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/ f Da Posr al' EFTA00260609 NO. 74520 (Ili;) hWi.; 'cluttlS9' AMMO • • EFTA00260610 EFTA00260611 I SIR. BIC JelTral Epstein in \cn 1,,l, /44 Epstein\ nine-floor. 5I.IIIM-square- roof loon house. Ile also °ails a 7.5101-aera• ranch in \en \lesicii, a house in Palm Beach. and a Caribbean Lately, 3effrey Epstein's high-flying style has been drawing oohs and aahs: the bachelor financier lives in New Iork's largest private reside *e, claims to take only billionaires as clients, and flies celebrities including Bill Clinton and Kevin Spacey on his Boeing 727. But pierce his air of mystery and the picture changes. VICKY WARD explores Epstein's investment career, his ties to retail magnate Leslie Wexner, and his complicated past EFTA00260612 1. n Manhattan's Upper Eaft Side. home to some of the most expensive real estate on earth. exists the crown jewel of the city's residential town houses. With its I5-lbot-high oak door. huge arched windows, and nine floors. it sits on—or. rather. commands —the block of 71st Street between Fifth and Madison Avenues. Almost ludicrously out of pro- portion with its four- and five-story neigh- bors. it seems more like an institution than a house. This is perhaps not surprising— until 1989 it was the Birch Wathen private school. Now it is said to be Manhattan's largest private residence. Inside, amid the flurry of mcnscnants attired in sober black suits and pristine white gloves, you feel you have stumbled into someone's private Xanadu. This is no mere rich person's home. but a high- walled. eclectic. imperious fantasy that seems to have no boundaries. The. entrance hail is decorated not with paintings but with row upon row of indi- vidually framed eyeballs: these. the owner tells people with relish. were imported from England. where they were made for in- jured soldiers. Next comes a marble foyer. which does have a painting, in the man- ner of Jean Dubuffet ... but the host coyly refuses to tell visitors who painted it. In any case. guests are like pygmies next to the nearby twice-life-size sculpture of a naked African warrior. Despite its eccentricity the house is curi- ously impersonal. the statement of someone who wants to be known for the scale of his possessions. Its occupant. financier Jeffrey Epstein. 50. admits to friends that he likes it when people think of him this way. A good- looking man, resembling Ralph Lauren. with thick gray-white hair and a weathered face, he usually dresses in jeans. knit shirts. and loafers. He tells people he bought the house because he knew he "could never live anywhere bigger." He thinks 51,000 square feet is an appropriately large space for some- one like himself, who deals mostly in large concepts—especially large sums of money. Guests are invited to lunch or dinner at the town house—Epstein usually refers to the former as "tea," since he likes to cat bite- size morsels and drink copious quantities of Earl Grey. (He does not touch alcohol or to- bacco.) Tea is served in the "leather room: so called because of the cordovan-colored fabric on the walls. The chairs are covered in a leopard print. and on the wall hangs a huge. Oriental fantasy of a woman holding an opium pipe and caressing a snarling li- onskin. Under her gaze. plates of finger sandwiches arc delivered to Epstein and guests by the menservants in white gloves. Upstairs. to the right of a spiral stair- case, is the "office." an enormous gallery spanning the width of the house. Strangely. it holds no computer. Computers belong in the "computer room" as smaller room at the back of the house). Epstein has been known to say. The office features a gilded desk (which Epstein tells people belonged to banker J. P Morgan). 13th-century black lacquered Portuguese cabinets. and a nine- foot ebony Steinway "D" grand. On the desk, a paperback copy of the Marquis de Sades The MAthrtitnes linue was re- cently spotted. Covering the floor. Epstein has explained. "is the largest Persian rug you'll ever see in a private home—so big. it must have come from a mosque." Amid such splendor. much of which reflects the work of the French decorator .Alberto Pin- to. who has worked for Jacques Chime and the royal families of Jordan and Saudi Ara- bia. there is one particularly startling oddi- ty: a stuffed black poodle. standing atop the grand piano. 'No decorator would ever tell you to do that:' Epstein brags to visi- tors. "But I want people to think what it means to stuff a dog:' People can't help but feel it's Epstein's was of saying that he always has the last word. In addition to the town house. Epstein lives in what is reputed to be the largest private dwelling in New Mexico. on an 518 million. 7.500-acre ranch which he named "Zorro." "It makes the town house look like a shack." Epstein has said. He also owns Little St. James. a 70-acre island in the U.S. Virgin Islands. where the main house is currently being renovated by Edward Tut- tle. a designer of the Amanresorts. There is also a 56.8 million house in Palm Beach, Florida. and a fleet of aircraft: a Gulfstrcam IV. a helicopter. and a Boeing -27. replete with trading room. on which Epstein re- cently flew President Clinton. actors Chris Tucker and Kevin Spacey, supermarket magnate Ron Burkle. Lew Wasserman's grandson• Casey Wasserman. and a few oth- ers. on a mission to explore the problems of AIDS and economic development in Africa. Epstein is charming. but he doesn't let the charm slip into his eyes. They are steely and calculating, giving some hint at the steady whir of machinery running behind them. "Let's play chess:' he said to me. af- ter refusing to give an interview for this arti- cle. "You be white. You get the first move." It was an appropriate metaphor for a man who seems to feel he can win no matter what the advantage of the other side. His advantage is that no one really seems to know him or his history completely or what his arsenal actually consists of. He has care- fully engineered it so that he remains one of the few truly baffling mysteries among New York's moneyed world. People know snippets. but few know the whole. -He's wry enigmatiC says Rosa NIonck- ton. the former C.E.O. of Tiffany & Co. in the U.K. and a close friend since the early 1980s. 