The government entered this photograph of Jeffrey Epstein standing in front of his Gulfstream airplane into evidence during his ex-pilot’s testimony during the trial of Ghislaine Maxwell.
A federal judge signaled on Tuesday that he will approve a more than $26 million settlement Deutsche Bank reached with shareholders over the German bank’s ties to Jeffrey Epstein and Russian oligarchs.
Senior U.S. District Judge Jed Rakoff made the announcement during a brief settlement conference on Tuesday morning in the Southern District of New York. He reserved a decision on the matter of attorneys’ fees and said he would release a written opinion.
Even after the deal is formally approved, Deutsche Bank will still face other possible liabilities over its ties to Epstein’s sex trafficking scheme — this time, brought by the victims.
Rakoff, known for his tough line on Wall Street after the 2008 financial crisis, is presiding over class action lawsuits filed against Deutsche Bank and JPMorgan Chase, who stand accused of “complicity” with Epstein’s crimes. Rakoff set a trial against Deutsche for Aug. 7 and against JPMorgan on Sept. 5.
The Virgin Islands government separately sued JPMorgan Chase, claiming that the bank “facilitated, sustained, and concealed” Epstein’s human trafficking network.
Unlike those pending cases, the recently settled lawsuit against Deutsche was filed by shareholders, not survivors. In July 2020, investor Ali Karimi filed the proposed class action complaint accusing Deutsche of making “materially false and misleading statements” about their business by failing to properly monitor “high risk” clients, such as Epstein and Russian oligarchs.
The investors claim that such practices harmed the bank financially by drawing critical press coverage and regulatory action.
“On May 13, 2020, media outlets reported that the Federal Reserve had sharply criticized Deutsche Bank’s U.S. operations in an internal audit,” the lawsuit noted. “The audit reportedly found that Deutsche Bank had failed to address multiple concerns identified years earlier, including concerns related to the Bank’s [anti-money laundering] and other control procedures.”
After the news broke, Deutsche shares dropped $0.31 per share, or 4.49 percent, according to the lawsuit.
A similar trend followed after the New York State Department of Financial Services issued a $150 million fine against Deutsche Bank for “significant compliance failures” with Epstein and correspondent banking relationships with Danske Bank Estonia and FBME Bank.
“In the case of Jeffrey Epstein in particular, despite knowing Mr. Epstein’s terrible criminal history, the Bank inexcusably failed to detect or prevent millions of dollars of suspicious transactions,” then-Superintendent of Financial Services Linda A. Lacewell declared in 2020.
In June 2022, Judge Rakoff rejected Deutsche’s motion to dismiss. The parties announced a $26.25 million settlement a few months later, arguing that it would help avoid the uncertainty of a trial and remaining pre-trial litigation.
“In general, ‘the more complex, expensive, and time consuming the future litigation, the more beneficial settlement becomes as a matter of efficiency to the parties and to the Court,'” the investors’ attorney Emma Gilmore wrote in a memo seeking approval of a settlement.
Gilmore noted that shareholder actions are “notoriously uncertain.”
“Further litigation would have been time consuming and expensive, involved complex issues of law and fact, and there was a significant risk of a lower recovery, or no recovery at all,'” she added.
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