When the Pattern Repeated

The questions in Part 1 about why federal prosecutors buried the money laundering investigation in September 2007, just as Bear Stearns began collapsing and the financial crisis was becoming visible, led me to look even more closely at what happened to the infrastructure Epstein had helped build but I wasn’t expecting what I found.

While searching for more on what happened to Liquid Funding Ltd after it paid off $6.7 billion and supposedly shut down in April 2008, I came across a FOIA document that appears to have received almost no attention other than one single Financial Times article from December 2020. 

I had found a copy of the SEC’s Division of Enforcement opening investigation into Jeffrey Epstein’s Financial Trust Company on September 25, 2019. Exactly ONE DAY BEFORE the criminally delayed SAR filed by JP Morgan that we just learned last week the Trump administration seems to have ignored. 

It said “This investigation is a non-public, fact-finding inquiry. The investigation does not mean that we have concluded that your client or anyone else has violated the law.” but why investigate if there wasn’t serious evidence. Why after he passed away? 

It also clearly said it was requesting “Documents sufficient to identify whether Epstein or any Epstein-Related Entity provided brokerage services to Persons during the Relevant Period, including effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security for or on behalf of others.

Documents sufficient to identify whether Epstein or any Epstein-Related Entity provided investment advisory services to Persons during the Relevant Period, including but not limited to advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities.” 

Then, the very next day, on September 26, 2019, JPMorgan Chase filed the comprehensive Suspicious Activity Report that has been dominating headlines this week after being unsealed by federal court order on October 31, 2025. That SAR flagged 4,700 transactions totaling over $1 billion that Epstein conducted through JPMorgan accounts between October 2003 and July 2019, identifying transactions involving Leon Black, Glenn Dubin, Alan Dershowitz, Leslie Wexner’s trusts, and wire transfers to Russian banks including Alfa Bank and Sberbank.

The SEC opening their “fact-finding” investigation one day before JPMorgan filed the SAR raises immediate questions about whether these actions were coordinated and whether the SEC knew the SAR was coming.

When I started looking at who would have received that September 26 JPMorgan SAR when it arrived at the Treasury Department’s Financial Crimes Enforcement Network, I found a family connection that I feel is worth exploring, since it traces back across three generations and directly to the book that started my Epstein investigations to begin with.

Mary Daly joined FinCEN as Senior Advisor to the Director in February 2019. Mary Daly is William Barr’s daughter. William Barr is Donald Barr’s son. Donald Barr hired Jeffrey Epstein at Dalton School in 1974. He has an FBI file confirming he was part of the OSS before working as headmaster. William Barr, his son, was Attorney General when Epstein died in federal custody on August 10, 2019. Mary Daly was at FinCEN when JPMorgan filed the comprehensive SAR documenting over $1 billion in suspicious Epstein transactions on September 26, 2019.

According to JPMorgan spokesperson Patricia Wexler, speaking this week after the SAR was unsealed, “It does not appear that anyone in the government or law enforcement acted on those SARs for years.” This means that despite JPMorgan flagging over $1 billion in suspicious transactions involving potential human trafficking and wire transfers to Russian banks, federal authorities apparently did nothing with this information.

This mirrors exactly what happened in September 2007. Prosecutors had built a money laundering case against Epstein, then buried it at the moment when the financial crisis was becoming visible. In 2019, the SEC opened an investigation and JPMorgan filed the massive SAR after Epstein was already dead, when criminal prosecution was impossible.

Both moments created opportunities to examine how Epstein’s operations connected to the broader financial system. Both opportunities were wasted. 

The Investigation That Could Have Connected Everything

We only just learned about this first opportunity last week. Bloomberg reported that in February 2007, federal prosecutors opened a money laundering investigation into Jeffrey Epstein. Assistant U.S. Attorney Marie Villafaña led the investigation, which was separate from but related to the sex trafficking charges that were also being prepared. Villafaña’s team subpoenaed every financial transaction conducted by Epstein and his six businesses dating back to 2003. The subpoenas went to JPMorgan Chase, Bear Stearns, and Washington Mutual, demanding comprehensive records.

