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He knew Jeffrey Epstein for more than three decades and had a unique insight into how the disgraced financier made his billions.
Now, American investigative journalist Edward Jay Epstein – no relation – unpicks the mystery of how the late sex offender embarked on his astonishing path to riches…
I first met Epstein at a large Halloween party in Manhattan in 1987. He was bright and charming, but whatever other talents he may have possessed, they didn’t include, as far as I could see, the conventional Wall Street money-making wizardry of arbitrage – wheeling and dealing in assets, stocks or currency in the markets.
Soon afterwards, he invited me to tea at the Mayfair Hotel and told me he was a financial bounty hunter, hired to track down hidden money from notorious offshore havens such as Andorra, Fiji, Gibraltar and the Cayman Islands. This suggested to me that he might be implicated in the shady business of hiding it there in the first place.
When we met in 1986, Epstein’s double identity intrigued me — he said he didn’t just manage money for clients with mega-fortunes, he was also a high-level bounty hunter. Sometimes, he told me, he worked for governments to recover money looted by African dictators. Other times those dictators hired him to help them hide their stolen money.
Back then, Epstein was not yet a tycoon. He lived in a one-bedroom apartment at Solow Tower at 265 East 66th Street. At the time, there was a rent strike, so he lived there without paying a cent.
On occasions he pretended he lived in the penthouse by inviting guests up to the roof garden and getting a deli to deliver food.
He also had a plush office at Villard House, which he shared with the wife of a former New York governor. The rent was paid by Steven Hoffenberg, a tall guy with dark eyes, who owned a bill-collection agency, Towers International.
It emerged about a year later, in 1988, that he was running a £380 million Ponzi scheme [a scam promising high rates of return with little risk to investors] for which he served 18 years in prison.
The cloud around Epstein darkened further when, to show off his power, he gave me a program which allowed me to remotely access his computer via my telephone modem, which seemed technically advanced for the time.
He said I could use it to get real-time quotes on the stock market, but it also revealed that he had a cashflow problem. Not only were there letters from people demanding the return of their money, but one New York financier reported that a cheque from Epstein for $83,000 had bounced a second time.
In early 1989, Epstein and I stopped speaking. I wrote a regular column called Wall Street Babylon in the Manhattan, Inc magazine.
I didn’t mention him by name, but I was becoming increasingly wary that Epstein was a scam artist and I described the barely legal form of insider trading in which he was clearly involved. Epstein was livid and broke off all contact. Even so, I couldn’t help being intrigued by his stratospheric rise into the upper echelons of the super-rich. As I watched from the sidelines, he seemed to be nothing short of a modern-day version of F Scott Fitzgerald’s Jay Gatsby.
We had mutual friends who informed me that he had moved from his fake penthouse to an enormous mansion on 71st Street, previously owned by Victoria’s Secret and Abercrombie & Fitch tycoon Les Wexner.
By now, Epstein had also acquired a ranch outside Santa Fé, New Mexico, a private island in the Virgin Islands and an apartment on Avenue Foch in Paris that had a stuffed baby elephant in the centre of the living room.
Then, out of the blue and after a hiatus of 24 years, Epstein called me in 2013 and invited me to his mansion. He said he wanted to ask me about Vladimir Nabokov, who wrote Lolita, about a precociously seductive girl. I had known the author many decades earlier.
I agreed to go for a different reason: finding out how he made, and continued to make, his fortune.
On the walls were photos of him with Saudi Prince Mohammed bin Salman and Emirate Prince Mohammed bin Zayed.
I asked: ‘Are these clients?’ He said some were.
No one I spoke with knew for sure where his initial windfall came from. So I decided to begin at the beginning with the man Epstein introduced me to in 1987 – the Ponzi scheme fraudster Steven Hoffenberg.
However, Hoffenberg’s version of events is all-too believable. He said he had been introduced to Epstein in 1987 by Douglas Leese, a London financier.
At the time, Hoffenberg was building his debt-recovery company Towers International into a billion-dollar Ponzi scheme. He needed help selling phoney securities and Leese, who had employed Epstein to do money-laundering for his clients’ schemes, recommended him for, as Hoffenberg put it, his ‘criminal mindset’.
As Hoffenberg tells it, Epstein quickly became a pivotal actor in the Ponzi scheme and got a share of the $475 million loot.
Ghislaine’s father Robert, whose body was found floating off the coast of Tenerife in 1991, is another often-mentioned candidate for bankrolling Epstein.
The media tycoon had stolen hundreds of millions of pounds from his companies’ pension funds, and not all the missing money could be traced.
Soon after his death, Epstein began dating Ghislaine, leading some of his acquaintances to suspect that more than romance was involved in their relationship and that Epstein had hidden some of the stolen funds.
When Epstein died a year ago, his visible assets added up to an extraordinary £467 million. But that was ‘only the tip of the iceberg’, according to the head of a multi-billion-dollar hedge fund who I first met at Epstein’s mansion in New York.
An extremely savvy financier and philanthropist told me after Epstein’s death about a proposition Epstein had once made him: that he could save more than $40 million in US taxes if he gave him $100 million to manage.
Epstein claimed the money would be concealed in a maze of offshore non-profits he controlled so that part of the profits would be transferred to the financier’s own philanthropic foundation, with the balance retained offshore and out of the reach of the taxman.
Indeed, shortly before his arrest last year, Epstein told an associate that he was going into the business of hiding funds for billionaires who were contemplating divorcing their wives – for a hefty commission, of course.
He also claimed to be in the final stages of buying a property in Morocco, one of four countries in the world not to have an extradition treaty with the US.
So perhaps the mystery of Epstein’s fortune is not how he made his millions, but to whom the money ultimately belongs.
Many very powerful people may have had cause to rue Epstein’s incarceration on sex charges – and, given the fact that they were hiding their assets from the authorities, it’s highly unlikely they will ever publicly come forward to try to recover their investments.
perhaps the sex with kids thing was another way to persuade his opposition to play nice. Once they have some wonderful video taken, their will to prosecute him just goes away.