'You think you know him and then you peel off another 'ring of the onion skin and there's something else extraordinary underneath. He never reveals his hand.... He's a classic iceberg. What you see is not what you get." ven acquaintances sense a curious dichotomy: les. he lives like a "modern ma- haraja." as Leah Kiernan. one of his art dealers. puts it. Yet he is fastidiously. a4 most obsessively private—he lists himself in the phone book under a pseudonym. He rarely attends society gath- erings or weddings or funerals: he considers eating in restaurants like "eating on the sub- way"—i.e., something he'd never do. There are many women in his life. mostly young. but there is no one of them to whom he has been able to commit. He describes his most public companion of the last decade. Ghislaine Maxwell. 41. the daughter of the late. disgraced media baron Robert Max- well. as simply his "best friend.- He says she is not on his payroll, but she seems to organize much of his life—recently she was making telephone inquiries to find a California-based yoga instructor for him. (Epstein is still close to his two other long- term girlfriends. Paula Heil Fisher. a for- mer associate of his at the brokerage firm Bear Stearns and now an opera producer. and Eva Andersson Dubin. a doctor and onetime model. He tells people that when a relationship is over the girlfriend "moves up. not down." to friendship status.) Some of the businessmen who dine with him at his home—they include newspaper publisher Mon Zuckerman. banker Louis Ranieri. Revlon chairman Ronald Perelman. real-estate tycoon Leon Black. former Mi- crosoft executive Nathan Myhnold. Tom Pritzker (of Hyatt Hotels). and real-estate I•• • vaN "V tA.t A ZCH 2003 EFTA00260613 personality Donald Trump—sometimes seem not all that clear as to what he ac-tually dots to earn his millions. Certainly. you won't find Epstein's transactions writ-ten about on Bloomberg or talked about in the trading moms. "The trading desks don't seem to know him. It's unusual for animals 'hat big not to leave any footprints in the .now." says a high-level investment manager. Unlike such fund managers as George Soros and Stanley Druckenmiller, whose client lists and stock maneuverings act as their calling cards. Epstein keeps all his deals and clients secret. bar one client: bil-lionaire Leslie Wexner, the respected chair-man of Limited BraMis. Epstein insists that ver since he left Bear Stearns in 19131 he as managed money only for billionaires —ho depend on him for discretion. "I the only person crazy enough, or arroeant cnough, or misplaced enough. to make my limit a bil-lion dollars or more:' he tells peo-ple freely. According to him, the flat fees he receives from his clients. combined with his skill at playing t e currency markets "with very I ge sums of money." have afforded .m the lifestyle he enjoys today. Why do billionaires choose him as their trustee? Because the prob-lems of the mega-rich. he tells peo-ple, are different from yours and mine, and his unique philosophy is central to understanding those problems: "very few people need any more money v ten they have a billion dollars. The key it. not to have it do harm more than any-thing else.... You don't want to lose your money." VMS 1 e has likened his job to specifically, one who spe- cializes of an architect—more in remodeling: "I always describe [a billion- aire) as someone who started out in a small home and as he became wealthier had add-ons. He added on another addition. he built a mom over the garage ... until you have a house that is usually a mess.... It's a large house that has been put together over time *here no one could foretell the financial fu-tu; : and their accompanying needs." le makes it sound as though his job co:abines the roles of real-estate agent. ac-countant. lawyer. money manager, trustee. and confidant. But, as with Jay Gatsby, myths and rumor swirl around Epstein. Here are some of the hard facts about Epstein—ones that he doesn't mind people knowing: He—grew-4m- middle-class in BR oklyn. His father worked for the city's parks department. His parents viewed educa- tion as "the way out" for him and his young- er brother. Mark, now working in real estate. Jeffrey started to play the piano—for which he maintains a passion—at live. and he went to Brooklyn's Lafa!ette High School. He was good at mathematics. and in his early 20s he got a job teaching physics and math at Dalton. the elite Manhattan pri-vate school. While there he began tutoring the son of Bear Steams chairman Ace Greenberg and was friendly with a daugh-ter of Greenberg's. Soon he went to Bear Stearns. where. under the mentorship of both Greenberg and current Bear Steams C.E.O. James Caync. he did well enough to become a limited partner—a rung be-neath full partner. He abruptly departed in 1981 because, he has said. he wanted to run his own business. Thereafter the details recede into shad-ow. A few of the handful of current friends who have known him since the early 1980s recall that he used to tell them he was a UNREAL iSTATE From top: the "leather morn" in Epstein's house. where "tea- is seSed to euests: Epstein at his Zorro ranch in 1991 with his -hest friend." Ghislaine Maxwell: Epstein in 1979. "bounty hunter.- recov- ering lost or stolen mon-ey for the government or for very rich people. He has a license to carry a firearm. For the last IS years. he's been running his business, J. Epstein & Co. Since Leslie Wexner appeared in his life—Epstein has said this was in 1986: others say it was in 1989, at the earliest—he has gradually. in a way that has not generally made headlines. come to be, ac-cepted by the Establishment. He's a mem-ber of various commissions and councils: he is on the Trilateral Commission, the Council on Foreign Relations. the New York Academy of Sciences, and the Insti-tute of International Education. His current fan club extends to Cayne. Henry Rosovsky. the former dean of Har-vard's Faculty of Arts and Sciences. and (4 ."