How Epstein’s Deep Ties Across Wall Street Helped Him Build Wealth and Power

Share this articleJust weeks after Jeffrey Epstein was charged with soliciting prostitution, he received a coveted invitation from a wealth manager: a shot at investing with the hedge fund Renaissance Technologies, whose reputation for success is almost mythical. It was August 2006, and newspapers were reporting accounts of Epstein paying teenagers for sex. A rising star at Smith Barney named Greg Hersch wrote an email to Epstein’s office: “I would like to bring to Jeffrey's attention that Citigroup's feeder fund to Dr James Simons' fund, Renaissance, LLC, will be closing to new investors at the end of this month as it nears its limit of 499 investors.”“I feel it would be a mistake to not make this investment,” wrote Hersch, adding that it wasn’t typically his style to give a “hard sell.”Epstein jumped. His chief investment vehicle, the Financial Trust Company, was in for $1 million, he wrote: From: J. Epstein To: Date: Wed, Aug 2 2006 12:49 PM Subject: Re: Fwd: Renaissance let's do it 1 milioon ftc __________________________________________________ Do You Yahoo!? Tired of spam? Yahoo! Mail has the best spam protection around http://mail.yahoo.com Two days later, when the Palm Beach Post published an editorial about Epstein—“He was over 50. And they were girls”—his office received the investment details and fees. The exchange ended with Epstein’s one-word go-ahead: “fine.” Hersch, who now runs his own firm, said through a spokesperson that his interactions with Epstein were solely professional and ended in 2007, before Hersch says he learned of Epstein’s crimes. Representatives for Renaissance and Citigroup Inc., which owned Smith Barney at the time, declined to comment.On Wall Street, finding success takes a mix of ambition, skill and luck. But turning a good run into a fortune—and then power—requires connections. A cache of more than 18,000 emails sent to and from Epstein’s private Yahoo account, obtained by Bloomberg News earlier this year, shows the abundance of access he enjoyed across Wall Street and how relentless he was at transforming it into wealth.It’s been well established that JPMorgan Chase & Co. and other major banks worked with Epstein after he pleaded guilty in June 2008 to state-level sex charges in Florida, including procurement of minors to engage in prostitution, and served about a year in jail. Congressional investigators are probing that business, and President Donald Trump, once friendly with Epstein, signed legislation last month compelling the Justice Department to release its files on him.The Yahoo emails provide new details about Epstein as an investor and adviser, including how he leveraged influence when his bets lost money. They also show that Epstein’s ties on Wall Street were broader than previously known, involving not just standard banking relationships but some of the most sought-after hedge funds. ➞ Read more about how Bloomberg News vetted Epstein’s emails After stories of Epstein’s teenage victims spilled into the open, Wall Street continued to stay in touch. He had access to prestigious names in global finance, including Renaissance and the investment firm of billionaire Carl Icahn. And as Epstein was directing his high-powered attorneys to pressure the government into offering him a light sentence, he threatened legal action against Bear Stearns and top executives for steep losses.The email cache doesn’t solve a central Epstein enigma: How did a former math teacher without a college degree turn himself into a globetrotting money manager with his own island? But it shows Epstein’s gamesmanship across Wall Street, where he was chummy, aggressive and effective. He found the right doors to banks, brokerages, billionaires and investments. When something went wrong, he had a playbook to handle it, often ruthlessly.When that high-flying career was threatened by investigations, charges and convictions, not all of his most elite connections shunned him. Instead, some helped him keep the money-machine turning. ‘Particular Ill Grace’Epstein’s first stint in finance ended terribly. In 1981, he left Bear Stearns with a cloud hanging over him. By his own account, when his bosses had found out he’d loaned $15,000 to a friend so the friend could buy stock, they told him it could violate securities law. “The way it was handled subsequently was offensive to me and I decided to resign,” Epstein told regulators a month later, during an investigation into other matters.James ‘Jimmy’ Cayne, who was head of Bear Stearns, in 2004. Source: Daniel Acker/Bloomberg/Getty ImagesBut when he returned to high finance, this time as an exclusive money manager, his old firm was woven into his work, the emails show. His companies put tens of millions of dollars in Bear’s investment funds and bought tens of millions of dollars more of its stock. He helped oversee one of Bear CEO Jimmy Cayne’s trusts. When Bear’s stock hit $100 for the first time, Epstein bought 100 shares and presented them to Cayne as a gift, one document in the inbox reveals. Epstein was also chairman of Liquid Funding Ltd., a Bermuda-based investment vehicle that Bear co-owned. The emails show, too, that he called the shots as money moved out of a Bear account belonging to one of Epstein’s key clients, the Ohio billionaire Les Wexner.Epstein was savvy in a fight that began once the subprime mortgage market sank. In August 2007, after the collapse of Bear hedge funds that Epstein had invested in, his office got an email from a lawyer representing other investors, including Charles Fix, heir to a Greek beer fortune. The attorney invited Epstein’s office to join in a confidential plan to boot Bear’s directors from fund leadership through a vote and replace them with an ally, then to unleash a full investigation into what had gone wrong, positioning investors to claw back losses. “do it,” Epstein told Darren Indyke, his longtime personal lawyer.Three months of emails and meetings followed, as the team kept Epstein’s office posted on strategy and internal fights. In November, the team believed they’d gained control of enough votes