Leon Black, chairman and chief executive officer of Apollo Global Management LLC, at the annual Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 27, 2015.
Patrick T. Fallon | Bloomberg | Getty Images
A Senate panel on Tuesday revealed a yearlong investigation into Apollo Global Management co-founder Leon Black’s ties to the late disgraced financier Jeffrey Epstein, with a focus on $158 million Black allegedly paid Epstein for tax and estate planning services.
Black has so far provided “inadequate responses” to the committee and refused to detail his payments to Epstein, raising concerns about whether those payments were “were properly characterized as income or gifts for tax purposes,” Senate Finance Committee Chairman Ron Wyden, D-Ore., wrote in a letter dated Monday.
The probe into Black’s tax schemes is one of a series of investigations by the committee into how ultra-wealthy people skirt their tax bills, Wyden’s letter said.
Black, a billionaire, is declining to give the committee anymore personal information.
A spokesperson for Black said that the private equity investor “has cooperated extensively with the Committee, providing detailed information about the matters under review.”
“The transactions referenced in the Committee’s letter were lawful in all respects, were conceived of, vetted and implemented by reputable law firms and tax and other advisors, and Mr. Black has fully paid all taxes owed to the government,” the spokesperson said.
A separate memo responding to Wyden notes that Black has already answered more than a dozen of the committee’s prior questions and produced more than 150 pages of his personal tax and estate documents. The committee’s latest round of questions are “inappropriately invasive” and potentially overstep the panel’s oversight role, Black’s memo contended.
The newly unveiled congressional scrutiny into Black’s relationship with Epstein marks just the latest example of the ongoing backlash faced by high-profile contacts of the money manager, who hanged himself in jail in 2019 while facing child sex trafficking charges.
Overnight, the U.S. Virgin Islands lobbed new accusations against JPMorgan Chase in a lawsuit accusing the bank of enabling Epstein’s criminal activity.
The territory in new court filings alleged that JPMorgan in 2004 had opened accounts and credit cards for two teenagers described as models and friends of Epstein.
A bank report for one of the girls, whose name is redacted, notes that she is a Slovakian citizen and that “Epstein has asked us the favor of opening a checking account for her and he will guarantee her credit card application,” according to the court filing.
The Virgin Islands’ filing also revealed that JPMorgan CFO of Asset and Wealth Management David Brigstocke compared a client’s house to Epstein’s by calling it “more tasteful, and fewer nymphettes.”
Both the Virgin Islands and JPMorgan filed motions overnight for partial summary judgment in the lawsuit.
The Finance Committee opened its investigation in in June 2022, Wyden wrote. The probe sought information about a review of Black’s financial relationship with Epstein that had been commissioned by Apollo’s board of directors in 2020 in the wake of Epstein’s federal indictment.
That review, conducted by law firm Dechert LLP and filed to the SEC in 2021, found that Black paid Epstein $158 million between 2012 and 2017. Witnesses told the firm that Epstein had helped Black solve a potential estate planning problem that could have resulted in a tax liability of $1 billion or more if left unresolved. The firm also reported that Epstein provided additional tax advice to Black that he estimated had saved $600 million in value.
“As a result of Epstein’s work, Black believed, and witnesses generally agreed, that Epstein provided advice that conferred more than $1 billion and as much as $2 billion or more in value to Black,” the law firm reported.
Wyden’s letter alleged Black has refused to address some of the committee’s questions, leaving them without the information needed to evaluate how Black retained income from his Apollo holdings “while avoiding gift and estate taxes on the transfer of enormous wealth to your children.”
The chairman also said that his committee has not heard a sufficient reason for why Epstein “was paid amounts vastly exceeding that paid to other attorneys and accountants involved in these transactions, and why you were willing to pay Epstein over $100 million without a written services agreement or contract.”
Wyden added that he has long been concerned about the “sophisticated tax avoidance schemes” used by the rich “to circumvent federal gift and estate tax laws.”
“With the assistance of sophisticated advisors, the wealthiest one percent of Americans often exploit estate planning and loopholes in the tax code to avoid paying hundreds of millions, or billions, of dollars in gift and estate taxes,” he wrote.
The Virgin Islands case
The territory has accused the bank of facilitating and concealing Epstein’s human trafficking operation for more than a decade by ignoring ample evidence of his criminal activity. Top executives at JPMorgan “turned a blind eye” to Epstein’s misconduct, the Virgin Islands alleges, because of the money and high-profile clients that the well-connected financier brought to the bank.
U.S. financier Jeffrey Epstein (C) appears in court where he pleaded guilty to two prostitution charges in West Palm Beach, Florida, U.S. July 30, 2008.
Uma Sanghvi | Palm Beach Post | Reuters
JPMorgan has denied wrongdoing and accused the USVI of helping Epstein, who owned a private island in the territory, carry out his crimes. In May, the bank alleged in a court filing that the former first lady of the Virgin Islands helped secure student visas for some of Epstein’s victims.
The USVI’s motion for summary judgment came less than two weeks after the government revealed that it sought at least $190 million from JPMorgan, in addition to a court order that would protect potential future trafficking victims.
The USVI’s case against the bank is currently scheduled to head to trial on Oct. 23.
Epstein at age 66 killed himself in a federal jail in Manhattan in August 2019, weeks after being arrested on federal child sex trafficking charges.
He had previously pleaded guilty in 2008 to a Florida state charge of procuring sex from an underage girl. He registered as a sex offender and served about 13 months in jail, though he was allowed out on work release for much of that sentence.
JPMorgan ended its banking relationship with Epstein in 2013.
Last month, JPMorgan agreed to pay about $290 million to settle a lawsuit brought by Epstein’s victims.