By May 2007, just three months after opening the investigation, Villafaña had drafted a 53-page federal indictment. The charges were specific: money laundering and operating an unlicensed money-transmitting business. What had prosecutors found? Epstein was directing employees to withdraw large amounts of cash, between $40,000 and $80,000 multiple times per month, and then disperse that cash to women around the world. JPMorgan’s own anti-money laundering compliance division had flagged these transactions in 2006 as suspicious. By the time Epstein pleaded guilty in 2008, these cash withdrawals totaled nearly $1.75 million just from the pattern JPMorgan had identified.

But here is what the investigation never examined, despite having the legal authority to do so. Prosecutors never investigated Epstein’s role as chairman of Liquid Funding Ltd. They never examined how a $6.7 billion entity was manufacturing investments from toxic mortgages and distributing them to American retirees through their savings accounts. They never traced the connections between Epstein’s personal money laundering through cash withdrawals and the institutional money laundering happening through structured investment vehicles that were moving billions of dollars through offshore entities to avoid regulatory oversight. They never examined the payments flowing through the Wexner Foundation to Israeli intelligence figures during this same period.

And maybe most important of all, prosecutors never examined what they would have seen if they had followed Liquid Funding Ltd’s connections to Bear Stearns and JPMorgan: that the same institutions creating and distributing toxic mortgage securities through entities like Liquid Funding were simultaneously building massive short positions betting those securities would fail. The investigation had subpoenaed records from JPMorgan, Bear Stearns, and Washington Mutual dating back to 2003. Those records would have most likely shown not just cash withdrawals to pay trafficking victims, but also the full scope of financial flows through Liquid Funding and the positions that Bear Stearns and JPMorgan held betting against the Americans they claimed to be supporting.

They would have seen the mechanics of how shadow banking operated, taking money from American savers, moving it through Irish and Channel Islands entities outside U.S. jurisdiction, investing it in toxic mortgages, and generating fees at every step for the banks involved.

They likely would have helped more clearly documented how Bear Stearns’ creation of “special products” in the 1970s, where Epstein was trained, evolved into the “creative products” that crashed the system in 2007.

Would following those money flows have revealed that the techniques used for personal money laundering were the same techniques used for institutional shadow banking? Were these the same techniques used to enable banks to short their own products while selling them to clients?

The timing of this investigation matters enormously. February 2007 was the moment when the mortgage crisis was becoming visible but before the full financial system collapse. By June 2007, Bear Stearns would announce that two of its hedge funds were facing massive losses from mortgage investments. By July 2007, those funds would collapse entirely. A money laundering investigation with subpoena power examining Epstein’s role in the infrastructure that was distributing these mortgage investments would have been in position to see not just how the crisis was being manufactured in real time, but how banks were deliberately engineering and profiting from that manufacture.

Between 2004 and 2006, while Epstein chaired Liquid Funding Ltd., he simultaneously managed the books for the Wexner Foundation, which paid $2.3 million to Ehud Barak, Israel’s former Prime Minister and military intelligence chief for research. IRS filings show Epstein listed as “in charge of foundation books” on the same page documenting these payments. Barak was out of government during this period, building a private defense technology consulting business connecting Israeli military intelligence startups to American capital. One year after the final payment, he returned to government as Defense Minister, serving six years in one of Israel’s most powerful positions. The timing reveals Epstein positioned at two critical intersections: offshore finance and shadow banking through Liquid Funding, and American capital and Israeli defense technology through the Wexner Foundation. Both operations used identical techniques: offshore structures in Ireland and the Channel Islands, complex instruments hiding true purposes, and operations beyond U.S. regulatory reach. So why would the US government simply choose not to look?

When Everything Converged

To understand why killing this investigation matters, you need to know what was happening in the financial markets at that exact moment. The mortgage crisis was no longer hidden. Bear Stearns had announced in June 2007 that two of its hedge funds, including the one where Epstein (or Investor #1) had invested his $57 million, were facing massive losses. By July 2007, those funds had collapsed completely, requiring Bear Stearns to inject $3.2 billion to try to contain the damage.

