Professional Documents
Culture Documents
Jpmorgan Chase Bank, N.a.'s Opposition Tousvi's Motion To Strike Affirmative Defenses
Jpmorgan Chase Bank, N.a.'s Opposition Tousvi's Motion To Strike Affirmative Defenses
Plaintiff,
Defendant.
TABLE OF CONTENTS
CONCLUSION ........................................................................................................................ 25
i
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 3 of 30
TABLE OF AUTHORITIES
Page(s)
Cases
EEOC v. UPS,
2017 WL 2829513 (E.D.N.Y. June 29, 2007) .........................................................................24
ii
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 4 of 30
18 U.S.C.
§ 1595(a) ..................................................................................................................................23
§ 1595(d) ..................................................................................................................................23
§ 1963.......................................................................................................................................21
§ 1964(c) ..................................................................................................................................21
§ 2346(b)(1) .............................................................................................................................18
iii
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 5 of 30
PRELIMINARY STATEMENT
Plaintiff Government of the United States Virgin Islands (“USVI”) is complicit in the
crimes of Jeffrey Epstein. Epstein could have lived anywhere in the world. He chose USVI.
Discovery obtained in this case reveals why. For two decades, Epstein maintained a quid pro quo
relationship with USVI’s highest ranking officials. He gave them money, advice, influence, and
favors. In exchange, they shielded and even rewarded him, granting him more than $ million
walked through USVI airports accompanied by girls and young women, and even
. And,
and for long after JPMC exited Epstein as a client, the entity that most directly failed to protect
public safety and most actively facilitated and benefited from Epstein’s continued criminal activity
Though the USVI government hopes to shroud itself in exemptions, it is a plaintiff in civil
litigation like any other. Tellingly, USVI’s motion seeks to strike only those specific defenses that
threaten to expose its relationship with Epstein. The law affords defendants equitable defenses to
protect them against precisely this sort of one-sided presentation of the evidence. This Court
should see the USVI’s gambit for what it is and deny its motion.
BACKGROUND
Discovery in this case is ongoing but has established at least the following. In 2009, upon
his release from prison for procuring a minor for prostitution, Epstein sought to arrange for
supervision of his parole to be transferred from Florida to USVI. He registered with the USVI as
a sex offender in 2010 and maintained his primary residence there. This put him under USVI law
1
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 6 of 30
enforcement’s direct jurisdiction and supervision. The decades-long quid pro quo between Epstein
and the USVI government took three forms. First, high-ranking USVI officials spent years
courting and gladly accepting Epstein’s influence in the form of gifts, favors, and political
donations. Second, in exchange, USVI granted Epstein preferential treatment in the form of more
than $ million in tax incentives, among other benefits. Third, and most troublingly, USVI
protected Epstein, fostering the perfect conditions for Epstein’s criminal conduct to continue
Epstein’s corrupt relationship with USVI began with gifts. Epstein courted USVI officials
with money and favors—which USVI gladly accepted. Epstein funneled money in three ways.
First, he funded and advised on the finances of the USVI government itself. For example,
in February 2017, Epstein wrote to USVI First Lady Cecile de Jongh referencing her husband,
USVI Governor John de Jongh: “the vi govt is desperate for cash. does john know of any asset
they might have that i can use as collateral. islands. etc[.]” The amount to be collateralized was
$50 million, and First Lady de Jongh replied that she would “get a list of GOVI properties.” Ex.
1. Epstein also gave money to fund the USVI Department of Planning and Natural Resources
(“DPNR”). Ex. 2. For example, in 2017, he directed that a $25,000 check be cut from his company
Southern Trust Company, Inc. (“STC”) to the DPNR. Id. Not only did the DPNR take his money,
Dawn Henry, the DPNR’s commissioner, actively facilitated Epstein’s apparent preference to
donate to a school library, writing to him: “If you prefer to donate to school libraries I can connect
you with the Commissioner for Education. Either way the Territory wins.” Id. In an email sent
just a week prior, Epstein wrote to Commissioner Henry that he had given “25 k to the home for
girls in st croix” and asked her where to direct another $25,000. Ex. 3. That same Commissioner
later stated that, “when [Epstein] was alive, we weren’t really willing to hold him accountable.”
2
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 7 of 30
Ex. 4. And “Epstein, who was jailed for soliciting girls as young as 14 for prostitution,” gave gifts
Similarly, in 2018, the now-current USVI Governor Albert Bryan facilitated donations by
Epstein to USVI’s schools and little leagues. 1 E.g., Ex. 6 (Governor Bryan’s suggestions for which
schools Epstein should donate $50,000); Ex. 7 (“Albert [Bryan] asked that the $30K go to the VI
to despite knowing that they risked provoking suspicion. For example, in 2012
he wrote to First Lady de Jongh regarding his potential funding of a training program for VIPD:
“I always would like to support these things. in the past. it was looked upon with suspicioun
[sic].” She responds: “Suspicion locally? My thought was that this would be ok because it is
specifically homicide training.” To avoid leaving a written record, he responds curtly: “face to
face.” Ex. 9.
Second, Epstein gave money to USVI politicians. For example, Epstein supported
working for the USVI Economic Development Authority (“EDA”), the USVI agency responsible
for awarding Epstein his massive tax benefits, Ex. 10 at 14:24-15:5; see infra pp. 6-8, and one of
the private law firms that represented Epstein in his USVI business affairs, Ex. 10 at 86:4-24.
