EFTA02729228

4ansC.-•- -z7.-7•744-f41 EFTA02729228 Jeffrey Elwyn* in lurk. 2001. 14. Epstein\ find loan knew. Ile Wtio) mirl• 7.50lbutre ranch in Nen Ink°, a house in Palm Koch. and a Caribbean Wand. Lately, leffrey Epstein's high-flying style has been drawing oohs and aahs: the bachelor financier lives in New Ifork's largest private resideece, 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 EFTA02729229 n Manhattan's Upper EEaapp Side. home to some of the most ezpdtsive real estate on earth, exists the crown jewel of the city's residential town houses. With its IS-foot-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 menservants 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 hint no boundaries. The entrance hall 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. Nen comes a marble foyer, which does have a painting, in the man- ner of Jean Dubutiet ... but the host coyly refuses to tell visitors who painted it. In any case. guests are like pygmies next to the nearby mice-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 shins, and loafers. He tells people he bought the house because he knew he "could never live anywhere bigger." He thinks 51.000 square ket is an appropriately large space for some. one like himself, who deals mostly in large concepts—especially large sums of money. 09/12/2019 302 !V•HITY !Alt Guests are invited to lunch or dinner at the town house—Epstein usually refers to the former as "tea," since he likes to eat bite- size morsels and drink copious quantities of Earl Gisy. (He does not touch alcohol or to- bacco.) Tea is served in the "leather mom," 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 a onskin. Under her gaze, plates of finger sandwiches are 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" to smaller mom 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). 18thwentury black lacquered Portuguese cabinets. and a nine- foot ebony Steinway "D" grand. On the desk, a paperback copy of the Marquis de Sade's The Miyanunes of Hrwe was it- cently spotted. Covering the 9oor. Epstein has explained. "is the lamest Persian rug you'll ever see in a private home—so big. it must have come from a mosquc." Amid such splendor, much of which reflects the work of the French decorator .Alberto Pin- to. who has worked for Jacques Chirac 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 way of saying that he always has the last wont. In addition to the town house. Epstein lives in what is reputed to be the largest private dwelling in New Mexico. on an SIB million. 7.500-acre ranch which he named "Zorro." "It makes the town house look 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 S6.8 million house in Palm Beach, Florida, and a fleet of aircraft: a Gulftutain IV, a helicopter. and a Boeing 727. replete with trading room, on which Epstein re- cently flew President Clinton. actors Chris Tucker and Kevin Spacey, supermarket magnate Ron Bustle. Lew Wasserman's grandson, Casey Wasserman, and a kw oth- ers on a mission to explore the problems of AIDS and economic development in Africa. Epstein is charming. but he doesn't let Page 2826 CONFIDENTIAL the charm slip into his eyes. They arc 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 'reusing to give an interview for this arti- cle. "You be white. You get the first mow." It was an appropriate metaphor for a man who seems to feel he can win no matter what the advantage of the other side. /lir 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 Mond- ton, the former C.E.O. of Tiffany & Co. in the U.K. and a dose friend since the early 1980s. "You think you know him and then you peel off another ring of the onion skih 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: Yes he lives like a "modem ma- haraja: as Leah Kiernan, one of his art dealers. puts it. Yet he is fastidiously. al- 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 r*. 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 Mansell. 