Six months after the plea deal, in March 2008, Bear Stearns collapsed. The firm was out of money and facing immediate bankruptcy. Under normal circumstances, a failed investment bank would be liquidated, its assets sold to pay creditors, and its executives potentially facing criminal charges for the financial mismanagement that led to the collapse. That is not what happened with Bear Stearns. The Federal Reserve, America’s central banking system, arranged an extraordinary rescue. JPMorgan Chase agreed to purchase Bear Stearns for $2 per share, a price later raised to $10, but only after the Federal Reserve provided $29 billion in guarantees against potential losses.

Why did Bear Stearns get rescued when other banks did not? Six months later, in September 2008, Lehman Brothers collapsed. Lehman was significantly larger than Bear Stearns and more deeply connected to the global financial system. The failure of Lehman Brothers triggered the worst phase of the financial crisis, requiring trillions of dollars in government interventions to prevent a complete collapse of the banking system. But Lehman received no government rescue. The Federal Reserve and Treasury Department decided to let Lehman fail. The official explanation was that Bear Stearns got rescued because it was the first crisis and regulators wanted to prevent panic, while Lehman was allowed to fail because regulators had decided government rescues created moral hazard. This explanation does not account for why the smaller, less important bank got protection while the larger, more systemically critical bank did not.

One month after Bear Stearns was rescued, in April 2008, something happened that raises even more questions. Liquid Funding Ltd paid off all its debts and shut down operations. Remember, this was the $6.7 billion entity where Epstein served as chairman, Bear Stearns owned 40%, and JPMorgan served as trustee. The entity owed $6.7 billion to investors. Who paid off those debts in April 2008? The official rescue of Bear Stearns by JPMorgan was not completed until May 31, 2008, more than a month later. But somehow, in April, Liquid Funding’s massive debts were paid and the entity was wound down cleanly.

Where did $6.7 billion come from to pay off Liquid Funding before JPMorgan officially owned Bear Stearns? The Federal Reserve had provided $853 billion in cumulative emergency loans to Bear Stearns through programs with names like the Primary Dealer Credit Facility and Term Securities Lending Facility. These were secret bailouts, the details of which were not revealed to the public for years. The most plausible explanation is that some of this secret Federal Reserve money was used to wind down Liquid Funding before JPMorgan took control, ensuring that the toxic mortgage investments and offshore structures would be quietly dismantled without public examination. This one is still a dead end, but I know there is more here.

If Bear Stearns needed to be rescued to prevent systemic collapse, why was Lehman allowed to fail? If regulators decided after Bear Stearns that rescues created moral hazard and needed to stop, why did they rescue numerous other institutions after Lehman failed?

In June 2008, two months after Liquid Funding shut down and one month after JPMorgan completed its purchase of Bear Stearns, Jeffrey Epstein pleaded guilty to state prostitution charges in Florida. He began serving his sentence in a county jail with work release privileges that allowed him to leave custody 12 hours a day, six days a week. The federal investigation into money laundering seemed to be over.

But the story of Liquid Funding did not end with its April 2008 shutdown. In 2011, JPMorgan resurrected the entity, installing a former Bear Stearns executive as chairman. The entity operated quietly until 2015, when the Bermuda entity was dissolved through Members’ Voluntary Liquidation, meaning it still had more assets than liabilities. This sure makes it seem like whatever functions Liquid Funding Ltd. had been performing between 2000 and 2007 were valuable enough for JPMorgan to restart operations after the financial crisis. 

Did Epstein Trade Information for Freedom?

Conchita Sarnoff, an investigative journalist who spent years documenting the Epstein case and interviewed many of the people involved, developed a theory about what happened during the plea negotiations in 2007, and I found it after I came up with the same one. 

She wrote: “Conceivably by professing to give the government inside information such as the internal workings of Bear Stearns and the structured funds, Epstein and his attorneys were able to negotiate a better plea deal with the Department of Justice in return for lesser charges and less jail time. Perhaps Epstein realized during the beginning of the negotiations, that he was able to strike back against the firm who fired him at their most vulnerable.”

