I would love to see how Fox and MSNBC would react to this. Would Fox attack Clinton while defending Trump? Would MSNBC attack Trump while defending Clinton? Or would they both avoid the story altogether because it may hurt a member of their “team”.
These Are the Deutsche Bank Executives Responsible for Serving Jeffrey Epstein
When New York regulators punished the bank for its work with Mr. Epstein, no individuals were named. The Times identified them.
Jeffrey Epstein, the sex criminal and financier, didn’t act alone. Now we know in vivid detail who some of his financial enablers were: executives and bankers at Deutsche Bank.
Last week the New York Department of Financial Services laid bare at least some of the financial underpinnings of Mr. Epstein’s sophisticated enterprise. Deutsche Bank agreed to pay a $150 million fine for its dealings with Mr. Epstein, who committed suicide last August, and for two other matters.
Mr. Epstein’s bankers “created the very real risk” that payments through the bank “could be used to further or cover up criminal activity and perhaps even to endanger more young women,” the department asserted.
Deutsche Bank executives approved Mr. Epstein as a client in 2013 and then kept working with him, even though employees worried about the fact that “40 underage girls had come forward with testimony of Epstein sexually assaulting them,” as the bank put it in internal communications about Mr. Epstein in early 2015.
And even though such high-risk clients are required to be carefully monitored to detect and prevent illegal activity, once Mr. Epstein was a client, “very few problematic transactions were ever questioned, and even when they were, they were usually cleared without satisfactory explanation,” the New York regulator concluded.
Deutsche Bank itself is a corporation, and, as has often been said, it’s people, not corporations, who do bad things. Responsibility for working with Mr. Epstein permeated the ranks of the private-banking division that caters to wealthy clients.
Yet Deutsche Bank declined to publicly identify any individuals involved — and the authorities didn’t demand it. The so-called consent order with the New York agency included no names of the bankers or executives who were implicated; instead, the document is littered with references like RELATIONSHIP MANAGER-1 and EXECUTIVE-2. A bank spokesman, Daniel Hunter, said the bank meted out appropriate punishments to employees who were still at the bank, but declined to name anyone.
Based on descriptions of the employees in the consent order and interviews with current and former Deutsche Bank officials, The New York Times was able to identify nearly every person anonymously described in the order. At least one high-ranking executive remains in her position: Jan Ford, the bank’s head of compliance in the Americas.
It is rare for companies and regulators that are settling allegations of crimes or other misconduct to name the individuals responsible for those misdeeds — a practice that perpetuates the myth that such acts were inadvertently committed by a faceless institution and were not the consequence of decisions made by human beings.
Large companies “will happily pay a big fine as long as senior managers are protected,” said John Coffee Jr., a Columbia Law School professor and author of the forthcoming book “Corporate Crime and Punishment: The Crisis of Underenforcement.”
Fines paid by public companies, even of the $150 million magnitude Deutsche Bank is paying, fall almost entirely on shareholders rather than the individuals responsible. When those individuals bear no discernible consequences, the result is an astonishing rate of recidivism, Mr. Coffee noted, despite repeated apologies and promises that bad behavior won’t happen again.
New York’s Department of Financial Services, not Deutsche Bank, wrote the consent order that omitted the executives’ and bankers’ names.
While the bank may not be legally obligated to name those responsible for the Epstein relationship, it should do so to rebuild public trust, said Brandon Garrett, a professor at Duke Law School and author of “Too Big to Jail.” “When a company does something seriously wrong, then accountability is all the more important,” Mr. Garrett said. “You want assurances they’re cleaning house. That’s especially true for Deutsche Bank, which has been around this block many times.”
Indeed, Deutsche Bank is a symbol of corporate recidivism: It has paid more than $9 billion in fines since 2008 related to a litany of alleged and admitted financial crimes and other transgressions, including
- manipulating interest rates,
- failing to prevent money laundering,
- evading sanctions on Iran and other countries and
- engaging in fraud in the run-up to the financial crisis.