Epstein personally gave the maximum amount to Ms. Plaskett’s campaigns over multiple election
cycles, Ex. 11; Ex. 10 at 148:8-17, 221:7-10. He asked that his contributions be kept secret. Ex.
12. And he directed others to contribute as well. See Ex. 13. The reason: “[W]e would have a
1
The USVI has had three governors over the last 16 years: John de Jongh (2007-2015);
Kenneth Mapp (2015-2019); and Albert Bryan (2019-present). As detailed herein, Epstein had
close ties to each of them.
3
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 8 of 30
friend in Stacey.” Id. In total, Epstein and his employees donated over $30,000 across three of
Third, Epstein funneled money via his business entities. See Ex. 15 (First Lady de Jongh
noting that USVI Governor Kenneth Mapp and USVI Senator Celestino White wished to see
Epstein and asking Epstein “[f]rom which entity” he wished to donate to the St. Croix Democratic
Party, to which Epstein replied “personal”); Ex. 14 (confirming a $15,000 donation from Southern
Trust “for the benefit of Stacey Plaskett”). And Epstein contributed through super PACs and like
entities that fall under different public reporting requirements. E.g., Ex. 16 (“prepare a check for
[Governor] mapps super pac for 75k”); Ex. 17 (confirming intent to donate “$10,000 to the Mapp-
Potter Inaugural committee and that it should come from Southern Trust”); Ex. 18 (discussing a
Epstein’s primary conduit for spreading money and influence throughout the USVI
government was First Lady de Jongh. See Ex. 19 (“Epstein has contributed to the political
campaigns of various senatorial, gubernatorial, and congressional candidates within the local
Democratic Party. … Unequivocally, a political culture was fostered within the local Democratic
Party of the Virgin Islands that allowed Epstein to remain unchecked in exchange for his
sponsorship and financial contributions.”). For example, First Lady de Jongh drove donations
from Epstein to support her husband and allies, e.g., Ex. 20 (reflecting Epstein’s $15,000 donation
to Governor de Jongh’s “Special Events Fund”); Ex. 22 (Epstein paying USVI Senator Celestino
White $10,000 to consult on changing the name of one of Epstein’s islands); Ex. 21. And the
2
What is more, Plaskett also solicited donations from Epstein on behalf of the Democratic
Party of the Virgin Islands—for which she raked in $13,000, Ex. 14—and the Democratic
Congressional Campaign Committee—to which Epstein attempted to donate $30,000 to assist
Plaskett, only to be rebuffed for failing to meet the DCCC’s vetting requirements, Ex. 10 at 219:7-
221:10, 226:10-227:12.
4
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 9 of 30
relationship went deeper. Despite her public role and official duties, First Lady de Jongh managed
Epstein’s USVI-based companies from January 2007 to January 2015—receiving from Epstein a
salary, bonuses, and other benefits, including $200,000 in 2007 alone. Ex. 23. Epstein paid her
children’s tuition—i.e., the children of sitting Governor de Jongh, including when he was the
sitting USVI governor. 3 See, e.g., Exs. 25-26. And he also offered to fund Governor de Jongh’s
defense in the Governor’s criminal case. Ex. 27 (Epstein writes: “I will play any role in this you
guys like. I can lend john the money so he immediatly has it. . i woulld gladly be on thephone
(anonymouse) with john[,] quinn and the prosecutor offering suggestions. 25 a year for 20 years.
. . 490 now. with an income tax credit for the full amount. 250 now, and 250 in 15 years. etc)”).
Lest there be doubt that Epstein’s goal was to gain influence, First Lady de Jongh explicitly advised
Epstein on how to buy control of the USVI political class. Ex. 28 (email from First Lady de Jongh
to Epstein outlining the “VI Political Landscape” and advising him to “give wide but nominal
support” in the primary to solidify relationships, then “strongly support” the winner of the
primary). She told him how to vote and whom to support. Ex. 29 (email from Epstein asking First
Lady de Jongh: “do you have the list of who i shoudl vote for?”); Ex. 30 (Epstein asking who “we”
backed for the USVI Governor’s race). And, at First Lady de Jongh’s suggestion, Epstein explored
paying monthly retainers to USVI politicians to ensure their “loyalty and access.” Ex. 31 (First
Lady de Jongh suggested that Epstein “consider putting Celestino [White] on some sort of monthly
retainer. That is what will get you his loyalty and access.”). 4
3
These tuition payments allowed the USVI Governor to funnel additional money to his
political campaigns. See Ex. 24 (email from First Lady de Jongh: “John and I have put money into
the campaign based on what we thought was going to happen with the tuition payments.”).
