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Maxwell family stolen pension fortune, hidden away by Epstein?
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…
Ghislaine Maxwell may be the last person alive who knows the answers to one of the decade’s great mysteries: how did Jeffrey Epstein amass his fortune and where is it now?
For one of the theories is that Maxwell’s father Robert bankrolled him.
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.
The question this financier could not answer was how Epstein, who he had never known to actually conclude a successful business deal, had accumulated such a tremendous fortune. Nor could any of Wall Street’s so-called ‘masters of the universe’.
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.
He then demonstrated his talent for magically transforming economy-class air tickets into first-class ones.
I gave him my cheapo ticket to Spain, and he gave it back to me the next day with a first-class sticker. A free upgrade? It seemed too good to be true and, indeed, when I tried to board the flight, I was told my first-class ticket was a fake.
It turned out that Epstein had simply obtained a cache of first-class upgrade stickers, which he pasted on cheaper tickets in the hope the true price paid wouldn’t be noticed at the check-in desk. Everything about Epstein was a con. I never thought: ‘Here’s an honest guy.’
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.
I remember being impressed when Epstein introduced me to Hoffenberg because he had an armed bodyguard.
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.
On his private airliner, he gave former President Bill Clinton rides to Africa. Prince Andrew was another associate and I remember being fascinated that Epstein was constantly surrounded by the most beautiful women I had ever seen in my life.
Astoundingly, nothing – not even a 13-month prison sentence for pleading guilty to soliciting under-age girls in Florida – could impinge this upward trajectory into an elite world of money and power.
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.
As a convicted felon, Epstein would not be allowed a licence to manage money. Yet, as he told me with a glistening, know-it-all smile, he was doing better than ever.
He now had homes in New York, Palm Beach, Paris and New Mexico, and he was in the process of buying a mansion in Saudi Arabia. He also had a private fleet of jets and a helicopter.
When I asked about his business, he replied: ‘I manage money for a few select clients.’
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.
‘What about Russia? Any clients there?’ He shrugged and said he often flew to Moscow to see Vladimir Putin.
I found this hard to swallow. It was implausible that such powerful world leaders would trust the management of their personal funds to a convicted sex offender.
After all, if they wanted financial wizardry, there was no shortage of well-connected investment bankers in London or New York. Some don’t ask too many inconvenient questions. So what special talent did Epstein have?
I would never find out, at least not from the horse’s mouth.
Jeffrey Epstein was found dead on the floor of his cell in July last year. His death, an apparent suicide by hanging, only deepened the mystery behind his wealth.
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.
I learned that one of the first things Hoffenberg did after he was released from prison in 2013 was to go uninvited to Epstein’s home and demand a large sum of money. Epstein called him crazy, and threw him out.
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.
The problem with Hoffenberg’s story is that Epstein was never implicated in various investigations into Towers International.
He was never mentioned by anyone involved in the swindle, even after Hoffenberg and his associates at Towers International agreed to co-operate with investigators. If Epstein had received part of the money, why hadn’t Hoffenberg disclosed that fact to mitigate his sentence? Did he really expect to get the money back after getting out of prison?
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.
As attractive as this theory may be, no evidence has emerged in the investigations of Maxwell or Epstein to support it.
Finally, it cannot be excluded that Epstein was actually telling the truth when he had said rich and powerful people found reason to consign funds to him.
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.
When the financier told him that the scheme amounted to illicit tax evasion, Epstein said it was highly unlikely the Internal Revenue Service would unravel it, and, if it did, he would protect the financier from any criminal exposure.
The financier asked him how? Epstein said the financier would have to sign over the funds to him, thus giving him total discretion over where and how the money was invested. This piece of paper, he said, would provide an alibi to the US tax authorities.
The financier turned down Epstein’s proposition, but others – Arab princes, Russian oligarchs and those interested in hiding some part of their wealth – might have accepted it.
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.
All of which leaves Ghislaine Maxwell as the last living link between a flawed 21st Century Jay Gatsby and the powerful figures who will no doubt be hoping that Epstein’s secrets died with him.
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