The mysteries surrounding Jeffrey Epstein’s wealth pose a new challenge for investigators following his death: how do you freeze assets and preserve wealth for his alleged victims when so little is known about the sources or locations of his wealth?
Epstein, who was charged with sexually abusing hundreds of adolescent girls in New York and Florida, was found dead in his jail cell on Saturday. While Epstein’s death was initially reported as an apparent suicide, the medical examiner in New York has said further investigation is needed before he will declare suicide as the cause of death.
Attorney General William Bar said on Monday that Mr. Epstein’s death would not halt the investigation into people who allegedly helped him recruit and traffic young girls. Several women have alleged that female associates of Epstein actively recruited and managed girls as young as 14-years-old to perform sexual services for Epstein and his friends.
“Any co-conspirators should not rest easy,” Barr said. “The victims deserve justice and they will get it.”
Attorneys for some of those victims have announced plans to file civil suits against his estate. And it is likely that federal prosecutors will file cases for civil forfeiture against the estate’s assets. But tracking down Epstein’s wealth and preserving it may be difficult because so much about Epstein’s fortune remains unknown.
Here are some of the questions that still need to be answered.
How much wealth did Epstein have? Epstein owns a huge mansion in Manhattan, a private island in the U.S. Virgin Islands, an enormous ranch in New Mexico, an apartment in Paris, a home in Palm Beach, Florida, and two private planes. The New York Times estimated that his real estate holding alone are worth around $200 million. Upkeep of the properties and the planes would amount to several million each year.
In his plea for bail, Epstein listed his wealth as around $500 million–far less than the billions he was said to have possessed prior to his arrest. That could be because his wealth was exaggerated or declined in the aftermath of his 2007 arrest and the financial crisis. Or it could be that he has hidden his wealth.
Where is Epstein’s financial wealth? Jeffrey Epstein had investments and accounts with Bear Stearns, his former employer, for years after he left that firm. These included tens of millions of dollars invested in hedge funds owned by Bear. Documents uncovered by McClatchy and the Miami Herald show from at least 2000 to 2007 Epstein was chairman of a company called Liquid Funding Ltd, a Bear Stearns subsidiary that lent out billions to hedge funds and others while selling its own debt to investors.
J.P. Morgan Chase purchased Bear Stearns as the storied investment bank collapsed in March 2008. The New York Times has reported that Epstein was a client of J.P. Morgan Chase until 2013. It’s likely that the bank essentially inherited Epstein as a client when it acquired Bear. A spokesman for the bank could not say whether Epstein was employed in any way by the legacy Bear outfits after the takeover.
At that point, it seems Epstein moved assets and currency trading business to Deutsche Bank, where Mr. Epstein was a client from 2013 until June 2019. Deutsche Bank is currently cooperating with investigators. But the situation remains murky.
From the New York Times:
On a number of occasions, Deutsche Bank executives had thought they had shut down all of Mr. Epstein’s accounts, only to learn that there were others that they had not previously been aware of, according to one of the people.
At least as of late spring, there were still transactions taking place in some of Mr. Epstein’s Deutsche Bank accounts, the three people said. Executives now believe that they have closed all of Mr. Epstein’s accounts.
Also from the New York Times:
Deutsche Bank, where Mr. Epstein was a client from 2013 until June 2019, has been handing over transaction-by-transaction data to federal prosecutors and other authorities, according to two people familiar with the matter. One of those people, who was briefed on the bank’s internal review, said it appeared that Mr. Epstein was using his accounts for sex trafficking and possibly other illegal activity. The banker who initiated the relationship with Mr. Epstein left Deutsche Bank last year, around the time that the company decided to begin shutting down Mr. Epstein’s accounts, according to one of the people.
There are also indications that Epstein kept money in Swiss bank accounts. In 2011, a trust listed as being under Epstein’s control from a Swiss bank account contributed tens of millions of dollars to a charity controlled by Leslie Wexner, according to financial records included in a leak to the French newspaper Le Monde. Wexner is the billionaire retail mogul who had turned over his fortune to Epstein for years but who recently claimed Epstein misappropriated “vasts sum” of his wealth.
What did Epstein do for Wexner? Perhaps the biggest mystery of Epstein’s fortune is how he built it and why Wexner gave his near total control over his finances.
Epstein was a college drop-out from a middle-class family in Brooklyn’s Coney Island. He somehow became a math teacher at Manhattan’s elite Dalton School. One of the parents of his students was so impressed with his abilities that he secured him a position at Bear Stearns in 1976. Bear was known for eschewing the Ivy League atmosphere of many Wall Street firms and hiring candidates regarded as “poor, smart, and desperate to be rich.”
But Epstein had allegedly padded his resumé, falsely claiming to have graduated from Stanford University, according to a Bear Stearns executive who spoke with the Wall Street Journal. There were also allegations of an inappropriate relationship with a female staffer. And Epstein alleged to have inappropriately allocated shares of initial public offerings, according to the Wall Street Journal.
But the role at Bear did not last. In 1982, he started J. Epstein & Co., a kind of one-man wealth management firm offering tax advice, fraud detection, estate planning, accounting, investment strategies, and the like to very wealthy investors.
For reasons that remain unknown to even close associates of Wexner, the chief executive of L Brands and its largest shareholder gave Epstein a shocking amount of control over his own fortune and his businesses. Wexner authorized Epstein to sign tax returns, hire people, purchase businesses, invest, and even borrow money on his behalf. There is some speculation that this was all an elaborate scheme to avoid taxes by assigning assets to offshore entities, but no one has uncovered how this might have worked.
While working for Wexner, Epstein became incredibly rich and created an impression of vast wealth and influence. He told people at the time that he was a money manager who only accepted clients with a billion dollars to invest, a level of liquid wealth that would have left him with very few potential investors. In any case, Wexner remains his only known client.
Epstein reportedly purchased his Manhattan mansion from Wexner, although records of the transaction remain scant. Epstein’s brother, Mark, also became the owner of a Manhattan apartment building formerly owned by Wexner. The Wall Street Journal reports:
The brothers are linked financially through a 200-unit condominium on Manhattan’s Upper East Side once owned by Jeffrey Epstein’s most lucrative client, retail magnate Leslie Wexner. The company that bought the building in the early 1990s is a former affiliate of J. Epstein & Co., Jeffrey Epstein’s investment firm, real-estate records and New York state filings show. Mark Epstein was once listed in corporate records as president of that company.
Last week, Wexner said in a letter to his charitable foundation that he had discovered Epstein had misappropriated “vast sums” from him. Wexner said he made the discoveries while severing ties with Epstein after his 2007 arrest. But he did not disclose this until last week.
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