Deutsche Bank claimed to have put all this behind it when it named Christian Sewing as chief executive in 2018. “We all have to help ensure that this kind of thing does not happen again. It is our duty and our social responsibility to ensure that our banking services are used only for legitimate purposes,” Mr. Sewing said last week in a message to employees.
Since neither the regulator nor the bank would reveal the people responsible for the misconduct, my colleagues and I decided to fill in some of the blanks left by the consent order. (Some of the bankers and executives confirmed their roles; none would comment on the record.)
“RELATIONSHIP MANAGER-1,” who brought Mr. Epstein into Deutsche Bank, is Paul Morris, who had previously helped manage the Epstein account at JPMorgan. Despite Mr. Epstein’s conviction in 2008 of soliciting prostitution from a minor and widespread press coverage of his involvement with underage girls, Mr. Morris in 2013 introduced Mr. Epstein to his Deutsche Bank bosses as “a potential client who could generate millions of dollars of revenue as well as leads for other lucrative clients to the bank,” according to the consent order.
In a subsequent email to higher-ups at the bank, Mr. Morris noted that the Epstein relationship could generate annual revenues of up to $4 million.
Mr. Morris needed approval for a client who carried such reputational risk. He sent Charles Packard, the head of the bank’s American wealth-management division and described in the consent order as “EXECUTIVE-1,” a memo detailing Mr. Epstein’s controversial past. In a subsequent email, Mr. Packard said that he had taken the issue to the division’s general counsel and the head of its anti-money-laundering operation and that neither felt Mr. Epstein required additional review. “We can move ahead so long as nothing further is identified,” Mr. Packard wrote in a May 2013 email to Mr. Morris.
(Deutsche Bank told regulators that it found no written record of any approval from the executives Mr. Packard said he consulted.)
At the time, Deutsche Bank was aggressively expanding its U.S. wealth management business under its new co-chief executive, Anshu Jain. The bank developed a reputation for courting wealthy clients who other banks shunned — including a default-prone real estate developer named Donald J. Trump.
Once the Epstein relationship was underway, Deutsche Bank executives ignored repeated red flags, including suspiciously large cash withdrawals and 120 wire transfers totaling $2.65 million to women with Eastern European surnames and people who had been publicly identified as Mr. Epstein’s co-conspirators, according to the consent order.
That and other activity — including media accounts of Mr. Epstein’s sexual misconduct — led employees in the bank’s anti-financial-crime department to urge executives to further scrutinize the Epstein relationship.
Mr. Morris and Mr. Packard met with Mr. Epstein at his East 71st Street mansion in January 2015 and asked him “about the veracity of the recent allegations,” according to the consent order. No one took notes; the bank told regulators it had no record of the substance of the meeting.
Whatever Mr. Epstein said, Mr. Packard “appeared to be satisfied,” according to the consent order. No one subsequently asked Mr. Morris for his opinion. Deutsche Bank apparently didn’t further investigate the allegations against Mr. Epstein.
Eight days after the visit to Mr. Epstein’s mansion, a bank committee charged with vetting transactions that pose risks to the bank’s reputation held a meeting. According to a bank official familiar with the meeting, it was chaired by Stuart Clarke, chief operating officer for the Americas; other attendees included Michael Chepiga, acting general counsel for the Americas; and Ms. Ford, the compliance executive who had joined the bank just one week earlier.
The committee concluded that it was “comfortable with things continuing” with Mr. Epstein, according to an email that a committee member sent Mr. Packard. One committee member “noted a number of sizable deals recently,” according to the consent order. In other words, the relationship was making money for Deutsche Bank.
The following week Ms. Ford, the head of compliance, memorialized the decision in an email to Mr. Packard and other executives that put the onus squarely on Mr. Packard: Deutsche Bank would “continue business as usual with Jeff Epstein based upon” Mr. Packard’s “due diligence visit with him.” Ms. Ford also imposed some conditions on the relationship, but Mr. Packard and others “inexplicably” failed to convey those conditions to all of those who regularly dealt with Mr. Epstein. The bankers “continued conducting business with Epstein in the same manner as they had,” the consent order said.