....'CM 2003 EFTA00260614 SPOILS OF SUCCESS From top: Epstein's '0- acre island. Little St. James. in the U.S. \irgin Islands—he now calls it Little St. Jeff: Epstein with President Clinton in Brunei. 2002: Leslie Wexner with his future wik. Abigail. at the 1990 C.F.D.A. Fashion Awards. in New York. 1991. Larn• Summers. Hananfs current presi- dent. Harvard law professor Alan Dersho- witz says. "I'm on my 20th book.... The only person outside of my immediate family that I send drafts to is Jeffrey." Real-estate developer and philanthropisi Marshall Rose, who has worked with Epstein on projects in New Albany. Ohio. for Wexner. says. "He digests and decodes the information very rapidly, which is to me terrific because we have shorter meetings." Also on the list of admirers are former senator George Mitchell and a gaggle of distinguished scientists, most of whom Epstein has helped fund in recent years. The• include Nobel Prize winners Gerald "Jeffrey [knows] when he is winning.... He will let youtchoose your weapon; says Wexner. Edelman and Nlurray Cell- Mann. and mathematical biologist Martin Nowak. When these men describe Epstein. they talk about "energy" and "curiosity." as well as a love for theoreti- cal physics that they don't ordinarily find in laymen. Gell-Mann rather sweetly mentions that "there arc al- ways pretty ladies around" when he goes to dinner elle: Epstein, and he's under the impression that Epstein's clients include the Queen of En- gland. Both Nowak and Dershowitz were thrilled to find themselves shaking the hand of a man named "Andrew" in Epstein's house. "Andrew" turned out to be Prince Andrew. who subsequently arranged to sit in the back of Dershowitz's law class. Epstein gets annoyed when anyone sug- gests that Wexner "made him." "I had real- ly rich clients before." he has said. Yet he does not deny that he and Wexner have a special relationship. Epstein sees it as a partnership of equals. "People have said it like we have one brain between two of us: each has a side.-"I think we both possess the skill of seeing patterns," says Wexner. "But Jef- frey sees patterns in politics and finan- cial markets, and I see patterns in lifestyle and fashion trends. My skills arc not in in- vestment strategy, and, as everyone who knows Jeffrey knows, his are not in fash- ion and design. We frequently discuss world trends as each of us sees them." y the time Epstein met Wexner, the latter was a retail legend who had built a S3 billion em- pire—one that now in- cludes Victoria's Secret. Express. and Bath & Body Works—from $5.000 lent him by his aunt. "Wexner saw in Jeffrey the type of person who had the potential to real- ize his [kffreysj dreams.- says some- one who has worked closely with both men. "He gave Jeffrey the ball. and Jeffrey hit it out of the park." Wane!: through a trust. bought the town house in which Epstein now lives for a reported S13.2 million in 1989. In 1993. Wex- ner married Abigail Koppel. a 31-year-old lawyer. and the newlyweds relocated to Ohio: in 1996. Epstein moved in- to the town house. Public documents suggest that the house is still owned by the trust that bought it. but Epstein has said that he now owns the house. Wexner trusts Epstein so completely that he has assigned him the power of fidu- ciary over all of his private trusts and foun- dations. says a source close to Wexner. In 1992. Epstein even persuaded Wexner to put him on the board of the Wexner Foun- dation in place of Wexner's ailing mother. Bella Wexner recovered and demanded to be reinstated. Epstein has said they settled by splitting the foundation in two. Epstein does not care that he comes be- tween family members. In fact, he sees it as his job. He tells people. "I am there to represent my client, and if my client needs protecting—sometimes even from his own family—then it's often better that people hate me, not the client." "You've probably heard I'm vicious in my representation of my clients:' he tells people proudly: Leah Kiernan describes his haggling over art prices as something like a scene out of the movie .11ad Mac Be- yond Thundertiome. Even a former mentor says he's seen "the dark side" of Epstein. and a Bear Stearns source recalls a meet- ing in which Epstein chewed out a team making a presentation for Wexner as 9 t! a e: h. dr 304 VAN'13 m4tCH 2003 EFTA00260615 being so brutal as to be "irresponsible." One reporter. in fan. received three threats from Epstein while preparing a piece. They were delivered in a jocular tone. but the message was clear: There will be trouble for your family if I don't like the article. On the other hand. Epstein is clearly very generous with friends. Joe Pagano. an Aspen-based venture capitalist, who has known Epstein since before his Bear Stearns days. can't say enough nice things: "I have a boy who's dyslexic. and Jeffrey's gotten close to him over the years Jeffrey got him into music. He bought him his first piano. And then as he got to school he had difficulty ... in studying ... so Jeffrey got him intereste4 in taking flying lessons." Rosa Monckton recalls Epstein telling her that her daughter. Domenica. who suf- fen from Down syndrome. needed the sun. and that Rosa should feel free to bring her to his house in Palm Beach anytime. Some friends remember that in the late 80s Epstein would offer to upgrade the air- line tickets of good friends by affixing first- class stickers: the only problem was that the stickers turned out to be unofficial. Some- times the technique worked. hut other times it didn't. and the utmitting recipients found themselves exiled to coach. (Epstein has claimed that he paid for the upgrades. and had no knowledge of the stickers.) Many of those who benefited from Epstein's largesse claim that his generosity comes with no strings attached. "I never felt he wanted anything from me in return." says one old friend. who received a first-class upgrade. E he is a familiar face to many of the Victo- ria's Secret girls. One young woman reccIls being summoned by Ghislaine Maxwell to a concert at Epstein's town house. where the women seemed to outnumber the