4
Epstein’s donations came with strings attached. For example, First Lady de Jongh
advised Epstein to cancel a check to Governor Mapp’s campaign to discourage him from launching
attack ads on her husband, Governor de Jongh. Ex. 32 (the First Lady writes: “The [USVI
5
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 10 of 30
Epstein got what he paid for. For example, Epstein’s donations to Congresswoman Plaskett
bought him easy access. Ex. 10 at 72:21-74:4. In fact, Ms. Plaskett went to New York and met
with Epstein at his townhouse in Manhattan less than a year before his arrest on federal sex
trafficking charges in 2019. Ex. 10 at 216:19-224:14. Other USVI officials (including Governor
Mapp, Dawn Henry, and First Lady de Jongh) visited Epstein’s islands, Little St. James (“LSJ”)
But the far more lucrative return on Epstein’s investment came in the form of tax breaks
given to his companies by the USVI EDA through its Economic Development Commission tax
incentive program (“EDC Program”). Epstein received these benefits through two entities:
Financial Trust Company, which was later renamed Southern Trust Company. Ex. 36.
applied for EDC Program benefits. Ex. 37. FTC’s application was approved in 1999 and granted
him tax incentives spread over 10 years set to terminate in 2009. Id.; see also Ex. 36. In 2012,
FTC’s tax incentives were extended to be spread over , from to . Ex. 38; see
See Exs. 39-52. And, in 2014, Epstein’s STC was granted tax incentives spread
over 10 years, from 2013 to 2023. Ex. 53; see also Ex. 36.
Governor] Mapp campaign is going to take the $ that you gave to attack John. … Can we stop
payment on the check to send a message.”).
6
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 11 of 30
-· Ex.60 at-13522.
when Governor de Jongh was contacted by a repo11er regarding the potential conflict of interest
inherent in the USVI government granting millions in tax incentives to his wife's employer, the
First Lady suggested to Epstein that they respond with the following statement: "Cecile de Jongh
cmTently works for Financial Trust Company in the capacity of office manager. She had nothing
to do with Financial Trnst Company receiving EDC tax benefits." Ex. 66. 5
The EDA was well aware of Epstein's past, even requesting an assessment of the potential
Southern Tmst Company." Ex. 70. Yet, despite the numerous red flags, STC continued to enjoy
EDA benefits
7
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 12 of 30
Ex. 71.
. Ex. 72.
In addition to the more than $ million in tax benefits from EDA, Epstein was given
inside information about executive branch deliberative process on banking regulations related to
International Banking Entities (“IBEs”). See Ex. 73 (First Lady de Jongh forwards Epstein an
email exchange between Governor de Jongh and the office of the lieutenant governor regarding
status of IBE rules and regulations). Epstein had been attempting since 2013 to take advantage of
tax benefits provided by creating an IBE, see Ex. 74, a status which appears to have been conferred
beginning in December 2014 and January 2015, Ex. 75 (approving Epstein’s entity Financial
In addition to accepting payments from Epstein and giving him “loyalty and access,” along
with over $ million in tax incentives, USVI government officials actively facilitated Epstein’s
crimes. Though discovery is ongoing, documents obtained to date show this happened in two
primary ways. First, USVI permitted Epstein—a registered sex offender under its supervision—
to . Second, USVI
granted
In 2011, the USVI legislature took up a bill to update its sex offender monitoring laws and
bring them in line with federal standards. On May 15, 2011, while the language of the bill was
8
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 13 of 30
being drafted, First Lady de Jongh emailed Epstein the draft language for the proposed bill, writing
“This is the suggested language; will it work for you?” Ex. 77 at -24493. Epstein responded: “We
should add out of country for more than 7 days , otherwise I could not go for a day trip to Tortola
,at the last minute.” Id. at -24492. And “Ithese files rcould be also accessible by the press. If we
are not careful. A list of who I stay with should violate my privacy. Restrict my business and
livelihood.” Id. The First Lady responded that she did not “want to email back and forth” and that
“[t]his needs to be settled by Thursday because J [Governor John de Jongh] goes away for a week
Epstein monitored the progress of the legislation closely. See Ex. 78 at -25219 (Epstein
writes to the First Lady regarding the Attorney General’s comments on the legislation at a rules
committee hearing); Ex. 79 at -16427 (First Lady de Jongh writes Epstein: “Is there anything you
want me to do re the hearing tomorrow? I am going to try to find out if anyone from justice has
been asked to testify again on Monday.”). Epstein’s personal attorney, Maria Hodge, exchanged
emails and phone calls with the USVI DOJ and the Attorney General regarding changes to the bill.
Ex. 80 at -25222-25223 (Ms. Hodge email to USVI DOJ officials arguing that a proposed version
of the legislation by the Attorney General “would create many complications and problems” and
Ultimately, the law passed on June 28, 2012. Epstein was disappointed by the final form
of the bill, but First Lady de Jongh offered comfort: “I know this was a horrible week and i am
really sorry about how things panned out. Not being able to take someone at their word is
incredibly frustrating. However, all is not lost and we will figure something out by coming up
with a game plan to get around these obstacles.” Ex. 81. First Lady de Jongh was correct: all hope
was not lost for Epstein. She crafted a plan to facilitate Epstein’s easy travel to and from USVI—
9
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 14 of 30
specifically: “We will need to work through [then-USVI Senator Carlton] Dowe and [then-USVI
Senator Celestino] White to get this accomplished. In the meantime, we will work with [then
USVI-Attorney General] Vincent [Frazer] to give the discretion for status quo for you - that’s the
Ex. 82 at .
Id. at
Id.
Id.
Ex. 82 at
. Ex. 83 at .
