Leon Black, chairman and chief executive of Apollo Global Management, was a lucrative client for Jeffrey Epstein. Photo / Rebecca Smeyme, The New York Times
Leon Black, whose $9 billion fortune could buy the best counsel in the world, paid at least $50 million to Epstein for advice and services after most others had deserted him.
Billionaire financier Leon Black, one of Wall Street's most powerful executives, was facing questions from clients after Jeffrey Epstein was arrested last year on federal sex trafficking charges. The two men had known each other for decades, and investors of Black's investment company, Apollo Global Management, wanted to know how close they had been.
Such questions were valid, Black said, according to a transcript of a call with analysts in July 2019. He said in a letter that same day to investors that he had had a "limited relationship" with Epstein, a convicted sex offender, and had consulted him "from time to time" on personal financial matters.
But their connection was deeper than Black let on: The two men often socialised and dined together, and Black was a lucrative client for Epstein over the final decade of his life.
Black wired Epstein at least US$50 million ($75 million) in the years after Epstein's 2008 conviction for soliciting prostitution from a teenage girl, according to documents reviewed by The New York Times and interviews with four people with knowledge of the transactions. The transfers included US$10 million ($15 million) to a foundation started by Epstein and consulting fees that were sufficiently unusual to draw scrutiny from Deutsche Bank, where Epstein kept his accounts. Two of the people said the total amount sent by Black to Epstein could be as high as US$75 million ($112 million).
It was not clear what kind of services Epstein provided to Black, whose US$9 billion ($13.5 billion) fortune can buy him access to the best lawyers and accountants in the world. Epstein, though he styled himself as a "financial doctor" to wealthy clients, was a college dropout who had worked on Wall Street for just a few years, demonstrated no great skill as an investor, and had no formal training in tax and estate planning.
"Mr. Black received personal trusts and estates planning advice as well as family office philanthropy and investment services from several financial and legal advisers, including Mr. Epstein, during a six-year period, between 2012 and 2017," said Stephanie Pillersdorf, a spokeswoman for Black. "The trusts and estate planning advice was vetted by leading auditors and law firms."
The business relationship ended in 2018 because of a "fee dispute," and Black stopped communicating with Epstein, she said.
"Mr. Black continues to be appalled by the conduct that led to the criminal charges against Mr. Epstein, and he deeply regrets having any involvement with him," Pillersdorf said.
She added that Epstein did not do any work for Apollo, whose investors include some of the biggest public pensions in the country, large sovereign wealth funds and private foundations.
The fees from Black help explain a mystery about Epstein's wealth: how a man who left behind an estate worth more than US$600 million ($902 million) made money in the years after his most lucrative client, billionaire retail magnate Leslie H. Wexner, cut him off.
Some of the payments from Black are described in an internal report by Deutsche Bank, which served as Epstein's primary banker from 2013 into 2019. The report was provided to regulators who fined the German bank over the summer for its failure to catch numerous red flags in Epstein's financial activities.
Portions of the report reviewed by The New York Times describe a payment of US$22.5 million ($33.8 million) in 2017 by a company called BV70 LLC, which the bank said owned Black's yacht, to Plan D, the company that managed Epstein's Gulfstream jet. When an employee in Deutsche Bank's anti-financial-crime division inquired about the payment, she was told by another bank employee that it was a fee for consulting services provided by Southern Trust Co., one of the dozens of entities Epstein operated in the Virgin Islands. There was no explanation for why the payment went to Plan D.
The Deutsche Bank report also shows that BV70 made a US$10 million donation in 2015 to a charitable foundation started by pstein, Gratitude America, which made several million dollars in grants while Epstein was casting himself as a philanthropist. BV70 also planned to make another payment of US$10 million to Epstein for advisory work, according to the report, although it was unclear if that payment was ever made.
And in 2014, Epstein received several million dollars in fees from Narrows Holdings, a company that Black — the chairman of the Museum of Modern Art — has used to purchase much of his billion-dollar art collection, according to two of the people with knowledge of the transactions. The details of the services Epstein provided in exchange for those fees are also unclear.
Epstein portrayed himself as a financial guru to the wealthy, although for many years his chief client was Wexner, founder of L Brands, which owns Victoria's Secret. Epstein was first publicly accused of engaging in sex with underage girls in 2006, and Wexner said he cut ties with Epstein at the end of the following year. (Wexner said last year that Epstein had misappropriated "vast sums" from him; Epstein had returned at least US$100 million to Wexner, The Times has reported.)
In 2008, Epstein pleaded guilty in Florida to a state prostitution charge with a minor and served 13 months in a state jail as part of a plea agreement with federal prosecutors — an arrangement that was kept confidential at the time. He kept a low profile for the next decade, but after an investigation by The Miami Herald drew attention to his plea deal, federal prosecutors in New York charged Epstein with sex trafficking in July 2019. His death the next month in a Manhattan jail cell was ruled a suicide.
Black knew Epstein for decades — in 1997 he made Epstein one of the original trustees of what is today called the Debra and Leon Black Foundation — and was among the high-profile figures who maintained ties with him following his prostitution arrest. They included Bill Gates, the Microsoft co-founder; Lawrence Summers, the former president of Harvard; James E. Staley, now the chief executive of Barclays; and hedge fund manager Glenn Dubin and his wife, Eva.
Epstein frequently hosted Black at his New York mansion, usually meeting him for breakfast or lunch, according to four people familiar with their relationship. In 2012, while on a family vacation in the Caribbean, Black traveled by yacht to attend a cookout at Epstein's private island residence in the US Virgin Islands, two of the people said.
In 2011, Epstein's financial advisory firm — Financial Trust — joined Black and members of his family in investing in a small emissions control company, Environmental Solutions Worldwide, where two of Black's sons serve as board members. The company did not respond to requests for comment.
According to an archived version of one of Epstein's websites, the men visited Black's alma mater, Harvard, together. Although the university stopped accepting gifts from Epstein after his 2008 plea, according to a report by the university, Black had given at least US$5 million to professors, and Epstein's staff members had "played a role in facilitating the Black donations."
Business records from the Virgin Islands reviewed by The Times last year show how Epstein's business suffered following his 2008 case. The conviction coincided with the fallout from the financial crisis, which cost Financial Trust US$150 million. The company took in just $200,000 in fee income from 2008 to 2012 before closing down that year, the records show.
The same year, Epstein established a new business, Southern Trust Co., which he told territorial officials was primarily a DNA data-mining and genetic research provider with a "financial arm." There's little evidence the company — which had no scientists on its nine-member staff — ever did any research.
Southern Trust collected more than US$180 million in fees between 2013 and 2017. (In 2018, the year Black said he cut ties with Epstein, Southern Trust reported no fee income.)
The attorney general of the Virgin Islands, Denise N. George, filed a civil forfeiture lawsuit against Epstein's estate this year, claiming that Epstein had deceived officials to get Southern Trust a lucrative tax break and used his island retreat to engage in sex trafficking. George's offices said in court filings that she intended to serve subpoenas on Black and several of his business entities. (George has said she intends to serve a subpoena on Dubin as well.)
Black's representatives have been gathering documents to hand over to the attorney general's office. Black was prepared to cooperate with George's request, Pillersdorf said.
Written by: Matthew Goldstein, Steve Eder and David Enrich
Photographs by: Rebecca Smeyne and Gabriella N. Baez
© 2020 THE NEW YORK TIMES
Volumes were lighter as investors are thinking more about the summer holidays.