men by far. "These were not women you'd see at Upper East Side dinners." the woman recalls. "Many seemed foreign and dressed a little bizarrely: This same guest also at- tended a cocktail party thrown by Maxwell that Prince Andrew attended, which was tilled. she says. with young Russian mod- els. "Some of the guests were horrified: the woman says. "He's reckless:says a former business associate. "and he's gotten more so. Mon- ey does that to you. He's breaking the oath he made to himself—that he would never do anything that would expose him in the pstein is known about town as a man who loves worn- en—lots of them. mostly young. Model types have been heard saying they are full of gratitude to Epstein for thing them around. and mAICti 200? media. Right now, in the wake of the pub- licity following his trip with Clinton, he must he in a very• difficult place." ccording to S.E.C. and other legal documents un- earthed by Vanity Fair, Epstein may have good reason to keep his past cloaked in secrecy: his real mentor. it might seem. was not Leslie Wexner but Steven Jude Hoffen- berg. 57. who. for a few months before the S.E.C. sued to freeze his assets in 1993. was trying to buy the New York Post. He is cur- rently incarcerated in the Federal Medical Center in Dewns. Massachusetts. serving a 20-war sentence for bilking investors out of more than 5450 million in one of the largest Ponzi schemes in American history. When Epstein met Hoffenberg in Lon- don in the 1980s. the latter was the char- ismatic. audacious head of the Towers Financial Corporation. a collection agency that was supposed to buy debts that peo- ple owed to hospitals. banks. and phone companies. But HolTenberg began using company funds to pay oil' earlier investors and service a lavish lifestyle that included a mansion on Long Island. homes on Man- hattan's Sutton Place and in Florida. and a fleet of cars and planes. Hoffenbeng and Epstein had much in common. Both were smart and obsessed with making money. Both were from Brook- lyn. According to HotTenbers. the two men were introduced by Douglas Leese. a de- fense contractor. Epstein has said they were introduced by John Mitchell. the late attor- ney general. Epstein had been running International Assets Group Inc. (I.A.G.). a consulting company. out of his apartment in the Solo building on East 66th Street in New York. Though he has claimed that he managed money for billionaires only. in a 1989 dep- osition he testified that he spent NO per- cent of his time helping people recover stolen money from fraudulent brokers and lawyers. He was also not above entering into risky. tax-sheltered oil and gas deals with much smaller investors. A lawsuit that Michael Stroll. the former head of Wil- liams Electronics Inc., filed against Epstein shows that in 1982 I.A.G. received an in- vestment from Stroll of 5150.000. which Epstein put into oil. In 1984. Stroll asked for his money back: four years later he had received only S10.000. Stroll lost the suit. after Epstein claimed in court, among oth- er things. that the check for 510.000 was for a horse he'd bought from Stroll. "My net worth never exceeded lour and a half mil- lion dollars." Stroll has said. Hoffcnbcrg. says a close friend. "really liked Jeffrey.... Jeffrey has a way of getting under your skin. and he was under Hof- fenberg's." Also appealing to HotTenberg were Epstein's social connections: they in- cluded oil mogul Cece Wang (father of the designer Vera) and Mohan Murjani. whose clothing company grew into Gloria Van- derbilt Jeans. Epstein lived large even then. One friend recalls that when he took Cana- dian heiress Wendy Belzberg on a date he hired a Rolls-Royce especially for the oc- casion. (Epstein has claimed he owned it.) In 1987, Hoffenberg. according to sources. set Epstein up in the offices he still occu- pies in the Villard House. on Madison Av- enue. across a courtyard from the restaurant Le Cirque. Holfenberg hired his new pro- tege as a consultant at 525.000 a month. and the relationship flourished. "They tray. eled everywhere together—on Hoffenberg's plane. all around the world. they were al- ways together..' says a source. HotTenberg has claimed that Epstein confided in him. saying. for example. that he had left Bear Stearns in 1981 after he was discovered ex- ecuting "illegal operations: Several of Epstein, Lar Stearns contem- poraries recall that Epstein left the compa- ny very suddenly. Wthin the company there were rumors also that he was involved in a technical infringement. and it was thought that the executive committee asked that he resign after his two supporters. Ace Green- berg and Jimmy Cayne. were outnumbered. Greenberg says he can't recall this: Cayne denies it happened. and Epstein has de- nied it as well. "Jeffrey Epstein left Bear Stearns of his own volition." says Cayne. "It was never suggested that he leave be any member of management. and manage- ment never looked into any improprieties by him. Jeffrey said specifically. 'I don't want to work for anybody else. I want to work for myself.— Yet. this is not the story that Epstein told to the S.E.C. in 1981 and to lawyers in a 198,4 deposition involving a civil business case in Philadelphia. In 1981 the S.E.C.'s Jonathan Harris and Robert Blackburn took Epstein's testimony and that of other Bear Stearns employees in part of what became a protracted case about insider trading around a tender offer placed on March II. 1981. by the Seagram Company L..! for St. Joe Minerals Corp. Ultimately several Italian and Swiss in- vestors were found guilts. including Italian financier Giuseppe Tome. who had used his relationship with Seagram owner Edgar Bronfman Sr. to obtain information about the tender oiler. After the tender offer was announced. the S.E.C. began investigating trades in- volving St. Joe at CON II•uf 0 0% Pthi. 1.11 VANI'v is EFTA00260616 contains a parody of Affleck and Matt Da- mon making Good Will Hunting II. Affleck says to Damon, "What do I keep telling you? You gotta do the safe picture, then you do the art picture. Then sometimes you gotta do the payback picture because your friend says