What information could Epstein have offered about Bear Stearns? As chairman of Liquid Funding, he had direct knowledge of how Bear Stearns used structured investment vehicles to manufacture and distribute toxic mortgage investments. He understood the offshore structures that kept these operations outside U.S. regulatory authority, structured through the Channel Islands and managed from Dublin. He knew which ratings agencies had given AAA ratings to obviously risky investments. He had access to the financial flows showing how money moved from American retirees’ savings accounts through money market funds into mortgage investments that were defaulting at unprecedented rates.

More critically, he potentially had knowledge of how banks were simultaneously creating these investments and betting against them. As chairman of Liquid Funding, which was buying mortgage securities from Bear Stearns while Bear Stearns was building short positions, Epstein would have been positioned to see the dual positioning. 

Ralph Cioffi and Matthew Tannin, the two Bear Stearns hedge fund managers whose funds collapsed with Epstein’s $57 million inside them, were arrested and charged with securities fraud in June 2008. The Department of Justice tried to prove that Cioffi and Tannin had deceived their investors about the health of their funds. The case was weak, relying primarily on a few internal emails that prosecutors claimed showed the managers knew the funds were failing while they told investors everything was fine. In November 2009, a jury found both men not guilty on all counts. Bank of America, which had acquired the remains of Merrill Lynch and inherited liabilities from Bear Stearns, filed a civil lawsuit against Cioffi and Tannin. In 2014, Judge Alison J. Nathan dismissed the case, ruling that the bank had failed to prove that the managers’ conduct caused damages.

Here is what makes Epstein’s investment suspicious. Ralph Cioffi explicitly stated that he had never met Epstein, either when Epstein worked at Bear Stearns in the 1970s or when Epstein invested in the fund in 2006. Epstein invested $57 million with complete strangers during the exact period when he was under FBI investigation and the fund itself was beginning to fail. The investment makes no financial sense unless it served a different purpose.

If Epstein invested $57 million in a Bear Stearns hedge fund specifically to establish himself as a victim of the firm’s mortgage securities fraud, the investment would make sense as a strategic move. When the fund collapsed and Epstein lost everything, he could claim he had been deceived by the same structured products he had helped distribute as chairman of Liquid Funding. This gave him standing to offer cooperation against Bear Stearns. Whether or not he actually provided useful information to prosecutors, the offer of cooperation could have created leverage during plea negotiations.

Multiple sources confirm that Epstein did not meaningfully cooperate with federal prosecutors on financial crisis investigations after his plea deal was signed. But the offer of cooperation might have been sufficient. But we may never know because there is an 11-month gap in Alexander Acosta’s emails during 2007. 

This gap covers exactly the period when he was negotiating Epstein’s plea deal with Epstein’s legal team. Federal government email systems are designed specifically to preserve records for congressional oversight, Freedom of Information Act requests, and potential investigations. Emails do not simply disappear from these systems. The systematic absence of all emails during this specific 11-month period suggests either a catastrophic technical failure affecting only this one time period and only this one person’s account, or deliberate deletion. 

The pattern of missing evidence extends well beyond Epstein’s 2007 plea deal. The surveillance footage from Epstein’s first apparent suicide attempt in his cell in July 2019 disappeared. The cameras outside his cell during his death in August 2019 malfunctioned at the critical time, creating the only gap in footage during his entire incarceration. His cellmate during the first incident, Efrain “Stone” Reyes, who had been cooperating with investigators about what happened that night, died of COVID in November 2020 at age 51. Thomas Bowers, a Deutsche Bank executive who handled Epstein’s accounts and processed his suspicious transactions for years, was found hanged in his Malibu home in November 2019, just as the FBI was seeking to interview him about Epstein’s banking activities. Jean-Luc Brunel, who ran a modeling agency that allegedly supplied young women to Epstein, was found hanged in his French prison cell in February 2022 using the exact same method as Epstein, just before he was scheduled to be questioned by investigators. Mark Middleton, a former Clinton White House aide who had facilitated meetings between Epstein and Clinton in the 1990s, was found dead in May 2022 under circumstances the local sheriff described as “unusual,” hanging from a tree with a shotgun wound to his chest, an injury pattern that experts say is physically implausible as suicide.