. See Ex. 82 at
10
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 15 of 30
Even as to the regulations USVI did enforce, it did so incompetently. For example,_
On other occasions,
-);Ex.86at
-· Further, while the USVI did conduct site visits ofEpstein's residence, those inspections
11
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 16 of 30
, and lax enforcement, Epstein still could not freely transport and exploit
young women without assistance from USVI government officials. First Lady de Jongh once
again proved to be a ready partner. For example, several of Epstein’s victims needed visas. To
that end, First Lady de Jongh arranged for Epstein to meet with a local immigration lawyer to assist
at least one woman, Ex. 95 at -25196, and contacted the University of the Virgin Islands (“UVI”)
to find out whether three young women could enroll there to obtain student visas. Ex. 96 at
-24114; see Ex. 97 at -20206 (First Lady de Jongh asking Epstein what visas the “ladies” have and
trying to arrange English as a Second Language classes for them); Ex. 96 at -24115-24117 (First
Lady de Jongh corresponding with the Vice President for Institutional Advancement at UVI about
enrolling students for English as a Second Language classes at UVI); Ex. 98 at -24119 (Epstein
suggesting to First Lady de Jongh to enroll three young women); Ex. 97 at -20206 (showing that
two of the women’s forms were sent to UVI). The women had to enroll in person and show their
ability to pay through a letter. Perhaps cognizant of the risk in having a registered sex offender
sign the letter, First Lady de Jongh wrote to Epstein that he should think about whether “[he]
should sign [the letter] or one of us.” Ex. 99 at -24130. Ultimately UVI structured a bespoke class
to enroll victims and provide cover for their presence in the territory—the same year Epstein
donated $20,000 to the university through one of his companies. Ex. 100 at -20983.
In addition to visas, some of the young women Epstein brought to the island also needed
employment. One of their stories is representative. To find employment in the USVI, the young
woman needed a dental license. First Lady de Jongh reached out to the Director for the Office of
Professional Licensure and Health Planning at the USVI Department of Health regarding a “new
practice act” that would have “significant changes and allowances for reciprocity.” Ex. 101 at
12
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 17 of 30
-23450-23451. The Director wrote to Ms. de Jongh that once the act went before the Senate
Committee she would have a “clearer idea on what [the young woman’s] options are moving
forward.” Id. at -23450. 7 First Lady de Jongh also reached out to her contacts at the Attorney
General and Solicitor General offices about the new rules. Ex. 103 at -15784 (First Lady de Jongh
writing “[b]ad news re the dental licensure rules and regs – the AG’s office does not have them,”
but that the “Acting Solicitor General is a good friend of mine” so she will “alert” him to “get it
fast tracked”). Ultimately, First Lady de Jongh was successful. The young woman eventually set
up a local dental practice in the USVI and shared an office with Epstein’s companies. Ex. 104 at
Finally, to get to Epstein’s island, the victims needed to fly to and from the airport—run
by the USVI Port Authority (“VIPA”), where Epstein leased hangar space. Ex. 106 at -23269;
Ex. 107 at -16129. 8 Given the extent of his use of the airport’s services, Epstein met with VIPA
leadership often, sometimes meeting with them just after he landed at the airport. Ex. 109 at
-15782 (First Lady de Jongh writing to Epstein that his “wheels-down time is at 2:45 and [the
executive director of VIPA] said that he can meet you at the hangar at that time”). In particular,
Epstein had close ties to the Executive Director of VIPA. Ex. 110 at -16521 (First Lady de Jongh
asking Epstein (on her husband’s behalf) if he would “support [then-USVI senator] Carlton
Dowe’s bid to go back to VIPA” who would be a “good person for us” there). Based on his
government connections, when traveling through the USVI’s airport accompanied by young
7
Epstein became frustrated that the process was not moving fast enough and suggested
calling the Governor’s Chief of Staff. Ex. 102 at -21434.
8
Indeed, employees at the airport noticed the young women he traveled with; one article
quoted a former air traffic controller at the local airstrip on St. Thomas as saying “[m]y colleagues
and I definitely talked about how we didn’t understand how this guy was still allowed to be around
children.” Ex. 108. A current airstrip employee added that “it was like he was flaunting it.” Id.
13
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 18 of 30
women as a registered sex offender, Epstein could count on his “great relationship” with the
officials there to avoid scrutiny or detection. See Ex. 111 at -24879 (Epstein emailing Ms. de
Jongh in 2010 to ask “who is [in] charge of customs in the v.i. I used to have a great relationship
with gloria Lambert the airport supervisor . . . .there is a mr carpenter who has been difficult
lately”). And when he did encounter difficulties, Epstein had but to email the USVI’s First Lady,
who gamely intervened on his behalf by reaching out to the future Governor. Id.; see also Ex. 112
at -16458 (November 15, 2012 Epstein email to de Jongh regarding sending “all 78 [USVI customs
agents] a turkey” for Thanksgiving); Ex. 113 at -25693; Ex. 114 at -22234.
In sum, in exchange for Epstein’s cash and gifts, USVI made life easy for him. The
government mitigated any burdens from his sex offender status. And it made sure that no one
asked too many questions about his transport and keeping of young girls on his island.
Rather than investigating its own twenty-year history of enabling Epstein’s criminal
activity, USVI filed this action against JPMC. JPMC filed its Answer on April 24, 2023. Dkt.