to win. It wasn’t that simple. Epstein soon flipped against the investor group, triggering rage from the Greek beer heir. Indyke wrote: Attachment: Letter to Charles Fix.docxFix’s colleague wrote back: “It is with particular ill grace that you are trying to suggest that Mr. Epstein claims "surprise" at our being angered by his (and your) misconduct today.” He asked Epstein to explain “why after months of his assuring us that he was supporting our efforts” he “did a 180 degree turnabout,” refusing to vote with the group, “thereby ensuring a loss for them—and us.”Epstein had been playing both sides. Behind the scenes, he was sharing intelligence with Cayne, the inbox shows, forwarding him the “ill grace” email from Fix’s colleague. Around the same time, Epstein emailed the Bear boss a list of complaints about the prosecutors investigating him for sex crimes and money laundering. Still, there was one more twist coming.Following Bear Stearns’ meltdown the next March, Epstein made preparations to sue Bear and several top executives, according to a June 2008 draft of a lawsuit from the inbox. In it, one of the most notorious figures of his era presents himself as the opposite: a victim. Get on our list Bloomberg’s senior investigative reporter Jason Leopold has detailed this cache of emails in his weekly newsletter, FOIA Files. ➞ Sign up here The draft complaint asks for more than $70 million in damages. It alleges that bankers dumped “toxic waste” into Bear funds and depicts Epstein as a loyal associate who was “fraudulently induced” by manipulative bankers. Bear betrayed its “special continuous 32-year relationship” with him, according to this version, luring him to buy and hold stakes in funds that were riskier than advertised. And though the draft doesn’t name Cayne as a defendant, it turns against him, too, alleging that he gave Epstein false assurance about his Bear holdings before the company collapsed and JPMorgan bought it. Around the same time of the draft, Epstein’s attorneys emailed with a JPMorgan lawyer about a potential settlement. Epstein sued Bear over related issues, including fraudulent misrepresentation, in 2009. Two years later, JPMorgan agreed to settle his claims against Bear for about $9 million, according to court documents filed in a separate case.A spokesperson for JPMorgan declined to comment. Lawyers for the Bear investment group didn’t return messages. Cayne died in 2021.‘No Names’During a given week, one investment sent Epstein’s way might have been for him, but the next might have been for Wexner, the billionaire behind Victoria’s Secret. Sometimes, even Epstein himself hesitated to say what went where. In late 2006, when Indyke passed along a question about whether one securities investment—“the 3x levered basket”—was for a Wexner family trust or Epstein’s company, Epstein told his lawyer to remind him about it in a couple of days. From: J. Epstein To: Date: Mon, Nov 27 2006 12:37 PM Subject: Re: Levered basket confirm remind me wed. ----- Original Message ---- From: "dkiesq[REDACTED]" To: jeeproject@yahoo.com Sent: Monday, November 27, 2006 12:43:59 PM Subject: Fw: Levered basket confirm Do you know which entity will invest? WCTII or FTC? Sent from my BlackBerry� wireless handheld Indyke didn’t answer specific questions for this story.For a financial adviser at Merrill Lynch named Ed Spector, that fluidity was par for the course. In 2005, the Merrill adviser sent Epstein a reminder about the timing of an investment for Wexner’s wife. A few days later, he advised Epstein on a peso deal for Financial Trust. That November, in an email about a plan to go long the Australian dollar while shorting New Zealand’s, Spector also asked if he wanted to split $10 million between Financial Trust and Wexner. Epstein told him: From: J. Epstein To: Spector, Edward (Private Banking and Investment - WFCB) Date: Thu, Nov 10 2005 7:56 PM Subject: Re: all wexner __________________________________ Yahoo! FareChase: Search multiple travel sites in one click. http://farechase.yahoo.com The inbox shows Epstein as a brash power broker who twisted arms to get what he wanted from Wall Street colleagues. And though it often worked, sometimes he went too far. In early 2006, Epstein asked for a favor that made Spector uncomfortable, according to emails from the financial adviser:“Jeffrey, I just got back to the office in NY. Please understand that as I thought about our conversation the last couple of days and two thoughts hit me... first, that I do not know the gentleman (no names) well enough to approach him on this. He would look at me like I am nuts and would ask what my interest is.. I know him only from a business sense. Also, as innocent as the request may sound, it could result in big problems for me internally if this gentleman doesn't think its an appropriate conversation. There is zero tolerance in the organization.”The emails don’t spell out what Epstein wanted, but he kept pressing the adviser. Spector bristled: “Jeffrey, As you know, I have a great deal of respect for you. I have asked around this afternoon after receiving your email on a no name basis and have been advised that I can have significant issues approaching the topic. I hope you understand.”That cryptic exchange and Epstein’s July arrest in Florida didn’t stop the pair from doing big business. In August, Epstein thanked Spector for telling him that a Hertz investment had paid $2.2 million each to Epstein’s firm and to a Wexner trust fund. Later, Spector reminded Epstein that the deal had been a special opportunity: “As you know, inclusion in Hertz was limited to clients with $1billion net worth,” he wrote. Would Epstein want to be included in Merrill’s billionaire-only deals? He added that it would take a commitment of $20 million or so per year.Epstein wrote back: From: J. Epstein To: Spector, Edward (PBIG New York, NY (Downtown)) Date: Mon, Nov 13 2006 11:19 AM Subject: Re: got it i'm in Spector died in 2009. A spokesperson for Bank of America, which bought Merrill that year, declined to comment.According to an email in late 2007, Epstein was also connected to billionaire Carl Icahn’s investment firm.