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- ma associate of his at the brokerage firm Bear Stearns and now an opera producer, and Eva Andersson Dubin. a doctor and onetime mode/. He tells people that when a relationship is over the girlfriend "mows 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 Myhrvold. Tom Pritzker (or Hyatt Hotels), and real-estate Agency to Agency Requet: 19-411 MAtCli 2003 SDNY_GM_00331390 0 a EFTA_00204 1 16 EFTA02729230 personality Donald Trump—sometimes seem not all that clear as to what he ac- tually does to earn his millions. Certainly, you won't find Epstein's transactions writ- ten about on Bloomberg or talked about in the trading rooms. "The trading aim don't seem to know hurt It's unusual for animals that big not to leave any footprints in the snow," says a high-laid investment manager. Unlike such fund managers as George Soros and Stanley Druciceruniller, whose client fists and stock maneuverings act as their calling cards, Epstein keeps all his deals and clients secret. bar one client: bil- lionaire Leslie Warner, the respected chair- man of Limited &grids. Epstein insists that ever since he left Bear Stearns in 1981 he has managed money only for billionaires— who depend on him for discretion. "I was the only person crazy enough, or arrogant enough. or misplaced enough, to make my limit a bil• lion dollars or more," he tells peo- pk freely. According to him, the Bat fees he receives from his clients. combined with his skill at playing the currency markets - with very large sums of money," have afforded hint 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 kw people need any more money when they have a billion dollars. The key is not to have it do harm more than any- thing else.... You don't want to lose your money." e has likened his job to that of an architect—more specific*. one who spe- cializes in remodeling: -I always describe (a billion- aire) as someone who started out in a small 2 home and as he became wealthier had add- : a He added on another addition. he built - a morn 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 where no one could foretell the financial fil- e tun and their accompanying needs." He makes it sound as though his job combines the roles of real-estate agent. ac- ;, cowman', 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—actg.- middle-class in r t Brooklyn. HIORM90069rked for the city's mAtC4 2003 parks department. His patents 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 five, and he went to Brooklyn's Laken, 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 Stearns 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 Stearns C.E.O. James Clyne, 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 kw of the handful of current friends who have known him since the early 1980s recall that be used to teff4890198i was a UNREAL ESTATE Fown top the -leather room' in Epstein's house. where "tea" ts until to guess: Epstein at his Zorro ranch in 1991 wth his "ben Iliend: Ghislaine Epstein in 1979. "bounty hunter.- recov- ;- 4- c"•—• ering lost or stolen mon- ey for the government or for very rich people. He has a license to carry a tinorm. For the last 15 years, he's been running his business. J. Epstein & Co. Since Leslie Wexner appeared in his life—Epstein has said this was in :986: others say it was in 1989 at the earliest— he has gradually, in a way that has not generally mad: 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 brAll6t9491tzilea'alein219-411 CONFIDENTIAL Vavi!! ;Ail 303 SDNY_GM_00331391 (4 EFTA_002 04 1 1 7 EFTA02729231 SPOILS OF SUCCESS From 9µr Epswin's 70- acre island. little St lames. in the LS. Vbitin Islands—he now calls it Little St. kit Epstein with President Clinton in Brunei. 2002: Leslie Wexner with his future ssife..Abevul. at the 1990 C.EDA. Fashion Awards. in New York. 1991. Larry Summers. Harvard's 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 dedoper and philanthropist 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. They include Nobel Prize winners Gerald 09/12/2019 501 Y•NIIIV F.IR Edelman and Murray Gell- 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 are al- ways pretty ladies around" when he goes to dinner the 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 Nernst-Ives 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 ifs like we have one brain between two of us: each has a sidPe." age 2828 CONFIDENTIAL "I think we both possess the skill of seeing patterns," says Planer. "But Jef- frey sees patterns in politics and linen- cial markets. and I see patterns in hist)* and fashion trends. My skills are not in in- vestment strategy, and, as everyone who knows Jeffrey knows, his are not in fash- ion and design. We frequently discuss ‘vodd 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 55.000 lent him by his aunt. "Wexner saw in Jeffrey the type of person who had the potential to real- ize his [Jeffrey's) dreams," says some- one who has worked closely with both men. 