124 (“Answer”). As relevant here, and given the extensive record exposing USVI’s complicity in
furthering an Epstein sex-trafficking venture recounted above, JPMC pleaded that USVI’s claims
are barred by the doctrines of in pari delicto, unclean hands, and laches, see id. at 26 (Fifth, Sixth,
and Seventh Affirmative Defenses), and that any damages suffered by USVI should be barred or
reduced in accordance with the doctrines of comparative and contributory negligence or fault, see
In keeping with its efforts to avoid accountability, and to purge the record of inconvenient
facts, USVI moved to strike JPMC’s Fifth, Sixth, Seventh, and Eighth Affirmative Defenses. Dkt.
139. As grounds, USVI argues that it would be burdened by the “additional discovery” these
defenses purportedly require. But striking JPMC’s valid affirmative defenses will not change the
14
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 19 of 30
scope of USVI’s discovery obligations; indeed, discovery has all but ended. This motion does not
seek to shield USVI from intrusive discovery; it attempts to insulate USVI from legitimate
ARGUMENT
“[C]ourts should not tamper with the pleadings unless there is a strong reason for so doing.”
Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976). Accordingly,
“[m]otions to strike an affirmative defense are generally disfavored, and will not be granted unless
it appears to a certainty that plaintiffs would succeed despite any state of the facts which could be
proved in support of the defense.” City of New York v. FedEx Ground Package Sys., Inc.,
314 F.R.D. 348, 354-355 (S.D.N.Y. 2015) (cleaned up). “In assessing the sufficiency of an
affirmative defense, the Court should construe the pleadings liberally to give the defendant a full
opportunity to support its claims at trial, after full discovery has been made.” Radiancy, Inc. v.
Viataek Consumer Prods. Grp., Inc., 138 F. Supp. 3d 303, 313 (S.D.N.Y. 2014). Thus, even if the
law and facts are in equipoise as to the propriety of a particular defense, a motion to strike should
be denied. See Index Fund, Inc. v. Hagopian, 107 F.R.D. 95, 100 (S.D.N.Y. 1985) (“If the
sufficiency of the defense depends upon disputed questions of fact or law, then the motion to strike
will be denied.”).
To carry its heavy burden, USVI must “satisfy a stringent three-pronged test: “‘(1) there
must be no question of fact that might allow the defense to succeed; (2) there must be no substantial
question of law that might allow the defense to succeed; and (3) the plaintiff must be prejudiced
by the inclusion of the defense.’” FedEx, 314 F.R.D. at 355 (quoting Specialty Minerals, Inc. v.
Pluess–Staufer AG, 395 F. Supp. 2d 109, 111 (S.D.N.Y. 2005)). USVI cannot satisfy any of these
15
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 20 of 30
As to the first and second prongs, USVI cannot show there is “no question of fact” nor
“substantial question of law” that “might allow the defense to succeed.” The facts recounted above
speak for themselves. As to the law, USVI is correct that defendants may not dictate government
policy, nor raise certain equitable defenses to law enforcement actions—but JPMC’s affirmative
defenses offend neither principle. JPMC seeks to hold the government to account for its
affirmative complicity in Epstein’s crimes. And USVI cannot invoke parens patriae as a talisman
against civil procedure where Congress has afforded it a civil cause of action, and nothing else.
E.g., New York v. Kraft Gen. Foods, Inc., 862 F. Supp. 1030, 1033 (S.D.N.Y.) (“The State of New
York sues as parens patriae on behalf of the citizens of New York. Although the State of New
York is a governmental actor, it is considered a private party[.]”), aff’d, 14 F.3d 590 (2d Cir. 1993).
be countenanced. JPMC has already taken substantial discovery demonstrating the potent
applicability those defenses will have at trial. Fact discovery will close the same day that briefing
on this motion will be complete. There can be no prejudice arising from discovery that has already
been provided. Rather, the only “prejudice” USVI seeks to avoid is accountability for its
USVI’s motion rests on a pair of cases arising from the government’s enforcement actions
in this district against UPS and FedEx relating to sale and transportation of contraband cigarettes.
See New York v. United Parcel Serv., Inc., 160 F. Supp. 3d 629 (S.D.N.Y. 2016), vacated in part
on other grounds on recons., 2016 WL 10672074 (S.D.N.Y. June 21, 2016); FedEx, 314 F.R.D.
348 (S.D.N.Y. 2016). In each case, as relevant here, the government brought claims under two
statutes: the Contraband Cigarette Trafficking Act (“CCTA”) and the Racketeer Influenced and
Corrupt Organizations Act (“RICO”). See UPS, 160 F. Supp. 3d at 633; FedEx, 314 F.R.D. at
16
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 21 of 30
353. Both defendants pleaded several affirmative defenses—including unclean hands and in pari
delicto—which the government moved to strike, claiming (as USVI does here) that said defenses
were an “improper collateral attack on plaintiffs’ enforcement decisions,” UPS, 160 F. Supp. 3d
at 633, that “impermissibly [sought] to interfere with the City and State’s executive discretion to
enforce their tax and public health laws,” FedEx, 314 F.R.D. at 355-356.
