Leon Black regards Jeffrey Epstein as a “confirmed bachelor with an eclectic taste, often employing attractive women.”
The private equity titan was prepared to overlook the fact that Epstein spent 13 months in a Florida jail after asking for a minor prostitute. This was partly because Epstein claimed the girl lied about her age, while Black, co-founder of Apollo Global Management Inc., believes in second chances, especially for its well-connected friend.
Thus, a relationship between the men continued, set out in a report released Monday by law firm Dechert, commissioned by the Apollo board, following news reports about their financial ties. The investigation found that between 2012 and 2017, Black paid $ 158 million to Epstein – after the sex offender pleaded guilty to charges in 2008 – for advisory services that helped expand the wealth of one of America’s richest men.
The report made it clear that Apollo never retained Epstein for any services and that he never invested in funds managed by Apollo. Dechert found no evidence that Black, 69, was in any way involved in Epstein’s criminal activities, and the billionaire maintains that he has no knowledge of Epstein’s abuse of underage girls. Yet the findings showed how the disgraced adviser’s knowledge of the tax system and the skills that run the affairs of the ultra-rich helped Black save at least $ 1 billion and possibly more than $ 2 billion.
At the same time, Apollo released details about the report, the company said Black would do so retires as CEO. He remains chairman.
Tax savings
The Dechert report traces a friendship back to the 1990s, with Black impressed by Epstein’s ties to leading figures in business, politics and science, including researchers at Harvard University and the Massachusetts Institute of Technology. Black was a regular visitor to Epstein’s mansion in Manhattan, entrusting him with personal affairs and visiting his homes around the world.
Dechert also explained how Epstein was useful to Black, which according to the US is worth almost $ 10 billion Bloomberg Billionaires Index.
According to the law firm, the business arrangement began in 2012, reviewing more than 60,000 documents.
Black had established a Grantor Retained Annuity Trust, or GRAT, a few years earlier. These vehicles, which are popular among extremely wealthy Americans, are structured so that valuation in assets placed in a GRAT can go to heirs without paying U.S. estate and gift taxes. But Blacks has a flaw and there was a risk of a $ 500 million tax assessment, which could rise to $ 1 billion or more if left unresolved.
Epstein presented what the report described as a ‘unique solution’. This was the first project Epstein worked on for Black and possibly the most valuable.
In 2015, Epstein helped with another deal designed to save Black’s children on taxes, known as an intensive deal. The complicated arrangement, which took nine months to execute, involved borrowing between Black and trusts and avoiding capital gains tax for its beneficiaries. Epstein claims the move saved $ 600 million.
Hunting, aircraft
Epstein, a Brooklyn resident, was a mystery to many inside and outside finances. He attended the Courant Institute of Mathematical Sciences of Cooper Union and the University of New York, but he left both without a degree. He worked briefly at Bear Stearns Cos. And before his first arrest, worked a lot for the underwear, Les Wexner. The founder of L Brands breaks ties with Epstein after his first conviction and later accuses him of abusing “large sums of money from me and my family”. But Epstein helped Wexner with his finances and purchases like real estate.
He did many of the same things for Black.
Photographer: Patrick T. Fallon / Bloomberg
According to the Dechert report, Epstein helped respond to audits and gave advice on how to manage Black’s art, hunting and aircraft.
“Epstein would end up in the weeds over obscure issues about which highly skilled Family Office employees were not knowledgeable,” the report said.
One of Epstein’s contributions, according to the report, was to convince Black to focus on these issues, as well as to meet with his family and explain how the estate was organized. He drew up detailed plans for ‘fire drill’ and tested how Black’s estate would be taxed under different scenarios.
‘Cutting power’
Black’s full – time staff did not always appreciate Epstein’s contributions. He was ‘generally a disruptive and biting force within the family office’, the report said, one who ‘had a habit of over-dramatizing even minor alleged mistakes’.
Epstein would earn honor for others’ ideas, while compiling long lists of his own proposals. Much of his creative estate planning schedules did not supervise. According to witnesses, including Black, “part of the challenge was to work with Epstein to separate the good ideas from the bad ones.”
But the payments have skyrocketed. Black paid Epstein $ 50 million in 2013, $ 70 million in 2014 and $ 30 million the following year. He also made a $ 10 million donation to Gratitude America in October 2015, which was a charity affiliated with Epstein.
But in 2016, the professional and personal relationship between Black and Epstein deteriorated, according to the report. The dispute was over a payment related to the intensification deal, and Black refused to pay Epstein tens of millions of dollars that Epstein believes he earned. Epstein pushed the issue back through emails calling for his friendship with the billionaire and referring to personal matters shared in trust.
Black’s last payment to Epstein was made in April 2017, and in 2018, according to the report, Epstein repaid a portion of two loans that were outstanding to Black. Black and Epstein stopped communicating in 2018, the year before Epstein was arrested on charges of underage sex trafficking and later died in prison. His death was decided as suicide.