'He gale Jeffrey the ball and Jeffrey hit it out of the park: Wexner. through a trust. bought the town house in which Epstein now lives for a reported SI3.2 million in 1989. In 1991 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 poster of fidu- ciary over all of his private trusts and foun- dations. sass a source close to Wexner. In 1992. Epstein even persuaded Wexner to put him on the board of the Planer 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 its a cx as his job. He tells people. "I am there to 3 the • represent my client. and if my client needs by E. protecting-sometimes even from his own U family—then it's often better that people rad hate me, not the client." ) a littl "You've probably heard I'm vicious in : tende my representation of my clients." he tells : that I People proudly; Leah Klcman describes his filled. haggling over art prices as something like els. "! a scene out of the movie Mad ,1fitc: Be- the m yond Thunderdome. Even a former mentor "It says he's seen "the dark side" of Epstein. associ and a Bear Stearns source recalls a meet- ey doe ing in which Epstein chewed out a team he mai making a presentation for Wexner as do any' Aeeney to Agency Kennet: 19-411 MARC"( 2001 1.4101 SDNY_GM_00331392 a Ir he riot; beir EFTA_00204 1 1 8 EFTA02729232 being so brutal as to be "irresponsible." One reporter in fact, received three threats from Epstein while preparing a piece. They were delivered in a jocular tone, but the message was clear: Thera. will be trouble for your family if I don't like the article. On the other hand, Epstein is clearly wry generous with friends. Joc Pagano, an Aspen-based venture capitalist. who has known Epstein since before his Bear Steams days. can't say enough nice things: 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 that as he got to school he had difficulty ... in studying ... so Jeffrey got him interestel in taking flying lessons." Rosa Monckton recalls Epstein telling her that her daughter. Domenica, who sub 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 otter to upgrade the air- line tickets of good friends by affixing fiat- class stickers: the only problem was that the stickers turned out to be unofficial. Some- times the technique worked. but other times didn't. and the unwitting recipients found themselves exiled to coach. (Epstein has claimed that he paid tbr the upgrades, and had no knowledge of the stickers] Many of those who benefited from Epstein's largesse claim chat his generosity comes with no strings attached. "1 never felt he wanted anything from me in return." says one old friend. who received a first-class upgrade. f.1 wan is known about town as a man who loves wom- en—lots of them. mostly young. Model types have been heard saying they are full of gratitude to Epstein for thing them around, and he is j 413111i:1r face to many of the Victo- ria's Secret girls. One young woman recalls 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 link 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 09712/2019 mAl2M 2003 media. Right now, in the wake of the pub- licity following his trip with Clinton, he must be in a very difficult place." A ecording 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, vas not Leslie Wexner but Steven Jude Reifen- berg. 57 who, for a few months before the S,E.C. sued to freeze his assets in 1991 was trying to buy the Aar NA Post. He is cur- rently incarcerated in the Federal Medical Center in Deans. Massachusetts. 'ening a 20-year sentence for bilking investors out of more than 5450 million in one of the largest Paul schemes in American history, When Epstein met Reifenberg 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- pk owed to hospitals. banks. and phone companies. But HotTenbera began using company funds to pay off 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 ears and planes. Floffenberg and Epstein had much in common. Both were smart and obsessed with making money. Bah were from Brook- lyn. According to Holfenberg. the ovo men were introduced by Douglas Leese. a de- knse contractor. Epstein has said they were introduced M. John Mitchell. the late attor- ney general. Epstein had been running Internatienal Assets Group Inc. (I.A.G.1. a consulting company. out of his apartment in the Solo building on East 66th Street in Nen York. Though he has claimed that he managed money for billionaires only. in a laiee dep- osition he testified that he spent SO per- cent of his time helping people recover stolen money from fraudulent brokers and lawyers. lie 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 5450.000. which Epstein put into oil. In 1984. Stroll asked for his money back: four years later he had received only 510.000. 