In each case, the court first rejected the breadth of the government’s motion and declined
to categorically immunize governmental plaintiffs from the equitable defenses generally available
in civil litigation. See UPS, 160 F. Supp. 3d at 641 (nothing “stand[s] for the sweeping proposition
that there is no set of facts pursuant to which an equitable defense might be asserted against a
governmental entity”); FedEx, 314 F.R.D. at 357 (same). The courts then identified two principles
when and under what circumstances to enforce a statute,” UPS, 160 F. Supp. 3d at 640; FedEx,
314 F.R.D. at 356 (noting “the existence of a basic principle against allowing a party to dictate
when and under what circumstances a particular law is to be enforced or not enforced.”).
Accordingly, each court struck the affirmative defenses that specifically sought to dictate or assign
fault to the government’s discretionary tax enforcement decisions. See FedEx, 314 F.R.D. at 357-
359 (striking three defenses that were “nothing more than FedEx’s request that Plaintiffs collect
lost taxes from other parties,” another defense that would “stand as a judicial mandate forcing the
City and State to re-prioritize their tax enforcement efforts,” and another whose “core premise”
was that the government was “negligent in their discretionary tax enforcement”); UPS,
17
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 22 of 30
160 F. Supp. 3d at 634 (“only” striking defenses that were “purely and properly cast as seeking
The second principle is that certain equitable claims are unavailable when the government
“enforce[s] certain laws in their traditional public capacity,” UPS, 160 F. Supp. 3d at 634, but are
available when the government acts “akin to” a “private actor,” id. at 648; FedEx 314 F.R.D. at
358. Thus, both courts allowed the affirmative defenses (including unclean hands and in pari
delicto) to stand as to the government’s RICO claims, as those claims were brought pursuant to
RICO’s civil remedy provision. See UPS, 160 F. Supp. 3d at 648 (“The RICO … claims must be
distinguished because, as to these claims, plaintiffs are acting in a role that is more akin to that of
a private actor[.]”); FedEx, 314 F.R.D. at 358 (same reasoning). In contrast, the courts struck the
equitable affirmative defenses as to enforcement of the CCTA, because (unlike the TVPA) that
law afforded no “private right of action,” FedEx, 314 F.R.D. at 357-358, and can be pursued
“exclusively … by local government entities,” such that in every CCTA case, the government acts
“in a law enforcement capacity,” “seeking civil penalties.” 10 UPS, 160 F. Supp. 3d at 646-648.
JPMC’s affirmative defenses abide the guardrails established by these cases. JPMC does
not ground its defenses of unclean hands and in pari delicto in prosecutorial inaction, but rather in
here enforcing its own statute pursuant to an exclusive law enforcement prerogative, but instead
seeks damages under the TVPA’s “civil remedy,” which does nothing more than give USVI the
9
USVI cites various cases invoking the “public duty doctrine” and its purported
applicability to JPMC’s comparative fault defense. Mem. 8-9. These cases merely repeat the first
principle in UPS and FedEx—i.e., that JPMC’s affirmative defenses “are not available against
government plaintiffs for alleged failure to enforce or regulate.” Mem. 8.
10
Unlike with the TVPA, Congress specifically authorized the states to enforce the CCTA.
See 18 U.S.C. § 2346(b)(1) (CCTA section titled “Enforcement and regulations,” permitting state
attorneys general to “bring an action … to prevent and restrain violations of this chapter[.]”).
18
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 23 of 30
same standing its residents already enjoy. In short, USVI is a civil TVPA plaintiff like any other,
and must answer to the affirmative defenses raised against its pursuit for civil damages.
Invoking the first principle in UPS and FedEx, the gravamen of USVI’s motion is that
JPMC cannot “second-guess the USVI’s discretionary governance decisions.” Mem. 7; see also
id. 8-10 (same argument as to JPMC’s comparative fault defense); Dkt. 147 at 5 (arguing that
JPMC “may not ‘second-guess’ governmental policy decisions.”). As explained, JPMC does not
contest the basic principle that private litigants cannot dictate discretionary government policy.
E.g., UPS, 160 F. Supp. 3d at 639 (“It is well-established, and both parties on this motion agree,
that government actors have broad executive discretion in law enforcement decisions.”). But
JPMC’s affirmative defenses do no such thing. Rather, JPMC’s affirmative defenses seek to hold
USVI to account for participating in and benefiting from Epstein’s criminal enterprise, not its
failure to prosecute. See United States v. Wharton, 514 F.2d 406, 409-412 (9th Cir. 1975)
For example, as to “unclean hands,” “New York courts have long applied the maxim that
one who comes to equity must come with clean hands,” and that no relief will lie for parties who
“ha[ve] committed some unconscionable act that is directly related to the subject matter in
litigation.” PenneCom B.V. v. Merrill Lynch & Co., 372 F.3d 488, 493 (2d Cir. 2004) (internal
citations and quotation marks omitted). Similarly, “the doctrine of in pari delicto may ba[r] a
claim where the plaintiff bears at least substantially equal[]responsibility for its injury.” UPS,
160 F. Supp. 3d at 646. 11 As applied here, these defenses share a common theme: USVI should
11
Similarly, comparative fault hinges on USVI’s complicity in the subject matter
complained of, and laches turns on USVI’s “unreasonable and inexcusable delay that [] result[s]
in prejudice to the defendant.” UPS, 160 F. Supp. 3d at 646.
