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When Jeffrey Epstein was arrested a year ago on a new set of sex-trafficking charges, his primary bank professed to be shocked—SHOCKED!—at the depth and scope of their relationship with the convicted sex criminal. How could this happen, they wondered. After all, the bank spluttered—hilariously—after reaching a $150 million deal with New York regulators over the whole sordid affair, its reputation is its “most precious asset.”

And not just its reputation, apparently, but those of the actual human beings employed by Deutsche Bank to make decisions for Deutsche Bank about, say, whether to open dozens of accounts and lines of credit to a man who was allegedly a financier but who was indisputably guilty of underage prostitution. The Department of Financial Services consent order does a much better job of hiding their names than Epstein’s buddy did of concealing herself from the FBI, behind terms such as “RELATIONSHIP MANAGER-1” and “EXECUTIVE-1.” This is bad.

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, [Columbia Law professor John] Coffee noted, despite repeated apologies and promises that bad behavior won’t happen again…. When a company does something seriously wrong, then accountability is all the more important,” [Duke Law professor Brandon] Garrett said. “You want assurances they’re cleaning house. That’s especially true for Deutsche Bank, which has been around this block many times.”

Luckily, The New York Times isn’t bound by whatever agreement of silence DFS made with the other DB, and it’s done the work of putting actual names to the skeezy things RELATIONSHIP MANAGER-1 (real name Paul Morris, former Epstein relationship manager at JPMorgan Chase) and EXECTIVE-1 (real name Charles Packard, head of Americas wealth management), said and did, and what they told those higher-ups who would later express such surprise.

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….

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.

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.

Ick. But he wasn’t alone!

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 [Jan] 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.

Turns out the only thing Deutsche Bank might be good at is cutting sweetheart deals over the things it is bad at.

These Are the Deutsche Bank Executives Responsible for Serving Jeffrey Epstein [NYT]


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