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 four and a half mil- lion dollars.' Stroll has said. Page 2829 CONFIDENTIAL Hoffenberg, says a close friend, "really liked Jeffrey.... Jeffrey has a way of getting under your skin, and he was under Hof- Embers 's." Also appealing to Hoffenberg were Epstein's social connections; they in- eluded oil mogul Cede Wang (father of the designer Wm) and Mohan Murjani, whose clothing company grew into Gloria Van- data 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, Reifenberg 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. Hoffenberg hired his new pro- tégé as a consultant at 515.000 a month. and the relationship flourished. "They trav- eled everywheie together—on Holrenberg's plane. all around the world. they were al- ways together," says a source. Hoffenberg has claimed that Epstein confided in him, saying. for example. that he had left Bear Steams in 1981 after he was discovered ex- ecutine "illegal operations" Several of Epstein's bar Stearns contem- poraries recall that Epstein left the compa- ny van suddenly. 1%ithin the company there were rumors also that he was invoked in a technical infringement. and it was thought that the executive committee asked that he resign after his two supporters..Xce Green- berg and Jimmy Cmne. were outnumbered. Greenberg says he can't recall this: Cayne denies it happened. and Epstein has de- nied it as well. -JetTrey Epstein left Bear Steams of his own volition." says Cayne. "It was never suggested that he leave by 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— Net, this is not the story that Epstein told to the S.F..C. in 1981 and to lawyers in a 1989 deposition invoh ing 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 Beat Steams employres in part of what became a protracted ease about insider trading around a tender offer placed on March II. 1981. by the Seagram Company Ltd for St. Joe Minerals Corp. Ultimately several Italian and Swiss in- vestors were found guihy. including Italian financier Giuseppe Tome, who had used his relationship with Seagram owner Edgar Bronfman Sr. to obtain information about the tender of After the tender offer was announced. the S.E.C. began investigating trades in- volving St Joe at COVTI•LE.1) rvt:. 1, Agency to Agency Hewer. 19-011 SDNY_GM_00331393 EFTA_OO2O41 19 EFTA02729233 01411CH 2003 contains a parody of ASTleek and Man Da- mon making Good Will Hunting II. MTleek 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 ga- la go back to the well." "Sometimes you do Reindeer Games." Damon says derisively. "That's just mean," Mika whines. But it's a pretty accurate description of ha career to date. "Ben takes these franchise properties so he can go and experiment," says Haney Weinstein. "He believes in trying to stretch himself and noff keep doing the same thing," ob- sent Bruce Willis, who starred with AffierJr in Armageddon. "He's an awesome actor, and I think he's going to do great things." Several years ago. in a televised interview on Inside the Actors Studio. Meek said that his goal was to main 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. I'll do character roles and focus on writing and directing. It doesn't require the same kinds of sac& Ike. in terms of quality of life and person- al We. 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 respectful and judicious about your input when it's somebody else's project" Affieck 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, at- utive vice president of production at Mira- max. "He knows how deals work. It's what sets him apart. If he wanted to tun a studio at some point, he could. He's about as sharp as they come." A filed( is already juggling his acting with screenwiting and such other commit- ments as Project Greenlight. the contest he and Damon started to help launch the ca- mas of young filmmakers. Affleck'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 Affleck'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 .vats in Africa than his mot ie 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 on in the day." S° Mimi Planning to nc.ome the lb cals. annver to Ronald Rowan' He admits that he entertains the thought of someday a^ aggress, at least: "I think theca real nobility to public service. It would be fun to run on a platform I really be!::' ed in, without any of the kind of oompron: -:5 people make-without being beholden the win-at-all-costs mentality" And the invasion of privacy would h: nothing new. "What are you going to say about me that hasn't already been said? I don't cheat. I don't drink, Idea% do drugs. I live a clean life." Arnett says, his eyes twinkling. "He's only 30 years old," says Jennifer Todd. who co-produced Boiler Room. "He still has an enormous amount of time to do things." lime, and drive. "I think he's incredibly hungry." says Sean Bailey. who founded the media and production company Live- Planet with ./fleck. 