Only after The Miami Herald revealed in November 2018 the extent of Mr. Epstein’s sexual misconduct and lenient plea deal did Deutsche Bank begin to wind down its relationship with Mr. Epstein. Even then, a bank executive wrote letters to two other financial institutions essentially vouching for Mr. Epstein.
By then Mr. Morris and Mr. Packard had both left the bank. Mr. Morris went to Merrill Lynch, where he’s a private wealth adviser. Mr. Packard joined Bridgewater Associates, the hedge fund founded by Ray Dalio.
Of the members of the risk-assessment committee who approved continuing the Epstein relationship, Mr. Clarke and Mr. Chepiga have both left the bank. Only Ms. Ford remains.
The bank’s Mr. Hunter declined to comment on her behalf. “Deutsche Bank undertook appropriate disciplinary actions based upon its findings regarding the underlying conduct, including termination for some employees,” Mr. Hunter said. “We do not comment on individual instances of employee discipline.”
Attorney General Sees Too Much Secrecy in Epstein Estate
The top prosecutor in the U.S. Virgin Islands says the estate needs to provide more detail about Jeffrey Epstein’s finances and is insisting on clauses that could protect others from wrongdoing.
Some of the same furtive techniques that Jeffrey Epstein employed in life are showing up in the litigation over dividing up the wealth he left behind when he died.
There are mysterious companies, lingering nondisclosure agreements and contractual clauses that some lawyers fear could protect anyone who took part in Mr. Epstein’s wrongdoing.
The estate’s lawyers say they have a plan to fairly distribute money to dozens of women who have accused Mr. Epstein of sexually abusing them as teenagers. But the attorney general of the U.S. Virgin Islands, where Mr. Epstein built a complex web of corporate entities, says Mr. Epstein’s money is still buying silence.
And in the middle is a fortune estimated at well over a half-billion dollars.
“We have a lot of concerns with respect to the transparency of the estate and its finances and the accounting of the estate,” the attorney general, Denise N. George, said in an interview last month.
Ms. George filed a civil forfeiture lawsuit against the estate in January, roughly five months after Mr. Epstein committed suicide while being held in federal custody in Manhattan after his arrest on sex trafficking charges. She said she sued to protect the interests of Mr. Epstein’s accusers and recoup some of the money that Mr. Epstein made during his two decades in the Virgin Islands.
The estate has insisted it is acting in the best interest of Mr. Epstein’s accusers. But it has also provided an incomplete accounting of his finances, according to records reviewed by The New York Times.
At least one business — IGO Company L.L.C., a corporate entity established by Mr. Epstein in December 2006 — was left out of the estate’s court filings. The company, which lists Mr. Epstein as its sole owner, was still active and in good standing as of Monday, according to a U.S. Virgin Islands government site.
Lawyers for the estate did not respond to a request for comment. The co-executors of the estate are Darren Indyke, a lawyer, and Richard Kahn, an accountant. Both men worked closely with Mr. Epstein for many years and were listed as officers for some of his businesses.
Much of the fighting between the estate and Ms. George’s office involves a plan to establish a victims’ compensation fund, which would allow accusers to receive payments from the estate without a potentially costly court case. The estate’s representatives say the proposed fund — which would be set up with the help of the specialist who ran the compensation program for victims of the Sept. 11, 2001, terrorist attacks — would allow accusers to receive money quickly and privately.
But Ms. George said the estate wanted to attach too many strings to those payments.
On April 7, Ms. George’s office told the probate court handling Mr. Epstein’s will that she and the estate had reached an impasse over the estate’s demand that victims who take part in the fund agree to a broad release that would bar them from suing any party “whether they participated negligently or intentionally in wrongdoing themselves.”
To Ms. George, the estate’s conduct was a reminder of the legal maneuvers that surrounded Mr. Epstein’s guilty plea 12 years ago to soliciting prostitution from a minor in Florida. In 2007, federal prosecutors agreed to a wide-ranging nonprosecution agreement that covered Mr. Epstein’s named and unnamed co-conspirators. (A federal appeals court this month rejected a legal challenge brought by one of his victims to the agreement.)
