The Billionaire Who Stood by Jeffrey Epstein
Billionaire financier Leon Black, one of Wall Street's most powerful executives, faced questions from clients after Jeffrey Epstein was arrested for federal sex trafficking last year. The two men had known each other for decades, and investors at Black's investment firm Apollo Global Management wanted to know how close they were.
Such questions are valid, Black said, according to a transcript of a call to analysts in July 2019. In a letter to investors on the same day, he said he had a "limited relationship" with Epstein, a convicted sex offender, and had consulted him "from time to time" in personal financial matters.
But their connection was deeper than Black's: the two men often socialized and ate together, and Black has been a lucrative customer for Epstein for the last decade of his life.
Black wired Epstein at least $ 50 million in the years following Epstein's 2008 conviction for prostitution of a teenage girl. This is evident from documents examined by the New York Times and interviews with four people who are aware of the transactions. The transfers included $ 10 million to a foundation established by Epstein and advisory fees unusual enough to be reviewed by the Deutsche Bank, where Epstein kept his accounts. Two of the respondents said the total amount Black sent to Epstein could be up to $ 75 million.
It wasn't clear what kind of services Epstein was providing to Black, whose $ 9 billion fortune could give him access to the best lawyers and accountants in the world. Although Epstein referred to himself as a "finance doctor" for wealthy clients, he was a college dropout who had only worked on Wall Street for a few years, had poor investor skills, and had no formal training in tax and estate planning.
"Mr. Over a six-year period between 2012 and 2017, Black received personal advice on trust and real estate planning, philanthropy and investment services for the family office from several financial and legal advisors, including Mr Epstein," said Stephanie Pillersdorf , a spokeswoman for Black, "The trust and estate planning advice has been reviewed by leading accountants and law firms."
The relationship ended in 2018 due to a "fee dispute" and Black stopped communicating with Epstein, she said.
"Mr. Black is still appalled by the behavior that led to the criminal charges against Mr. Epstein and he deeply regrets that he has been linked to him," said Pillersdorf.
She added that Epstein didn't do any work for Apollo, whose investors include some of the country's largest public pensions, large sovereign wealth funds and private foundations.
Black's fees help clear a mystery of Epstein's fortune: like a man who left a property worth more than $ 600 million in the years after his most lucrative customer, billionaire Leslie H. Wexner, cut him off, made money.
Some of Black's payments are detailed in an internal report from Deutsche Bank, which served as Epstein's main banker from 2013 to 2019. The report was made available to regulators, who fined the German bank that summer for failing to recognize numerous red flags from Epstein's financial activities.
Portions of the New York Times-audited report describe a payment of $ 22.5 million in 2017 by a company called BV70 LLC, which Bank claims owned Blacks Yacht, to Plan D, the company that owned Epstein's Gulfstream Jet managed. When an employee of Deutsche Bank's financial crimes department inquired about the payment, she was told by another bank employee that it was a fee for advisory services from Southern Trust Co., one of the dozen of companies that Epstein in the Jungfrau operates islands. There was no explanation as to why the payment went to Plan D.
Deutsche Bank's report also reveals that BV70 made a $ 10 million donation in 2015 to a nonprofit foundation founded by Epstein, Gratitude America, which received millions of dollars in grants while Epstein is a philanthropist issued. BV70 also planned another $ 10 million payment to Epstein for consulting work, according to the report, although it was unclear whether that payment was ever made.
And in 2014, Epstein received multi-million dollar fees from Narrows Holdings, a company with which Black - chairman of the Museum of Modern Art - bought much of his multi-billion dollar art collection, according to two experts on the transaction. The details of the services Epstein provided in exchange for these fees are also unclear.
Epstein portrayed himself as the financial guru of the rich, although his main client for many years was Wexner, the founder of L Brands, which owns Victoria's Secret. Epstein was first publicly accused of having sex with underage girls in 2006, and Wexner said he cut ties with Epstein late the following year. (Wexner said last year that Epstein misused "huge sums" of him; Epstein returned at least $ 100 million to Wexner, The Times reported.)
In 2008, Epstein pleaded guilty to a state prostitution charge with a minor in Florida and served 13 months in a prison as part of a settlement with federal prosecutors - an arrangement that was kept confidential at the time. He went nondescript for the next decade, but after an investigation by the Miami Herald caught his plea, federal prosecutors in New York accused Epstein of sex trafficking in July 2019. His death the next month in a Manhattan prison cell was a ruled suicide.
Black knew Epstein for decades - in 1997 he made Epstein one of the original trustees of what is now the Debra and Leon Black Foundation - and was one of the high-profile figures who cultivated ties with him after his arrest for prostitution. These included Bill Gates, the Microsoft co-founder; Lawrence Summers, the former president of Harvard; James E. Staley, now Managing Director of Barclays; and hedge fund manager Glenn Dubin and his wife Eva.
Most who stayed in touch with Epstein after his conviction now claim it was a mistake and say they will not condone his actions.
Last year, Bridgitt Arnold, a Gates spokeswoman, said, "Bill Gates regrets ever meeting Epstein and acknowledges that it was an error of judgment." Staley said he was out of touch with Epstein after 2015 and was "transparent and open" with Barclays about his previous relationships. The Dubins said they were "appalled and unaware of the new allegations" against Epstein. And Summers has said Epstein never did an advisory job to him and that his deals are limited.
Epstein often hosted Black at his New York mansion and usually met him for breakfast or lunch, according to four people familiar with their relationship. While on a family vacation in the Caribbean in 2012, Black traveled by yacht to a cookout at Epstein's private island residence in the U.S. Virgin Islands, two respondents said.
In 2011, Epstein's financial advisory firm, Financial Trust, invested with Black and members of his family in a small emissions control company, Environmental Solutions Worldwide, which has two of Black's sons serving as directors. The company did not respond to requests for comment.
According to an archived version of one of Epstein's websites, the men attended Black's alma mater, Harvard, together. Although the university stopped accepting gifts from Epstein after his 2008 plea, according to a university report, Black had given at least $ 5 million to professors and Epstein staff had "played a role in facilitating Black's donations."
Annual reports from the Virgin Islands, audited by The Times last year, show how Epstein's business suffered after its 2008 fall. The conviction coincided with the aftermath of the financial crisis that cost the Financial Trust $ 150 million. The company generated just $ 200,000 in fee income from 2008 to 2012 before closing that year.
That same year, Epstein started a new company, Southern Trust Co., which he said territory officials were primarily a DNA data mining and genetic research company with a "financial arm". There is little evidence that the company, which had no scientists in its nine employees, ever investigated.
Southern Trust collected fees of more than $ 180 million between 2013 and 2017. (In 2018, the year Black said he severed ties with Epstein, Southern Trust reported no fee income.)
Virgin Islands Attorney General Denise N. George filed a civil lawsuit against Epstein's estate earlier that year, alleging Epstein deceived officials to give Southern Trust a lucrative tax break and used his island retreat to engage in sex trafficking. George's court records stated in court records that she intended to serve subpoenas on Black and several of his business units. (George said that she intends to serve a subpoena on Dubin as well.)
Black's agents have collected documents to hand over to the attorney general's office. Black is ready to work with George's request, said Pillersdorf.
In a letter to investors the Monday after this article went online, Black said he "never tried to hide the work Epstein did for him." He admitted that he "paid Mr. Epstein millions of dollars annually for his work," but noted that "no one, including the New York Times, has alleged that I was involved in wrongdoing or improper conduct."
Apollo's shares closed 5.7% on Monday.
This article originally appeared in the New York Times.
© 2020 The New York Times Company
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