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 be derailed by any number of mrscalculanons. including a pd- vale life that generates zoo man). sensational headlines, but Arnett has a clear idea of the ultimate goal. "On ny deathbed. I hate to be one who looks back and feels I lived a good and substantial and meaningful lifer he say's. In the meantime. hone::: there's a wed- ding to plan. Z Jeffrey Epstein CONTINCE0 /ROM PAOt 103 Bear Stearns and other firms. Epstein resigned from Bear Stearns on March 12. The S.E.C. was tipped off 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, given on April I. 1981, Epstein claimed that he had found "offenave" 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 money to his clos- est friend. lin the 1989 deposition he said that he'd lent approximately 520.000 to War- ren Eisenswin, to buy stock.) Such an action could have been considered improper, al- though Epstein claimed he had not realized this until aftenvard. According to Epstein. Bear Stearns man- agement had questioned him about the loan around March 4. The questioners. Epstein Q: Sit are you a re t r • • an rumors may A: said,09(48/kfrkflmei (Mickey) Tarnopol and Q: ilat°pAlien ighiVitily9-ctistersa. been TANI_ 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 tuo partners told him that the executive com- mittee had milted the offense. together with previous "careiessness" over expenses. and he would be fined 52.500. "There was discussion whether, in fact, 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 km a shot at partnership that year. What the S.E.C. waned 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: nation wkh your reasons for !eating the firm? A: I'm aware that there were many rumors. Q: What were the rumors you heard? A: Nothing to do with St. Joe. Q: Can you relate what you bead? A: It was having to do with an illicit affair with a secretary. Q: Hate 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 Stearns? k L in fact. ham head that rumen but it's been from Mr. Hams in our comersation last week. Q: Have you heard it from anyone else? A: No. A little later the interview focuses on James Cayne: Q: Did mu ever hear while you were at Bear Steams that Mr. Came may have trader or n:. sider information in connection with St ' • Minerals Corporation? A: No. Q: Did Mr. Cayne ever have any conversation with you about St. Joe Minerals? " , 41` 343 SDNY_GM_00331 394 EFTA_00204120 EFTA02729234 .Jeffrey Epstein lions bitumen Mr. Cayne and anyone else re- garding St Joe Minerals? A: No. And still later in the questioning comes this exchange: Q: Haw you had any type of business deal- ings with Mr. Cayne? There's no relationship with Bear Steams. Q: Pardon? A: Other than Bear Steams. no. Q: Have you been a participant in any type of business venture with Mr. Cayce? A: No. co" Do you have any expectation of participat- ing nippy business venture with Mr. Cayne? A: Nd. Q Have you had any business participations with Mr. Theram? A: No: nor do I anticipate any. Q: Mr. Epstein. did anyone at Bear Steams tea you in words or substance that you should not divulge anything about a. Joe Minerals to the stall of the Securities and Exchange Com- mission? A: No. Q: Has anyone indicated to you in any way. either directly or indirectly. in words or sub- stance. that your compensation for this past year or any ttaure monies comma to you from Bear Steams will be contingent upon your ma divulging information to the Securities and Exchange Commission? A: No. Despite the circumstances of Epstein's leaving. Bear Stearns agreed to pay him his annual bonus—which he anticipated as he- ins appravimately 5100.000. 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 haw given it up over a mete 53.500 fine. Certainly the years after Epstein left the firm were not obviously prosperous ones. His luck didn't seem to change until he met Hoffenberg. O ne of Epstein's first assignments for Hof- titers was to mastermind doomed bids to take over Pan American World Airways in 1987 and Emery Air Freight Corp. in 1988. Hofknberg claimed in a 1993 hearing before a grand jury m Illinois that Epstein came up with the idea of financing these bids through Tower's acquisition of two ailing Illinois insurance companies. Associated Life and United Fire -He was hired by as to work on the securities side of the insurance companies and Towers Financial, supposedly to make a profit fa us and for the companies." Hoffen- berg reportedly told the grand jury. He also alleged that Epstein