims they make is not only did JP Morgan keep Epstein around, they kept him around because he was helping them get access to rich clients. So one of the things that our reporting has shown broadly is Epstein was surrounded by celebrities and rich people. trying to uncover whether or not some of these rich people, Epstein connected to J.P. Morgan as clients and brought them as essentially new clients to J.P. Morgan, making the bank a whole bunch of money and a reason to protect Epstein is their allegation. What have Musk and Brin said about these subpoenas and having their names dragged into this case. Bryn has not commented yet, as far as I know. They also said they were having trouble finding Musk, which is, I think, a little ironic. He then came out. I know where to find him. Twitter. He then came out on his platform and blasted the idea on Twitter saying,

look, I never relied on Epstein for any advice. I wouldn't have done such a thing. And to be clear, he also truly dislikes JP Morgan. They have quite a fight going on. And he says, like, this is all nonsense. Wow. Okay. This brings us to an explosive report from your paper this weekend about Jeffrey Epstein and Microsoft co-founder Bill Gates. Maybe, can you just lay the groundwork for me about what we know about Jeffrey Epstein's pitch to JP Morgan for this philanthropic fund you mentioned earlier, and then how that pitch ends up involving Bill Gates? Sure. So, right, we mentioned this fund earlier. So the idea in 2011 was Jeffrey Epstein wanted JP Morgan and their asset management group to house a fund of mega rich people where they would put their money in and it would be for philanthropy purposes.

So JP Morgan would manage this huge pot of money, minimum $100 million put in by the rich people. And JP Morgan would manage that as a donor advised fund and they they would like spread the money out do philanthropy in like a smart way that was the whole idea uh sort of like the giving pledge that gets a lot of attention from bill gates and warren buffett jay mcgurgan was keen on this idea i thought it was a great idea and at the center of it all epstein wanted bill gates to sit now this is where it gets a little weird ep Epstein and Gates had a relationship. Absolutely. We reported multiple meetings. Gates flew on his plane. We reported about one day in 2014 where Gates spends like six hours with Epstein going around to meet a whole bunch

of other rich people. They clearly had a relationship. It also appears that Epstein embellished that relationship for many different reasons than to meet other rich people and to get closer to J.P. Morgan. So he's emailing J.P. Morgan all these notes about how Bill feels about the fund and how he's annoyed at their work and wants to do this and how they have to change the fund to put Bill Gates at the center. So that fund never gets off the ground. That fun never gets off the ground. And Bill Gates, what Bill Gates says today and has said consistently is Epstein was over-embellishing our relationship. I talked to him about philanthropy ideas. I thought he could help with things like that.

And he regrets that decision. What did you do when you found out about his background? Well, you know, I've said I regretted having those dinners uh and there's nothing absolutely nothing new on that is there a lesson for you for anyone else looking looking at this well he's dead so uh you know in general you always have to be careful uh you know i'm i'm very proud of what we've done in philanthropy, very proud of the work of the foundation. You know, that's that's what I get up every day and focus on. Let's talk about the weird twist this case takes afterwards. So Epstein's telling the bank, I'm going to get you Bill Gates. All right. It's not happening. Gates doesn't agree to participate in this philanthropic fund. And so tell me what your paper uncovered this weekend about what happens after that.

Gates and Epstein relationship starts to deteriorate in the later years. And what we learned was that Gates was having an affair with a young woman. Gates is a big bridge player. And he met this 20-something-year-old woman who also was interested in playing bridge. And they started having a consensual affair. Epstein finds out about this affair. And there's another character here, a person close to Gates, who Gates connects the woman to because she's trying to raise money to start an online bridge course, essentially. She wants to start a company. So Gates says, talk to my guy over here. And she talks to the guy. And the guy says, oh, you should talk to Epstein. Epstein gets introduced to this woman who is having an affair with Bill Gates. He finds out about this affair and he starts sort of drawing himself closer to this woman.

And over the years, he winds up paying for her to take some coding classes because the bridge idea doesn't work. So she goes to do something else. He pays for those classes. He gives her use of an apartment that he had kept. He kind of ensnares himself in this relationship. Gates breaks it off with her before all these things start happening. But as the relationship with Gates and Epstein starts deteriorating, Epstein sends Gates an email and says, I paid for these things. Reimburse me. It's pretty shocking stuff. I mean, it sounds like Epstein was basically trying to extort Gates. Like, hey, I know about your affair with this 20-something-year-old Russian bridge player.

And it's been a very persistent, though I would say unproven theory at this point, that Epstein was running a blackmail operation. You're right. That is the persistent rumor or speculation. So far, I can't say that our reporter has uncovered more of this. But I think that that's how gates took it it was such a minimal amount of money for billionaires to care about this little expense that gates certainly took it the the report says as as an attempt to extort him he said he did not pay him to be clear it it is uh it is pretty shocking. Okay. So before we go today, it's been nearly four years since Jeffrey Epstein died awaiting a sex trafficking trial.

His former girlfriend and associate is behind bars convicted of sex trafficking. So why do you think it's still important all these years later to be reporting on and digging into this really pretty lurid story. So I think we think at the Wall Street Journal that, one, there's still a lot of mystery around the guy. I think even the people that knew him, quote unquote, well, have always maintained that he was a mysterious, strange guy. And where did his money come from? And how did he maintain his reputation has been this like open question. And we've really focused on the time after his first allegations. So when it was known that he had been convicted and served prison time for sexual offenses and was a registered sex offender. And yet he continued to have this immensely powerful circle of people around him who lent him credibility and lent him respectability to a lot of people.

A lot of people we talked to said like, well, I met with him because that guy was meeting with him. And that guy was meeting with him because the other person was meeting with him. He cultivated this group of associates that allowed him to keep operating. So to shed light on the people who are around him and lending him credibility seems an important endeavor. And thanks for taking the time to chat with us about that. It's the case that it just never ends, right? I think there's a lot more for us to find out. Yeah.

All right, David, thanks so much for being here. Thanks for having me. That's all for this week. FrontBurner was produced this week by Imogen Burchard, Derek Vanderwyk, Lauren Donnelly, Rafferty Baker, and Jody Martinson. Our sound design was by Matt Cameron and Sam McNulty. Our music is by Joseph Shabison.

The show's executive producer is Nick McCabe-Locos. I'm Alex Panetta. Thanks for listening, and we'll talk to you next week. For more CBC Podcasts, go to cbc.ca slash podcasts.