Each piece of missing evidence closes off a line of investigation. Each death removes a witness who could have provided testimony connecting Epstein to broader networks. Each destroyed document erases part of the historical record at exactly the moment when that record becomes relevant to understanding how the system worked. When evidence disappears once, it might be coincidence or bureaucratic failure. When evidence systematically disappears at every critical juncture, and when the people who could have provided that evidence keep dying under suspicious circumstances, the pattern suggests active protection of information rather than a series of unfortunate events.

The Question Nobody Can Answer

The October 2025 document unsealing and Senator Ron Wyden’s ongoing investigation have brought renewed attention to questions that should have been answered 18 years ago. What JPMorgan CEO Jamie Dimon knew about Epstein’s activities and when he knew it remains unresolved despite the bank’s $290 million settlement with victims. The unsealed suspicious activity report filed September 26, 2019, just three weeks after Epstein’s death, flagged 4,700 transactions totaling over $1 billion from October 2003 to July 2019. These were transactions the bank processed for 16 years despite their suspicious nature, transactions that multiple JPMorgan compliance officers had flagged, transactions that generated suspicious activity reports dating back to 2002 that federal regulators received but never acted upon.

The October 2025 revelations confirm what victims and investigators have suspected for years. The banks knew. The regulators knew. What would have been revealed if the investigations had proceeded and prosecutors had examined Epstein’s role as chairman of Liquid Funding Ltd? 

Following the money from Liquid Funding Ltd. might have traced connections showing that American retirees’ savings went into money market funds, those funds lent to Liquid Funding, Liquid Funding bought toxic mortgage investments from Bear Stearns, Bear Stearns and other banks simultaneously built short positions betting those investments would fail, and the fees and profits from both sides went to the banks while the losses eventually fell on Americans when the system collapsed and required bailouts. The investigation could have documented that this was not negligence or separate departments making independent bad decisions, but coordinated positioning that made the crisis profitable for those who engineered it.

What the Buried Investigation Cost Us

The investigations by the Senate Permanent Subcommittee on Investigations and the Financial Crisis Inquiry Commission found no evidence of explicit coordination between institutions. No emails between bank executives coordinating strategy or meetings where they plotted to crash the economy. But that doesn’t mean it wasn’t noticed and copied despite knowing the implications. Eighteen years later, that infrastructure is still operating. Two days before his death, Epstein transferred everything into a trust controlled by the same lawyers and accountants who had managed his operation. His biggest investment, now worth $170 million, funds surveillance technology companies. Between 2013 and 2017, he met with former Israeli intelligence chief Ehud Barak at least 36 times and invested in Barak’s surveillance company, which now has U.S. government contracts. The October 2025 documents finally unsealed show what was deliberately hidden in 2007: a system designed to protect powerful people who profit from manufacturing crises while keeping that machinery beyond the reach of accountability. Senator Wyden’s investigation is trying to answer questions that should have been answered before the financial crisis destroyed millions of lives. The real question is though, will the US government let us?

View All Sources

Government Reports

DOJ Office of Professional Responsibility Report (November 2020)
“Investigation into the U.S. Attorney’s Office for the Southern District of Florida’s Resolution of Its 2006-2008 Federal Criminal Investigation of Jeffrey Epstein”
https://www.justice.gov/archives/opa/press-release/file/1336416/dl

Senate Permanent Subcommittee on Investigations (April 13, 2011)
“Wall Street and the Financial Crisis: Anatomy of a Financial Collapse”
https://fraser.stlouisfed.org/title/wall-street-financial-crisis-anatomy-a-financial-collapse-5094
Also available: https://www.hsgac.senate.gov/subcommittees/investigations/library/files/report-psi-staff-report-wall-street-and-the-financial-crisis-anatomy-of-a-financial-collapse/