wis the "technician." m- 09/12/2019 ecuting the schemes, although, having no broker's license, he had to rely on others to make the trades. Much of Hoffcnberg'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. Yet Rich and Allen. the former treasurer of United Fire, recalls seeing Epstein two or three times at the company. lie 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" Hoffmberls 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 Totters's acquisition of the companies. Hoffenberg promised to in- feet 53 million of new capital into them. In fact. in his grand-jury testimony Holknberg claimed that he. his chief operating officer. Mitchell Bata. and Epstein came up with a scheme to steal S3 million of the insurance companies bonds to buy Pan Am and Em- ery stock. "Jeffrey Epstein and Mitch Butter arranged the various brokerage acaaunts for the bonds to be placed with in New York. and 1 think one in Chicago. Rodman St Ren- shaw." Hoffenberg reportedly said. Then. said Hoffenberg, 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 .as the person in chance of the trans- actions. and Mitchell Bruer teas assisting him with it in coordination on behalf of the insurance companies money." Hotknberg claimed at the time. At one point, according to Hoffenberg. a broker forged the documents necessary fix a 51.8 million check to be written on insurance' company funds. The check %vas used to buy more stock in the takeover targets. Mean- while. in order to throw the insurance regula- tors ott the 51.8 million was rammed u being safely invested in a money-market account. United Fire's former chief financial officer Daniel Payton confirms pan of HotTenbag's 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 ... land] used some mar- gin account to take some positions in ... Emery and Pan Am.- says Payton. Epstein's extraordinary creativity was. ac- cording to Hoffenberg. responsible for the purchase by the insurance companies of a $500.000 bond. with no money down. "Ep- stein created a great scheme to purchase a 5500.000 treasury bond that would not be shown ... (as1 wgiikthor collateralized. E pstein was involved with Wallenberg in other questionable transactions. Finan- cial records show that in 1988 Epstein in- vested .51.6 million in Riddell Sports Inc.. a company that manufactures football hehnets. 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 Toboroff that he had raised his shattegfirthguntsgsticirfiaguatvaksiblinker, 144 VAN::" CONFIDENTIAL ll 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 Hoffenbag's direction and telling him it was urgent they retrieve the missing bonds for a state examination. According to Allen Epstein said, "We'U get them back." He had "kind of a flippant atti- tude." says Allen. "They never came back." E pstein. according to Hoffenberg. 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 HotTenberg's bid went wrong and the share price began to fall. This was alleged to lite involved multiple clic& accounts con- trolled by Epstein. EVentUally. in 1991 insurance regulators in Illinois sued Hoffenberg. He settled the case. and Epstein. who was only a paid consul- tant. was never deposed or accused of arty 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 hint 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 Ix was involved with the Pan Am and Emery run that Hoffenberg made. but we never got a chance to depose him.- "From the government's discovery in the main sentencing against Hoffenbag a ssculd seem the gosemment was perhaps a bit lazy? mys David Lewis. who represented Mitchell Beata. "They went for what they knew they could get ... and that was the trauduient promissory notes (i.e., the much larger and unrelated part of Hoffenberg's fraud. based in New York State].... What they couldn't get. they didn't bother with." Another lawyer involved in the criminal prosecution of Hoffenberg says. "In a crim- inal investigation like that. when there is 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." MAa CA 2 a a3 SDNY_GM_00331395 EFTA_00204121 EFTA02729235 • K • • • • 0 5 whose identity they could not be allowed to know. But Hoffenberg has claimed the mon- ey came from him, and Towers's financial statements for that year show a loan to Ep- stein of 5400.000. (Epstein has said he can't remember the details and has dis- puted the accuracy of the Towers financial reports.) Around the same time, Nedcdander and Toboroff let Epstein come in with them on a scheme to make money out of Pennwalt. a Pennsylvania chemical company. The plan was to group together with two other panics to take a substantial declared position in the stock. According to a source. Epstein was supposed qv help Nederlander and Toboroff raise 515 million. He seemed to kit to find other investors, say those familiar with the deal. (Epstein has said he was merely an in- vestor.) He invested SI million. which he told his co-investors was his own money. 