you owe him. Then sometimes you got- ta go back to the well." "Sometimes you do Reindeer Games." Damon says derisively. "That's just mean." Affleck whines. But it's a pretty accurate description of his career to date. "Ben takes these franchise properties so he can go and experiment:' says Harvey Weinstein. "He believes in trying to stretch himself and not/keep doing the same thing." ob- serves Bruce Willis. who starred with Affleck in Armageddon. "He's an awesome actor. and I think hes going to do great things." Several years ago. in a televised interview on Inside the Actors Studio. Affleck said that his goal was to make big commercial movies. He has since revised his ambitions. "That's an adolescent aspiration. in a way. I'd rather be in movies like Magnolia. which I think is a towering achievement. I'll con- tinue to act. but I won't act in a way that requires me to hang my name out there and do a lot of publicity. Fit do character roles and focus on writing and directing. It doesn't require the same kinds of sacri- fice, in terms of quality of life and person- al life. and it's a more holistic approach to the process. It's become increasingly frus- trating for me to have my role in the story- telling process limited to one character. You have to be respeztful and judicious about your input when it's somebody else's project:' Affleck has always impressed colleagues with his voracious appetite for information and skills. "He has made it a point to learn everything he can about how the business works—not just the craft of acting. but from the producing standpoint, from the studio standpoint. - says Jon Gordon. exec- utive vice president of production at Mira- max. "He knows how deals work. It's what sets him apart. If he wanted to run a studio at some point, he could. He's about as sharp as they come.- A ffleck is already juggling his acting with nscreenwriting and such other commit- ments as Project Greenlight. the contest he and Damon started to help launch the ca- reers of young filmmakers. .Alfleck's friends are certain he'll be directing soon. "There's no question.' Weinstein says. "Both he and Matt. I think they're going to rewrite the rules. These guys can fix anything. There'll be home runs in both instances:' But there are other thoughts tickling the back of Meek's mind as well. A passion- ate liberal. he campaigned for Al Gore. cares deeply about political issues. and is extremely well informed. He entertains him- self by writing imaginary political speeches in his head. He would rather discuss mos in Africa than his movie career. When Lopez goes to Affleck's mother's house for dinner. Weinstein reports. "J.Lo told me that the conversation at the table is always about politics—about government initiatives. educational initiatives. what's go- ing en in the day." te to is Affleck Planning to rc tome the lib- hralatChaensvdenet errtabinR:tnalhedthReagioughlt Someday 1 a real nobility to public service. It wont,' be running for Congress. at least: -I think them s admits fun to run on a platform I really ed in, without any of the kind of common. a% people make—without being beholden , the win-at-all-costs mentality." And the invasion of privacy would he nothing new. "What are you going to say about me that hasn't already been said? I don't cheat, I don't drink, I don't do drugs. I live a clean life: Affleck says, his eves twinkling. "He's only 30 years old," says Jennifer Todd, who co-produced Boiler Room. "Hc still has an enormous amount of time to do things." Time, and drive. -I think he's incredibly hungry." says Sean Bailey. who founded the media and production company Live- Planet with Affleck. Damon. and Chris Moore. "I think the guy has very grand aspirations. I don't think he's going to be content with just being a movie star. He knows he has the potential to do very big things." Such ambitions could 'ise derailed by any number of miscalculations. including a pri- vate life that generates too many sensational headlines, but Affleck has a clear idea of the ultimate goal. "On my deathbed. I have to be one who looks back and feels I lived a good and substantial and meaningful lire: he says. In the meantime. howc. zr. there's a wed- ding to plan. Jeffrey Epstein Cil•TIVI ED FROM %tot ,a, Bear Stearns and other firms. Epstein resigned from Bear Steams on March 1_. The S.E.C. was tipped oil that Epstein had information on insider trading at Bear Steams. and it was therefore obliged to question him. In his S.E.C. testi- mony. tgven on April 1. 1981. Epstein claimed that he had found "otTensive" the way Bear Stearns management had handled a disci- plinary action following its discovery that he had committed a possible "Reg D" viola- tion—evidently he had lent mom, to his clos- est friend. I In the 1989 deposuton he said that he'd lent approximately 5.20.000 to War- ren Eisenstein. to buy stock.) Such an action could have been considered improper. al- though Epstein claimed he had not realized this until afterward. According to Epstein. Bear Stearns man- agement had questioned him about the loan around March 4. The questioners. Epstein said, were Michael (Mickey) Tarnopol and Alvin Einbender. In his 1989 deposition Ep- stein recalled that the partner who had made an "issue' of the matter was Marvin David- son. On March 9. Epstein said. he had met with Tarnopol and Einbender again. and the two partners ;cid him that the executive com- mittee had weighed the offense. together with previous "carelessness" over expenses. and he would be fined S2.500. -There was discussion whether. in tact. I had ever put in an airline ticket for some- one else and not myself and I said that it was possible. ... since my secretary han- dles my expenses: Epstein told the S.E.C. In his 1989 testimony he stated that the "Reg D" incident had cost him a shot at partnership that year. What the S.E.C. seemed to be especially interested in was whether there was a con- nection between Epstein's leaving and the alleged insider trading in St. Joe Minerals by other people at Bear Steams: Q: Sir, arc you aware that certain rumors may have been circulating around