19
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 24 of 30
not be heard to allege that JPMC “facilitated or participated” in Epstein’s criminality and was
“indispensable to the operation,” Mem. 1, when it is itself culpable of those very allegations. In
other words, USVI cannot claim a sovereign interest in enabling Epstein’s crimes.
Discovery has revealed the merit of these defenses and how they apply to this case. USVI
did not simply fail to prosecute Epstein or protect his victims. Worse, USVI actively worked with
Epstein, reaping the benefits of his wealth while lending official services in aid of his crimes. As
recounted above, USVI’s officials accepted Epstein’s cash while the USVI government doled out
millions. USVI facilitated Epstein’s transportation of young women and girls to and from his
islands, securing visas and arranging for their enrollment in ESL classes. USVI’s First Lady
worked for Epstein’s companies and extensively lobbied on his behalf with government officials,
including the governor. USVI dutifully considered Epstein’s input into its sex offender legislation
Mem. 7. Rather, these facts demonstrate beneficial participation in Epstein’s ventures and that the
doctrines of unclean hands and in pari delicto squarely apply. To grant USVI immunity from these
defenses would be to allow it to profit from Epstein twice: first directly, then again in a civil suit
Nor can USVI avail itself of the second principle in FedEx and UPS that shields the
government when acting in its traditional law enforcement capacity. As the FedEx and UPS courts
recognized in allowing the defenses of unclean hands and in pari delicto to proceed against New
York’s civil RICO claims, there is a fundamental distinction between government actions brought
as “a public enforcer” and those “more akin to that of a private actor.” UPS, 160 F. Supp. 3d at
20
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 25 of 30
647-649; FedEx, 314 F.R.D. at *358. Comparing USVI’s civil TVPA claims to the civil RICO
claims in UPS and FedEx demonstrates that USVI is acting as a civil plaintiff like any other.
RICO claims, like TVPA claims, can be brought in two ways. First, the United States may
seek criminal RICO penalties under 18 U.S.C. § 1963. In so doing, everyone agrees the
government acts in a “traditional public capacity.” E.g., UPS, 160 F. Supp. 3d at 634. But
Congress also afforded “civil remedies” to any “person injured” by a RICO violation, including
treble damages and attorneys’ fees. 18 U.S.C. § 1964(c). The distinction is critical. When
“[governments] sue under this civil provision … unlike the provision providing for RICO’s
criminal penalties, which are recoverable only by the United States,” FedEx, 314 F.R.D. at 354,
they act “in a role that is more akin to that of a private actor, rather than in the role of a public
enforcer of the public interest.” UPS, 160 F. Supp. 3d at 648; FedEx, 314 F.R.D. at 358. As such,
courts allow affirmative defenses to stand as to governments’ civil RICO claims. The same
analysis applies here. USVI brings these claims pursuant to the TVPA’s “civil remedy”
1595(d) does not authorize any other remedy. And USVI seeks from JPMC “damages,” including
FedEx, 314 F.R.D. at 354 (“A civil RICO plaintiff can recover treble damages, costs, and
attorney’s fees.”). USVI is thus a civil plaintiff subject to standard applicable defenses, just as
It is no answer that USVI claims immunity as parens patriae. Mem. 7. This district
recently rejected similar arguments in the antitrust context. In In re Google Digital Advertising
Antitrust Litig., 2022 WL 4226932, at *41 (S.D.N.Y. Sept. 13, 2022), several state attorneys
general (like USVI here) asserted “claims ‘in their respective sovereign capacities’ and [as] parens
21
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 26 of 30
patriae on behalf of their citizens.” Google raised laches in defense, and the attorneys general
(like USVI here) argued that “as sovereigns acting to vindicate the rights of the public, principles
of equity afford them power not granted to private litigants.” Id. at *42. The court disagreed.
First, the court noted that originally only the United States could enforce federal antitrust law. Id.
at *43. Congress later “expand[ed] antitrust enforcement” to permit civil actions by the states, but
(as the court explained) states “proceeding [under that law] do[] not act in the capacity of a
sovereign but as a private enforcer.” Id. Accordingly, equitable defenses “may be applied to the
States’ claims[.]” Id. The court in New York v. Facebook, Inc., 549 F. Supp. 3d 6 (D.D.C.), aff’d
sub nom. New York v. Meta Platforms, Inc., 66 F.4th 288 (D.C. Cir. 2023), drew a similar
conclusion. There, New York (like USVI here) invoked parens patriae as a shield against
equitable defenses. The court observed Congress’s distinction between actions brought by the
United States and those brought by states pursuant to a civil cause of action, and held equitable
defenses apply against the latter. “The fact that the States bring this parens patriae suit in the
public interest does not counsel a different result.” 549 F. Supp. 3d at 39 (internal citations and
quotation marks omitted); 12 see also Kraft Gen. Foods, Inc, 862 F. Supp. at 1033 (“Although the
Those analyses map exactly onto USVI’s claims here. The TVPA, like the Sherman Act
analyzed by the Facebook and Google courts, is first and foremost a federal statute enforceable
only by the United States. When the United States enforces the TVPA, it acts “in a law
12
The Facebook court noted that in “expanding the universe of antitrust enforcers beyond
the United States itself, Congress [] drew no distinction between states and private litigants.” Id.
at 39. The same analysis applies to the TVPA’s civil remedy. Although Congress conferred a
private right of action on citizens and attorneys general via two different subsections of § 1595,
the rights are coterminous—there are two subsections simply because Congress passed them at
different times.