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 Tabora( didn't know about. Two things happened that alarmed Nederlander and Toboroff. After the group signaled a possible takeover. the Pennwalt management threatened to sue the would-be raiders. Epstein was reluctant ini- tially to give a deposition about his share of the money. telling Toboroff there were "reasons" he didn't want to. Then, after the opportunity for new investors was closed, co-investors recall Epstein announcing that he'd found one at last: Dick Snyder. then C.E.O. of the publisher Simon & Schuster. who want- ed to put up approximately 5500.000.1Nei- ther Epstein nor Snyder can now recall the investment. Yet in the 1989 deposition Epstein said that he had recruited Sny- der. whom he had met socially, into the deal.) According to a source. Toboroff and Ne- deriander told Epstein that Snyder was too kite, but. without their realizing it, Hoffen- berg has claimed, Snyder wrote a check to Hoffenberg and bought out some of his in- vestment. But then Snyder wanted out. - Nederlander started to get these irate calls from [Snyder,' who wasn't pan of the deal, saying he was owed all this money." says someone close to the deal. Toboroff art'. Nederlander were baffled. *vrmtfilligefldlirce close to Hoffenberg s ::enberg paid Snyder off. lust as Nederlander and Toboroff were growing wary of Epstein, he became in- creasingly 'inched with Leslie Wane; whom he had met through insurance executive Robert Meister and his late wife. Epstein has told people that he met Wexner in 1986 in Palm Beach, and that he won his confidence by persuading him not to invest in the stock market, just as the 1987 crash was approach- ing. His story has subsequently changed. When asked if Wexner knew about his con- nection to Hoffenberg. Epstein said that he began working for Werner in 1989, and that "it was certain& not the same time." Wherever and whenever it was that Ep- stein and Wexner actually met, there was an immediate and strong personal chem- istry. Wexner says he thinks Epstein is "very smart with a combination of excellent judg- ment and unusually high standards. Also. he is always a most loyal friend." OFFICE SPACE The -office" in Epstein's house. It has no computers. but it does have a desk that Epstein tells people once belonged to banker J. P. Morgan. and "the largest Persian rug you'll ever see in a ornate home." Sources say Epstein proved that he could be useful to Wexner as well. with -fresh" ideas about investments. -Warier had a cou- ple of bad investments. and Jeffrey cleaned those up right away." says a former associ- ate of Epstein's. Before he signed on wih Warner. Epstein had several meetings with Harold Lamt then head of %leaner Investments. in which he enunciated ideas about currencies that Levin found incomprehensible. "In fir." says some- one who used to work say closely with Wa- rt "almost everyone at the Limited won- dered who Epstein was he literally came out of nowhere: "Everyone was M uch of Epstein's work is related to cam- ias up, tightening budgets, and efficien- cies. One person who worked for Werner and who saw a contract drawn up between the two men says Epstein is involved in "every- thing, not just a link 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 kf- frey on it.... He has a reputation for being ruthless but he gets the job done." Epstein has evident& been asked to fire penonakstaff members when needed. lie was that mysterious person that everyone was scared to death of.- says a former employee. Meanwhile. he is also less than popular with some people outside Miancis 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- sel." says Lan Forsberg. a lawyer whose firm at the :init. Dickerson and R:'.y. was hired to deal with litigation stemming from the construction of Waner's Dmirlen— at AS feet. one of the largest private yachts in the world. Evidently. Ep- stein stalled on paying Dickerson and Reny for is tick "It's prttably once .'r twice in my le- gal career that I've had to sue a client the paiment of services that he'd re- quested and we'd per- Mimed ... 