your firm in con-nection with your reasons for leaving the firm? A: I'm aware that there were mans rumors. Q: What were the rumors you heard? A: Nothing to do with St. Joe. Q: Can you relate what you heard? A: It was having to do with an illicit affair with a secretary. Q: Have you heard any other rumors suggest- ing that you had made a presentation or com- munication to the Executive Committee con- cerning alleged improprieties by other mem- bers or employees of Bear Steams? A: I. in fact, have heard that rumor. but it's been from Mr. Harris in our conversation last week. Q: Have you heard it from anyone else? A: No. A little later the interview focuses on James Cayne: Q: Did you ever hear while you were at Bear Steams that Mr. Cayne may have trader or im sider information in connection with 5< ' Minerals Corporation? A: No. Q: Did Mr. Clyne ever have any conversation with you about St. Joe Minerals? A: No. Q: Did you happen to overhear any comma- matC. :003 EFTA00260617 .relliev Epstein (ions between Mr. Cayne and anyone else re-garding St. Joe Minerals? A: No. And still later in the questioning comes this exchange: Q: Have you had any type of business deal-ings with Mr. Cayne? A: There's no relationship with Bear Stearns. Q: Pardon? A: Other than Bear Stearns. no. Q: Have you been a participant in any type of business venture with Mr. Cayne? A: No. Q: Do you have any expectation of participat-ing ir\jtany business venture with Mr. Cayne? Q: Have you had any business participations with Mr. Theram? A: No: nor do I anticipate any.. Q: Mr. Epstein. did anyone at Bear Stearns tell you in words or substance that you should not divulge anything about St. Joe Minerals to the staff of the Securities and Exchange Com-mission? A: No. Q: Has anyone indicated to you in any way. either directly or indirectly. :n words or sub-stance. that your compensation for this past year or any future monies coming to you front Bear Stearns will be contingent upon your not divulging ithrmation to the Securities and Exchange Commission? A: No. Despite the circumstances of Epstein's leaving. Bear Steams agreed to pay him his annual bonus--which he anticipated as !..e. ing approximately S100.000. The. S.E.C. never brought any charges against anyone at Bear Stearns for insider trading in St. Joe. but its questioning seems to indicate that it was skeptical of Epstein's answers. Some sources have wondered why, if he was such a big producer at Bear Stearns. he would have given it up over a mere 52.500 tine. Certainly the years after Epstein left the firm were not obviously prosperous ones. His luck didn't seem to change until he met HotTenberg. nrte of Epstein's first assignments for lief- tenberg was to mastermind doomed bids to take over Pan American %Sethi Airways in 1987 and Emery Air Freight Corp. in 1988. Hoffenberg claimed in a 1993 hearing before a grand jury in Illinois that Epstein came up with the :dea of financing these bids through Towers's acquisition of two ailing Illinois insurance companies. Associated Life and United Fire. "He was hired by us to work on the securities side of the insurance companies and Towers Financial, supposedly to make a profit for us and for the companies." Hoffen-berg reportedly told the grand jury. He also alleged that Epstein o.as the "technician: a-caning the schemes. although. having no broker's license. he had to rely on others to make the trades. Much of Hoffenberg's sub- sequent testimony in his criminal case has proven to be false. and Epstein has claimed he was merely asked how the bids could be accomplished and has said he had nothing to do with the financing of them. Yct Rich- ard Allen. the former treasurer of United Fire. recalls seeing Epstein two or three times at the company. He and another ex- ecutive say they had direct dealing with Ep- stein over the finances. And in his deposition of 1989. Epstein stated that he was the one who executed "all" Hoffenberg's instructions to buy and sell the stock. He called it "mak- ing the orders." He could not recall whether he had chosen the brokers used. To win approval from the Illinois insur- ance regulators for Towers's acquisition of the companies. HotTenberg promised to in- ject S3 million of new capital into them. In fact. in his grand-jury testimony Hoffenberg claimed that he. his chief operating officer. Mitchell Brater. and Epstein came up with a scheme to steal S3 million of the insurance companies' bonds to buy Pan Am and Em- en stock. "Jeffrey Epstein and Mitch Bracer arranged the various brokerage accounts for the bonds to be placed with in New York. and I think one in Chicago. Rodman & Ren- shaw." Ho0enberg reportedly said. Then. said Reifenberg. while making it appear as though they were investing the bonds in much safer financial instruments. they used them as collateral to buy the stock. "Ep- stein was the person in charge of the trans- actions. and Mitchell Brater was assisting hint with it in coordination on behalf of the insurance companies money." HotTenberg claimed at the time. At one point. according to Hoffenberg. a broker forged the documents necessary for a 51.8 million check to be written on insurance- company funds. The check was used to buy more stock in the takeover targets. Mean- while. in order to throw the insurance regula- tors off. the 51.8 million was rerorted as being safely invested in a money-market account. United Fire's former chief financial officer Daniel Payton confirms part of Reifenberg .; account. He says he recalls making one or two telephone calls to Epstein (at Holten- berg's direction) about the missing bonds. "He said, 'Oh. yeah. they still exist.' But we found out later that he had sold those assets ... leveraged them ... (and! used some mar- gin account to take some positions in ... Emery and Pan Am.- says Payton. Epstein's extraordinary creativity was. ac- cording to HotTenberg. responsibk for the purchase by the insurance companies of a 5500.000 bond, with no money down. "Ep- stein created a great scheme to purchase a $500900 treasury bond that would not be shown las] margined or collateralized. -he reportedly told the grand jury. "It looked like it was free and clear but it actually wasn't.