Ms. George’s office said the estate now wanted to “secure similarly broad protection for Epstein’s compatriots-in-crime from their victims.”
Lawyers for the estate reject that argument. In their response, they said Ms. George had mischaracterized the situation and said two lawyers representing several accusers were ready to move forward with the fund. The estate’s lawyers contend the liability release is “modeled on releases employed in multiple voluntary compensation programs.” Its intent, they say, is to make sure a victim does not double-dip by getting compensation from the fund and then suing an individual affiliated with the estate who might be entitled to be legally reimbursed by the estate.
The particulars of how Mr. Epstein made his millions have long been a mystery, in particular after his 2008 conviction. Financial filings the estate has made so far have raised as many questions as they have answered.
In January, the estate filed a required report that, along with routine transactions to pay bills and other expenses, showed the estate had transferred more than $12 million to Southern Country International, a little-known private bank Mr. Epstein had established in 2014.
The magistrate judge overseeing the probate of the will, Carolyn Hermon-Purcell, questioned the estate’s lawyers about the transfers and asked for a fuller accounting. The estate has not yet filed an explanation; the territory’s courts have granted blanket extensions because of the coronavirus outbreak.
But according to four people familiar with the matter, the estate’s $12 million payment to the bank involved preparations for Mr. Epstein’s criminal case. Mr. Epstein used the bank to pay a $12 million retainer fee to the criminal defense attorney Reid Weingarten, according to the people, who spoke on the condition of anonymity because the matter has not been made public.
In mid-December, Mr. Weingarten’s law firm, Steptoe & Johnson, returned the unused portion of that retainer — roughly $11 million, according to the estate’s first quarterly filing. The next day the estate sent that money to the bank.
What happened to the money in Southern Country after that is not clear; the estate reported the bank had a year-end balance of just $500,000.
Southern Country is an unusual kind of bank: an international banking entity, which is limited to conducting business for customers overseas. Mr. Epstein was approved for his license in 2014, but the bank had not commenced doing business as of April 2018, according to a letter the bank sent to its regulator.
According to two people briefed on the matter, Mr. Epstein began to move money to Southern Country last spring after Deutsche Bank, his longtime bank, decided to sever all ties with him in response to a series of stories about Mr. Epstein by The Miami Herald.
Ms. George’s office is small compared with her mainland counterparts, and she has bulked up its resources by hiring a forensic accountant and outside lawyers with Motley Rice, a large plaintiffs’ litigation firm. But it has been active.
In recent weeks, Ms. George’s office sent a subpoena seeking bank records for Mr. Epstein’s businesses in the Virgin Islands, according to two people briefed on the matter. She also subpoenaed some records from the Virgin Islands Economic Development Authority, the government agency that granted lucrative tax benefits to Mr. Epstein’s companies, said Tracy Bhola, an authority lawyer.
According to one person familiar with the matter, Ms. George’s office has also made a demand for information from Mr. Epstein’s former girlfriend and business associate Ghislaine Maxwell, who recently filed a lawsuit against the estate asking it to cover her legal fees for any claims brought against her by his accusers.
Ms. George’s office has also reached out to some of Mr. Epstein’s former employees in the Virgin Islands. She said her office was trying to navigate around nondisclosure agreements that Mr. Epstein had signed with many of his them. She said the estate should commit to releasing the employees from those agreements.
“Just the existence of an N.D.A. casts a shadow or chilling effect on anyone speaking freely,” she said.
While many of Mr. Epstein’s companies — including IGO Company L.L.C. — continue to exist on paper, there is little left of their physical operations.
Those include Southern Trust, once Mr. Epstein’s main business venture, which generated $300 million in profits in just six years. Mr. Epstein had said it was a DNA research firm, although Ms. George said her office had found no evidence it engaged in that kind of work. Southern Trust alone is valued at $234 million, and the estate has yet to disclose where most of its assets are being held.
For months after his death, employees still showed up at the company’s office in the American Yacht Harbor club on St. Thomas. That stopped in late February, and by the start of last month the office doors were secured with a padlock.