Is Jeffrey Epstein Even A Billionaire?

We should put Forbes on the case!

The New York Times   makes a persuasive case that references to "Billionaire financier and alleged child molester" Jeffrey Epstein may need a second "alleged" before the word "billionaire." Sure, he's clearly got a pretty big fortune in real estate -- including that private island of his -- and federal prosecutors warned his "nearly infinite" wealth and his two private jets made him a flight risk. We can see how the jets would make them worry about flight, which is why they're the high-powered federal prosecutors.

As for the limitless wealth, it looks like there's much more evidence of Epstein's alleged sex crimes than his alleged billions, and gosh, who ever heard of some prominent sleazebag claiming to be much richer than he actually is? Talk about unprecedented!

Epstein certainly enjoyed a reputation as a super rich guy, hanging out with rich and powerful people like a president or two. The Times points out that even after he pleaded guilty to Alex Acosta's sweetheart plea deal in 2008, Epstein

promoted himself as a financial wizard who used arcane mathematical models, and he often dropped the names of Nobel Prize-winning friends. He told potential clients that they had to invest a minimum of $1 billion. At his peak in the early 2000s, a magazine profile said he employed 150 people, some working out of the historic Villard Houses on Madison Avenue.

But instead of being a super math whiz, the piece argues, Epstein seems to have had a real talent for schmoozing with the right people. Two, in particular:

Steven J. Hoffenberg, a onetime owner of The New York Post and a notorious fraudster laterconvicted of running a $460 million Ponzi scheme,and Leslie H. Wexner,the billionaire founder of retail chainsincluding The Limited and the chief executive of thecompany that owns Victoria's Secret [...]

Mr. Epstein's firm, Financial Trust Company, has released no audited financial statements or performance reports to back up his claims of investment prowess. In a 2002 court filing, Mr. Epstein said he had 20 employees, far fewer than reported figures around that time. Six years later, he lost large sums of money in the financial crisis. And friends and patrons — including Mr. Wexner — deserted him after he pleaded guilty to prostitution charges in 2008.

Epstein is definitely rich, but that "billionaire" stuff seems more a matter of good publicity than actual fact. Imagine that!

The piece offers a financial bio of Epstein, tracking his rise from teaching math at a fancy private school in Manhattan, where he tutored the son of the chair of Bear Stearns and eventually got a job at the investment firm. He eventually got shitcanned from Bear for "irregularities" and went into business for himself, and by the late '80s got hired by Hoffenberg, whose firm, Towers Financial, was at the time a sort of financial carrion eater,

buying unpaid debt from hospitals, nursing homes and phone companies and trying to collect it — a distinctly unglamorous niche. Mr. Hoffenberg hired Mr. Epstein as a consultant for $25,000 a month, and the two men refashioned themselves as corporate raiders.

Two of their grand takeover schemes were "spectacular failures," like trying to take control of Pan American Airlines just before the 1988 Lockerbie bombing, which drove the company into bankruptcy. They also tried to take over an air freight outfit, and again failed miserably. But at least one takeover bid went very well indeed for Epstein:

He told Vanity Fair in 2003 that he had invested $1 million, including $300,000 of his own money, in a raid on Pennwalt, a chemical processing firm in Philadelphia. Pennwalt eventually accepted an offer from a French company that was nearly double the price at which the investor group began acquiring shares, giving Mr. Epstein a profit.

After that, Epstein met Wexner, the actual billionaire, and the two really hit it off, to the bafflement of a lot of people close to Wexner.

Robert Morosky, who had been the vice chairman of The Limited, was surprised Mr. Wexner took to Mr. Epstein so readily. "Everyone was mystified as to what his appeal was," Mr. Morosky said. "I checked around and found out he was a private high school math teacher, and that was all I could find out. There was just nothing there."

It's like he was some kind of Svenjolly, with a cheerful mental hold over Wexner. They did a bunch of deals, including some prime Manhattan real estate like the mansion where Epstein now lives. By 1998, Epstein was able to buy himself that island. That was when he claimed nobody could invest with his creatively named "Financial Trust Company," unless they brought over a billion dollars, although, oops, the one actual disclosure form that exists showed nothing of the sort:

Thomas Volscho, a sociology professor at the College of Staten Island who has been researching for a book on Mr. Epstein, recently obtained the form, which shows Financial Trust had $88 million in contributions from shareholders.

In 2008, Epstein lost millions when Bear Stearns fell apart, and then there was the little matter of that investigation into his alleged sex crimes against young girls. He took the plea deal, which allowed him to work during the day, but investors for some reason weren't so happy to be associated with him. A spokesperson told the Times Wexner had "severed ties" with Epstein in 2007. Even so, Epstein still managed to do some investing and live like the multimillionaire he still was, because apparently you can still get along fairly well even if you don't have billions. Who knew!

Most recently, Epstein was "a client of Deutsche Bank's private-banking division, which caters to ultrawealthy individuals and families." Hey, see if this sounds familiar! According to two insiders who spoke to the Times, 

  At one point,compliance officers at Deutsche Bank raised concerns about transactions by Mr. Epstein's company, because he posed reputational risk to the bank, the people said.

Deutsche Bank managers overruled their concerns, the people said. They noted that there was nothing illegal about the transactions and that Mr. Epstein was a lucrative client.

Given Deutsche Bank's apparent willingness to quash "suspicious activity reports" of hinky-looking transactions by Jared Kushner's family business, guess it shouldn't be surprising the managers would also be happy to overlook mere "reputational" concerns about a dude who was merely an accused -- but lucrative -- child molester. But be of good cheer! The Times carefully notes that, earlier this year, Deutsche Bank finally "ended its relationship with Mr. Epstein." Its reputation is safe, we guess!

[ NYT ]

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