- he said. Epstein has denied he ever had any deal- ings with anyone from the insurance com- panies. But Richard Allen says he recalls talking to Epstein at Hoffenberg's direction and telling him it was urgent they retrieve the missing bonds for a state examination. According to Allen. Epstein said, ?We'll get them back." He had "kind of a flippant atti- tude." says Allen. "They never came back." Epstein. according to HotTenberg. also came up with a scheme to manipulate the price of Emery Freight stock in an at- tempt to minimize the losses that occurred when HotTenberis bid went wrong and the share price began to kill. This was alleged to have involved multiple clients' accounts con- trolled by Epstein. Eventually. in 1991. insurance regulators in Illinois sued Hotrenberg. He settled the case. and Epstein, who was only a paid consul- tant. was never deposed or accused of any wrongdoing. Barry Gross. the attorney who was handling the suit for the regulators. says of Epstein. -He was very elusive.... It was hard to really track him down. There were a substantial number of checks for significant dollars that were paid to him. I remem- ber.... He was this character we never got a handle on..Again we presumed that he was involved with the Pan Am and Emen run that HotTenberg made. but we never got a chance to depose him." "Front the government's discovery in the main sentencing against HotTenberg it wculd seem the government was perhaps a bit lazy.- says David Lewis. who represented Mitchell Brater. "They went for what they knew they could get . . and that was the fraudulent promissory notes (i.e.. the much larger and unrelated part of Hoffenberg's fraud. based in New York Statej.... What they couldn't get. they didn't bother with:' Another lawyer involved in the criminal prosecution of HotTenberg says. "In a crim- inal investigation like that, when there is a guilty plea. to be quick and dirty about it. discovery is always incomplete. ... They don't have to line up witnesses: they don't have to learn every fact that might come out on cross-examination." Epstein was involved with HotTenberg in other questionable transactions. Finan- cial records show that in 1988 Epstein in- vested $1.6 million in Riddell Sports Inc.. a company that manufactures football helmets. Among his co-investors were the theater mogul Robert Nederlander and attorney Leonard Toboroff. A source close to this transaction claims that Epstein told Neder- lander and ToborotT that he had raised his share of the money from a Swiss banker. 341 &I/RCN 22)3 EFTA00260618 ■ 0 whose identity they could not be allowed to Just as Nederlander and Toboroff were know. But Hoffenberg has claimed the mon- growing wan' of Epstein. he became in-ey came from him, and Towers's financial creasiney involved with Leslie Warier. whom statements for that year show a loan to Ep- he had met through insurance executive stein of $400.000. (Epstein has said he Robert Meister and his late wife. Epstein has can't remember the details and has dis- told people that he met Wexner in 1986 in pored the accuracy of the Towers financial Palm Beach. and that he won his confidence reports.) by persuading him not to invest in the stock Around the same time, Nederlander and market. just as the 1987 crash was approach-Toboroff let Epstein come in with them on a ing. His story has subsequently changed. scheme to make money out of Pennwalt. a When asked if Wexner knew about his con-Pennsylvania chemical company. The plan nection to Hoffenberg. Epstein said that he was to group together with two other parties began working for Wexner in 1989. and that to take a substantial declared position in the "it was certainly not the same time.-stock. According to a source. Epstein was Wherever and whenever it was that Ep-supposed tk help Nederlander and Toboroff stein and Wexner actually met. there was raise 515 million. lie seemed to fail to find an immediate and strong personal chem-other investors. say those familiar with the istry. Wexner says he thinks Epstein is "very deal. (Epstein has said he was merely an in- smart with a combination of excellent judg-vestor.) He invested SI million, which he ment and unusually high standards. Also. told his co-investors was his own money. he is always a most loyal friend." But in his 1989 deposi- tion he said that he put in only 5300.000 of his own money:. Where did the rest come from? Hof- fenberg has said it came from him. in a loan that Nederlander and ToborotT didn't know about. Two things happened that alarmed Nederlander and ToborotT. Afier the group signaled a possible takeover. the Pennwalt management threatened to sue the would-be r.talers. Epstein was reluctant ini- tially to give a deposition about his share of the money. telling Toboroff there were "reasons" he OFFICE SPACE didn't want to. Then. after the opportunity The "office" in Epstein's house. It has no for new investors was closed. co-investors computers. but it does have a desk that recall Epstein announcing that he'd found Epstein tells people once belonged to banker one at last: Dick Snyde: then C.E.O. of J. P. Monran. and "the largest Persian rue the publisher Simon a Scauster who want- you'll ever see in a private home.