22
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 27 of 30
enforcement capacity,” and “ordinarily applicable equitable defenses do not apply.” UPS, 160 F.
Supp. 3d at 647-648. As it did with the Sherman Act (via the Clayton Act), Congress separately
codified a “civil remedy” for private citizens at 18 U.S.C. § 1595(a); and later, Congress expanded
that civil remedy to include state attorneys general (§ 1595(d)). But like with the Sherman/Clayton
Acts, Congress did not authorize state attorneys general to “enforce” the TVPA. Compare
would have authorized the attorney general of any state to bring suit in the name of the United
States to enforce any of the antitrust laws.” (internal quotation marks omitted)). Rather, Congress
granted the states a TVPA remedy akin to the civil cause of action afforded to all citizens. As
such, just as in an antitrust context, when a state acts pursuant to the TVPA civil cause of action,
it does so “not [] in the capacity [as] a sovereign but as a private enforcer,” subject to standard
Indeed, this Court has already recognized as much in permitting retroactive application of
the TVPA’s civil remedy. As this Court explained, “in 2018, when Congress empowered state
attorneys general to assert TVPA claims, it merely gave a new set of plaintiffs the right to vindicate
potential liabilities which already existed,” and thus “did not expand any party’s liability[.]” Op.
& Order on Mot. to Dismiss, Dkt. 130, at 23; id. at 21 (the “quasi-sovereign interests that give
states standing to sue under section 1595(d) are tied to injuries that would give individual plaintiffs
a right to sue under section 1595(a)”). Had Congress in fact authorized the states, as sovereigns,
to enforce a criminal law like the TVPA, certainly they could not do so retroactively.
***
UPS and FedEx are USVI’s principal authorities, and they (along with In re Google and
Facebook) plainly require denying the motion. That is critical, as the burden is on USVI, not
23
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 28 of 30
JPMC, to “demonstrate[e] to the Court to a certainty that [it] would succeed despite any set of
facts which could be proved in support of the defenses.” Walsh v. City of New York, 585 F. Supp.
2d. 555, 557 (S.D.N.Y. 2008) (internal quotation marks omitted) (emphasis added). There must
be “no question of fact,” nor any “substantial question of law that might allow the defense to
succeed.” Specialty Minerals, Inc, 395 F. Supp. 2d at 111. And if there are “disputed questions
of law or fact, then the motion to strike will be denied.” Index Fund, Inc., 107 F.R.D. at 100. The
fact is, “the law as to the applicability of equitable defenses to government agencies is not as settled
as Plaintiff suggests, and even where the defense presents a purely legal question, the courts are
very reluctant to determine disputed or substantial issues of law on a motion to strike.” EEOC v.
UPS, 2017 WL 2829513, at *12 (E.D.N.Y. June 29, 2007) (internal quotation marks and citations
Finally, USVI fails to meet the third prong. A motion to strike will not be granted unless
the plaintiff can “show that it is prejudiced by the inclusion of the defense.” Estee Lauder, Inc. v.
Fragrance Counter, Inc., 189 F.R.D. 269, 272 (S.D.N.Y. 1999). Where “there is no prejudice that
could possibly result” from the inclusion of an affirmative defense, USVI’s own authority indicates
that a court will “decline[] to strike it.” FedEx, 314 F.R.D. at 366. That is the case here.
USVI argues that prejudice will result from “additional discovery.” Mem. 7. But fact
discovery closes the same day briefing on this motion is complete, and USVI has already produced
documents relevant to JPMC’s affirmative defenses (as evidenced in the background provided).
JPMC’s defenses have not and will not extend the discovery period, and their continued existence
in the pleadings cannot harm a party that has already substantially complied with the discovery
obligations attendant to those defenses. In short, as there is no “extra cost and [] delay in bringing
24
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 29 of 30
the case to trial,” FDIC v. Eckert Seamans Cherin & Mellott, 754 F. Supp. 22, 23 (E.D.N.Y. 1990),
USVI should also not be heard to complain about “expending trial time on questions” about
its complicity in an Epstein sex-trafficking venture, as that complicity will be an issue at trial
regardless of JPMC’s affirmative defenses. Mem. 7. For example, USVI’s complicity goes
directly to issues surrounding its obstruction charge, including the existence (vel non) and nature
of any USVI investigation into Epstein’s crimes, and USVI’s continued knowledge of Epstein’s
enterprise. Further, USVI’s alleged damages must be balanced against the considerable benefits
that USVI reaped from its facilitation of Epstein’s crimes. At bottom, USVI will not be able to
present a prima facie case that JPMC violated the TVPA or obstructed its enforcement without
confronting questions about USVI’s own actions. USVI may indeed feel prejudiced by the nature
of its actions coming to light, but that is no basis to grant this motion to strike.
CONCLUSION
For the foregoing reasons, the Court should deny USVI’s motion to strike JPMC’s
affirmative defenses.
25
Case 1:22-cv-10904-JSR Document 165 Filed 05/25/23 Page 30 of 30
26