Financial Crisis Inquiry Commission Final Report (January 27, 2011)
https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf
Also available: https://fcic.law.stanford.edu/report

Paradise Papers / Liquid Funding Investigation

ICIJ Paradise Papers – Jeffrey Epstein
https://www.icij.org/investigations/paradise-papers/jeffrey-epsteins-offshore-fortune-traced-to-paradise-papers/

ICIJ Offshore Leaks Database – Liquid Funding Ltd
https://offshoreleaks.icij.org/nodes/82004676

ICIJ Offshore Leaks Database – Jeffrey E. Epstein
https://offshoreleaks.icij.org/nodes/80063035

Court Cases & Settlements

Jane Doe 1 v. JPMorgan Chase Bank, N.A.
Case No. 1:22-cv-10904 (S.D.N.Y.)
$290 million settlement (June 2023)
Court documents available via PACER.gov

Deutsche Bank Settlement
$75 million settlement with Epstein victims (July 2023)
$150 million fine from New York Department of Financial Services (2020)

U.S. v. Cioffi and Tannin
Case No. 1:08-cr-00415 (E.D.N.Y.)
Bear Stearns hedge fund managers acquitted (November 2009)

IRS Records

Wexner Foundation IRS Form 990 Filings (2004-2006)
Available via ProPublica Nonprofit Explorer: https://projects.propublica.org/nonprofits/
Documents $2.3 million in payments to Ehud Barak, Epstein listed as “in charge of foundation books”

SEC Filings

Dechert Investigation of Leon Black Payments (January 2021)
Filed with SEC, available via EDGAR database
https://www.sec.gov/edgar/search/
Search: “Apollo Global Management” + “Dechert” + “2021”
Documents $158-170 million in payments from Leon Black to Epstein (2012-2017)

Federal Reserve Records

Federal Reserve Bank of New York Emergency Lending Programs
$29 billion in guarantees for JPMorgan acquisition of Bear Stearns
$853 billion cumulative loans to Bear Stearns through PDCF and TSLF
Details disclosed 2011 following Bloomberg FOIA litigation

Congressional Documents (2023-2025)

Senator Ron Wyden Investigation

• Letter to JPMorgan Chase (September 24, 2025) – Cited in Bloomberg/CNN reporting
• JPMorgan response (October 10, 2025) – Obtained via litigation discovery
• Senate Finance Committee ongoing investigation of JPMorgan SAR filing delays

JPMorgan Chase Suspicious Activity Report (September 26, 2019)
Unsealed by court order October 2025
4,700 transactions totaling $1+ billion
Reported by CNN, Bloomberg, Fox Business, NBC News (October-November 2025)

SEC Investigation Documents

SEC Division of Enforcement Letter (September 25, 2019)
“In the Matter of Financial Trust Co. (HO-13814)”
Obtained via FOIA/litigation discovery
Note: No public enforcement action resulted from this investigation

Legal Statutes

Bank Secrecy Act Requirements
31 U.S.C. § 5318(g)(2) – Reporting requirements
31 C.F.R. § 1020.320(e) – SAR filing timelines (30-60 days)

SEC Statute of Limitations
28 U.S.C. § 2462 – Five-year limitation period
Gabelli v. SEC, 568 U.S. 442 (2013) – Limitations run from violation, not discovery
Kokesh v. SEC, 581 U.S. 455 (2017) – Extended to disgorgement claims

Books

Conchita Sarnoff, TrafficKing (2016)
Documents Epstein as “Investor 1” in Bear Stearns hedge fund; theory regarding cooperation offers during plea negotiations

News Reports (Recent)

Bloomberg – “Epstein Emails Reveal Federal Money-Laundering Probe Prosecutors Hid” (October 31, 2025)

CNN, Fox Business, NBC News – Reporting on unsealed JPMorgan SAR (October-November 2025)

Wall Street Journal – Epstein-Barak meetings documented via calendar (May 2023)

Haaretz – Epstein investment in Carbyne surveillance company (2019)

NPR – Deutsche Bank $150 million settlement with NY DFS (July 2020)