-ed to put up approximately 5500.000. (Nei- ther Epstein nor Snyder can now recall Sources say Epstein proved that he could the investment. Yet in the 1989 deposition be useful to Wexner as well. with "fresh" Epstein said that he had recruited Sny- ideas about investments. "Wexner had a cou-der. whom he had met socially, into the plc of bad investments, and Jeffrey cleaned deal.) those up right away? says a former associ-According to a source. ToborolT and Ne- ate of Epstein's. derlandcr told Epstein that Snyder was too Beihre he signed on with Wexner. Epstein Lae. but. without their realizing it. Hoffen- had several meetings with Harold Levin. then het,: has claimed. Snyder wrote a check to head of Wexner Investments. in which he HotTenberg and bought out some of his in- enunciated ideas about currencies that Levin vestment. But then Snyder wanted out. found incomprehensible. "In fact." says some-"Nederlander started to get these irate one who used to work very closely with %Vex-calls from [Snyder.) who wasn't part of the ner. "almost everyone at the Limited won-deal, saying he was owed all (his money." dered who Epstein was: he literally came says someone close to the deal. Toboroff out of nowhere." a: Nederlander were baffled. "Everyone was my:stitied as to what his ::::ually. a source close to HotTenberg appeal was says Robert Morosky. a former .t'enberg paid Snyder off vice-chairman of the Limned. Much of Epstein's work is related to clean- ing up. tightening budgets. and effickn- des. One person who worked for Wexner and who saw a contract drawn up between the two men says Epstein is involved in "every- thing. not just a little here. a little there. Everything!" In addition, he says. "Wexner likes having a hatchet man.... Whenever there is dirty work to be done he'd stick Jef- frey on it.... He has a reputation for being ruthless but he gets the job done." Epstein has evidently been asked to fire personal-staff members when needed. "He was that mysterious person that eyrryone was scared to death of: says a former employee. Meanwhile. he is also less than popular with some people outside Wexner's company with whom he now deals. "He 'inserted' himself into the construction process of Les- lie Wexner's yacht.... That resulted in liti- gation down the road between Mr. Wexner and the shipyard that eventually built the ves- wl." says Lars Forsberg. a law ar whose firm at Dickerson and F. v. ..as hired to deal with hitt:anon stemming from the construction of Wexner's Limitless— at 315 feet. one of the largest private yachts in the world. EY idently. Ep- stein stalled on paying Dickers::: and Reily for wc-k "Ifs probably once r :‘%:ce in my le- gal career that I've had to sue a client for txtyment of services that he'd re- quested and wed per- formed ... without issue on the performance." says Forsberg. In the end the matter was settled. but Ep- stein claims he now has no recollection of it. The incident is ore of a number of disputes Epstein has become embroiled in. Some arc thr sums so tiny as to be baffling: for instance. Epstein sued investment adviser Herbert Glass. who sad him the Palm Beach house in 1990. for S 13.444—Epstein claimed this was owed him for furnishings removed Ili MAI: In 1998 the C.S. Attorney's Office sued Epstein for illegally: subletting ;he forme home of the deputy consul general of trar,n to attorney Ivan Fisher and others. ft,gec paid 515.000 a month in rent to the,, Department. but he charged hin ,,scr eye . his colleagues $20,000. Though ih terms of the agreement are • court ruled against Epstein. Wexner offers some into rot combative "Many winning and losing." Wexner has the unusual quality a" n, hen EFTA00260619 Jeffrey Epstein he is winning. Whether in conversations or negotiations, he always stands back and lets the other person determine the style and manner of the conversation or negotiation. And then he responds in their style. Jeffrey sees it in chivalrous terms. He does not pick a fight. but if there is a fight, he will let you choose your weapon." One case is rather more serious. Currently. Citibank is suing Epstein for defaulting on loans from its privatebanking arm for 520 million. Epstein claims that Citibank "fraud- ulently induced" him into borrowing the money for investments. Citibank disputes this charge. The legal papers for another case offer a rare window into Epstein's finances. In 1995. Epstein stopped paying rent to his landlord. the nonprofit Municipal Arts Society. for his office in the silllard House. He claimed that they were breaking the terms of the lease by not letting his stall in at night. The case was eventually settled. However. one of the papers filed in this dispute is Epstein's financial gate- ment for 1988. in which he claimed to be worth 520 million. He listed that he owned $7 million in securities. SI million in cash. zero in residential property (although he told sources that he had already bought the home in Palm Beach). and 511 million in other assets. including his investment in Riddell. A co-investor in Riddell says: "The company had been bought with a huge amount of deb!. and it wasn't public. so it was meaningless :o attach a figure like that to it ... the price it cost was about 51.2 mil- lion." The co-investors bought out Epstein's share in Riddell in 1995 for approximately 53 million. At that time, when Epstein was asked. as a routine matter, to sign a paper guaranteeing he had access to a few million dollars in case of any subsequent disputes over the sale price. Wexner signed for him. Epstein has explained that this was because the co-investors wanted an indemnity against being sued by. Wexner. One of the investors calls this "bullshit." Epstein's appointment to the board of New York's Rockefeller University in 2000 brought him into greater social promi- nence. Boasting such social names as Nancy Kissaiger. Brecke Astor. and Robert Bass. the board also includes such pre-tminent scientists as Nobel laureate Joseph Gold- stein. "Epstein was thrilled to be elected." says someone who knows him. After one term Epstein resigned. Accord- ing to New York magazine, this was because he didn't like to wear a suit to meetings. A "ke:.pe tor, fc- the Rockefeller board says • k : becaiae he had insufficient time a member recalls that he was "arrogant" and "not a good fit." The spokesperson admits that it is "infrequent" for board members not to be renominated after only one term. Still, the recent spate of publicity Ep- stein has inspired does not seem to have fazed him. In November he was spotted in the front row of the Victoria's Secret fashion show at New York's Lexington Avenue Ar- mory: around the same time the usual co- terie of friends and beautiful women were whisked off to Little St. James [which he tells people has been renamed Little St. Jeff) for a long weekend. Thanks to Epstein's introductions. says Martin Nowak. the biologist finds himself moving from Princeton to Harva