Hedge-fund managers believe his wealth didn't come from trading
By Art Moore, 12 July 2019.
Indicted for allegedly molesting underage girls and engaging in sex trafficking, Jeffrey Epstein has been regularly described in news reports this week as a billionaire hedge-fund manager.
Some have doubted he’s a billionaire, and now some hedge-fund managers are casting doubt on the belief that he is a legitimate hedge-fund manager.
How then did he accumulate enough wealth to own a Caribbean island, private jets and palatial mansions around the world?
New York magazine spoke with hedge-fund managers who believe Epstein was running a blackmail scheme under the cover of a hedge fund.
The magazine also pointed to a thread on the anonymous Twitter feed of @quantian1 that provides a rough blueprint for how Epstein could blackmail rich people into investing with him without raising too many flags.
Among the points in the Twitter feed:
Have lots of massive parties at your spacious home (check), invite top academics, artists, politicians to encourage people to come (check), and supply lots of young women (check)
You don’t even have to do anything, and most people invited might even be totally unaware of the real purpose of the parties! But, sooner or later, some billionaire will get handsy, she’ll escort him to a room with a hidden camera, things happen. Morning after, you strike.
You inform him she was really 15, but you offer him a nice, neat way to buy your silence: a large allocation to your hedge fund, which charges 2/20 (check). To ensure nobody else asks questions, you also take the extraordinary step of demanding power of attorney (check)
The fund is offshore in a tax haven (check) and nobody will see the client list (check). Of course, you don’t really know anything about investing, instead making up some nonsense about currency trading (check), and nobody on Wall Street has ever traded with you (check)
The fund itself doesn’t need investment personnel (check), only some back office people to process the wires (check). You don’t want to money from non-pedophiles, or they’ll notice you’ve just put it in a S&P 500 fund, so you reject all incoming inquiries (check)
A $20 million wire from Billionaire X to you with no obvious reason will raise many questions, and the IRS will certainly want to know what you did to warrant it. A $5 million quarterly fee for managing $1 billion in assets? Nobody bats an eye.
Because of this structure, you’re extraordinarily secretive about client lists (check) because they aren’t clients, they’re pedophiles paying you bribes, and they also are very secretive, which is why no letters or return streams ever leak (check)
Occasionally you may also try this trick on other people: important political figures, mayors, prosecutors, etc. They don’t invest in the fund, but it’s nice to have them in your pocket. Others (academics, artists, etc.) can just be bought with money as a PR smokescreen.
And, of course, the scam can be kept going as long as people are willing to pay, which is forever. If you’re ever caught, just lean on some of your other friends in government to lean on the prosecutor to get you a sweetheart deal. There’s almost zero risk.
And the last piece of the puzzle is the evidence. You’d want it somewhere remote, but accessible: a place the US can’t touch but you have an excuse to visit all the time to update. Remember that offshore fund?
The theory is bolstered by a Bloomberg report citing a former Epstein worker who claimed there was an extraordinarily high level of secrecy around a steel safe in Epstein’s office that suggested it contained much more than money.
Outside of an occasional visit by a housekeeper, no one was allowed in Epstein’s office or in another room that contained a safe, the worker said.
Rich and famous
Among the rich and famous in Epstein’s orbit were former President Bill Clinton, Britain’s Prince Andrew, attorney Alan Dershowitz, actor Kevin Spacey, comedian Chris Tucker, director Woody Allen, L Brands CEO Les Wexner, physicist Lawrence Krauss, psychologist Steven Pinker, former Clinton treasury secretary Larry Summers and publisher Mort Zuckerman.
President Trump’s praise of Epstein in an interview with New York magazine in 2002 has drawn attention since the arrest Saturday.
“I’ve known Jeff for fifteen years. Terrific guy,” Trump said at the time. “He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it – Jeffrey enjoys his social life.”
Epstein was a member of Trump’s South Florida club, Mar-a- Lago. But a court filing says the club dumped Epstein after he approached an underage girl there.
On Tuesday, Trump told reporters he was “not a fan” of Epstein.
“I knew him like everybody in Palm Beach knew him,” Trump said.
The president said he had a “falling out” with Epstein “a long time ago.”
“I don’t think I’ve spoken with him for 15 years. I wasn’t a fan,” Trump said.
Clinton claimed Monday that he knew Epstein briefly, in 2002 and 2003, and took only five trips on Epstein’s private jet. But flight logs obtained by FoxNews.com in 2015, showed the former president made 26 trips on the plane dubbed by tabloids as the “Lolita Express.” Clinton also claims he never visited Epstein’s private island in the U.S. Virgin Islands, dubbed by media “Orgy Island” and “Pedophile Island.” But one of Epstein’s accusers testified in an affidavit in a 2014 lawsuit that she saw Clinton on the island.
The accuser, Virginia Roberts Giuffre, also claimed Epstein instructed her, at age 15, to have sex with Prince Andrew on three separate occasions. Buckingham Palace denied the allegations in 2015 as “false and without any foundation.”
Fox News reported in 2016 that Epstein allegedly offered sex to underage girls aboard his Boeing 727. An air hostess testified the plane had a bed where passengers had group sex.
A Clinton spokesman said Monday that the former president had “one meeting with Epstein in his Harlem office in 2002, and around the same time made one brief visit to Epstein’s New York apartment with a staff member and his security detail.”
However, a March 1995 story by the Palm Beach Post reported then-president Clinton attended a three-hour dinner with a “very select group of people” at the Palm Beach home of business magnate Ron Perelman that included Epstein.
The Smoking Gun reported in 2015 regarding the 2014 lawsuit that Epstein had 21 different numbers for Bill Clinton in his phonebook. The report said several of Epstein’s victims “floated the possibility of subpoenaing Clinton.”
FoxNews.com reported attorneys for Epstein touted his close friendship with Bill Clinton in an attempt to boost Epstein’s image during plea negotiations in 2007.
In a 23-page letter, lawyers Alan Dershowitz and Gerald Lefcourt claimed Epstein helped start Clinton’s controversial family foundation.
36 accusers identified
The FBI and the U.S. attorney’s office for the Southern District of Florida investigated Epstein more than a decade ago, identifying 36 potential accusers. But the probe ended with the negotiation of a plea deal in September 2007 in which he was prosecuted only on lesser state charges.
On Monday, the U.S. attorney for the Southern District of New York unsealed an indictment alleging Epstein recruited and paid dozens of underage girls in the early 2000s to give him massages that became sexual assaults in his Manhattan and Palm Beach homes.
The Miami Herald reported Thursday that more than a dozen women have contacted attorneys claiming sexual abuse by Epstein. The paper said no one knows how many more women have contacted prosecutors directly.
CNN reported Friday that after Florida authorities opened their investigation, accusers and witnesses told police they faced intimidation and bare-knuckle tactics.
A 14-year-old girl said that after she reported Epstein to authorities in 2005, she received a warning from someone who claimed to be in contact with Epstein, according to a Palm Beach police report. The girl said she was told she would be paid cash if she agreed not to to cooperate with law enforcement. And she was warned that “those who help [Epstein] will be compensated and those who hurt him will be dealt with.”
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