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 art of a number of disputes Epstein has become embroiled in. Some air for sums so tiny as to be baffling: for instance. Epstein sued investment adviser Herbert Glass. who sold him the Palm Beach house in 1990. for 513444—Epstein claimed this was owed him lire furnishings removed by Glass. In 1998 the L.S. Attorney's Office sued Epstein thr illegally subletting the former home of the deputy consul general of Inn to attorney /van Fisher and cabers. Egstria D panipda5rtlmi n0n0t0. anumiontnehuninargreudnt IFonlinutterState veil his colleagues 520.000. Though the ev_v~ utenurmntsruokfdthasn e in agnir Er:oaten arc sealed' :a tIbil to what his comlAbatner ive•She StasitrlitEggr thergLie sane slim Ito hii‘:..4 . 1 "-:1; m iii rAttihnge uannd /Qs tigu'ality • -.wit .non SDIN_GM_00331396 EFTA_00204122 EFTA02729236 Jeffrey Epstein he is winning. Whether in conversations or negotiations, he alums 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 private-banking arm for 520 million: Epstein claims that Citibank "fraud- ulently induced" him into borrowing the money for inveamems. Citibank disputes this charge. The legal papers kit another case offer a rare window into Epstein's finances. In 1995. Epstein stopped paying rent to his landlord, the nonprofit Municipal Arts Society. kit his office in the Ydlard House. He claimed that they were breaking the terms of the lease by not letting his staff in at night. The case was esentually senkd. However. one of the papas filed in this dispute is Epstein's financial state- ment for 1988. in Much he claimed to be worth S20 million. He listed that he owned 57 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-inwstor in Riddell says: "The company had been bought with a huge amount of debt. and it wasn't public. so it was meaningless to anach a figure like that to it ... the price it cost was about 51.2 mi4 lion." The co-imestors bought out Epstein's share in Riddell in 1995 for approximately S3 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." E pstein'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 Kissinger Brooke Astor, and Robert Bass. the board also includes such preeminent scientists as Nobel laureate Joseph Gold- stein. "Epstein was thrilled to be elected." says someone who knows him. Alter one term Epstein resigned. Accord- ing to New Mc magazine, this was because he didn't late to wear a suit to meetings. A •-ikttption to' the Rockefeller board says 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 lime 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 Harvard. where he is assuming the joint position of profes- sor of mathematics and professor of biolo- gy. Epstein has pledged at least S25 million to Harvard to create the Epstein Program for Mathematical Biology and Evolutionary Dynamics, and Epstein will have an office at the university. The program wig be dedi- cated to searching kr natures algorithms. a pursuit that is a specialty of Novak's. For Epstein this mus: be the summit of every- thing he has worked toward: he has been seen proudly displaying Harvard president Larry Summers's letter of commitment as if he can't quite believe it is real. He says he was reluctant to have his name attached to the program. but Summers persuaded him. He rang his mentor Werner about it. and Wane( told him it was all right. An insatiable. restless snarl. always on the move. Epstein builds a tremendous amount of downtime into his hectic work schedule. Yet there is something almost programmed about his relaxation: it's as if even plea- sure has to be measured in terms of self- improvement. Nowak says that. when he goes to stay with Epstein in the Caribbean, they'll get up at six and. as the sun rises. have threeshour conversations about theorto ical physics. "Then he'll go off and do some work. re-appear, and we'll talk some more." Another person who went to the island with Epstein. Maxwell. and astral beautiful women remembers that the women -sat around one night teasing him about the kinds of grasping women who might want to date him. He vas amused by the idea. . .. He's like a king in his own maid." Many people comment there is some- thing innocent. almost childlike about Jef- frey Epstein They see the as refreshing. given the sophistication of his surroundings. Alan Dershowitz says that. as he was getting to know Epstein. his wok asked him if he would still be close to him if Epstein sudden!), filed for bankruptcy. Dershowitz says he replied. "Absolutely. I would be as interested in him as a friend if we had hamburgers on the lifilgiarcause he had insufficient time boardwalk in Tamil/Wad an.1 talked about o corium.: a :-Yard member recalls that coNFIDENTIAL .0 I VANrlY FAIL FASHION Cos Ion Moen Double RL T vas from Doubly 81. 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