Icahn Capital Management sent him revised fees and terms—the kind that are usually only shared with investors—along with holiday wishes. Icahn’s office did not respond to questions.News reports that Epstein was preparing to plead guilty to sex crimes didn’t stop contacts from pursuing him. An investment firm called Yin Harbor Drive Capital sent him an email in February 2008 with a plan to profit even if markets fall. They met that month. “I hope that you found the discussion as interesting and thought-provoking as I did,” executive Duncan Yin wrote afterwards, sending along details about “trading Indian equity volatility.” Investment talks continued for months. Bruce Jaeger, a former Bear Stearns executive, met with Epstein about the deal in June, just as Epstein was finalizing his plan to plead guilty in Florida.“It was great to see you on Monday and I am glad to see that you are keeping such a positive attitude,” Jaeger wrote early that month. “I am sure that you will prevail and make the right decision on how to proceed. Right before Ghislaine entered your office, you asked me if we could start trading and the answer is yes.” The executive attached details for a $5 million investment. Yin didn’t return messages. Jaeger said he couldn’t answer questions on the phone and didn’t return messages.Epstein fielded requests for investments until his last week of freedom. That June, his office got a pitch for an offshore fund that traded carbon credits; the next day, he got another nudge from an acquaintance about investing in an oil firm. On June 30, he pleaded guilty to two felonies in Palm Beach County, which, under an agreement that has since become infamous, spared him and any potential co-conspirators from federal prosecution in exchange for about 13 months in jail.Epstein’s continued attention from Wall Street included an exchange with Morgan Stanley, the emails show.Patricia Glass, a senior vice president and director of portfolio management in its wealth unit, teamed up with an executive director to talk to Richard Kahn, Epstein’s longtime accountant and a key deputy. They followed up in October 2016 with a presentation on a strategy called risk reversals—buying one kind of option while selling another. A lawyer for Kahn said he doesn’t believe the strategy was pursued. Lawyers for Kahn and Indyke said their clients haven’t been accused of witnessing or committing abuse, and that they never knowingly enabled Epstein to abuse or traffic women. A spokesperson for Morgan Stanley declined to comment.‘A Daddy’Some of Epstein’s most intriguing work wasn’t with banks, brokerages or hedge funds. To globetrotting billionaires, men who were richer and more powerful than he was, Epstein offered the services of a consigliere. Over email, he was empowered, paranoid and shrewd. At the end of 2005, years before artificial intelligence became an obsession of global capitalism, Epstein had an idea for Leon Black, the co-founder of Apollo Global Management. Marvin Minsky, a celebrated computer scientist at the Massachusetts Institute of Technology, was working with colleagues to “build a machine that is capable of commonsense thinking, one that can solve real problems for real people,” according to one of the Yahoo emails. Their pitch was to build a non-profit with for-profit spin-offs. Epstein asked an assistant: From: J. Epstein To: Cecilia Steen Date: Wed, Dec 28 2005 5:00 PM Subject: Re: Marvin Minsky cecelia ,,,please fax to leaon black.... with a note tht says,,, this guy is the father of artificial intelligence... you could adopt the whole project,, and have fun __________________________________ Yahoo! for Good - Make a difference this year. http://brand.yahoo.com/cybergivingweek2005/ Minsky died in 2016.Documents released last month by a congressional committee also show Epstein’s role for clients as something less conventional than mere money manager. In a batch of 2015 emails that he later forwarded to himself, he tried to shape Black’s financial life: “Leon, Yesterday, I again spent hours upon hours of my time with your office,” he wrote. He complained that Black had gotten himself into a fix by ignoring his advice from a year earlier, going so far as to quote it: “Your family office needs a daddy. children with good intentions are running around , sniping , nitpicking with little direction.” Leon Black in Los Angeles in April 2008. Source: Jamie Rector/Bloomberg Epstein made clear that his involvement didn’t come cheap: “very serious I am wiling to continue to accommodate some of your concerns , but I am, under no circumstances , none, willing to spend my time for free. its not fair.” He added a parenthetical, and another inside it: “(you had claimed I had you over a barrel , ( a horrible position to be in with my very close friend.), unfortunately I fear that if you are not cautious ,in the near future, another barrel will appear of your own design ).” Epstein was like Thomas Cromwell at Henry VIII’s ear. At the end of 2015, an email described one of Black’s deputies as “a little man , using your power, to appear larger,” and another colleague as “self aware enough to know she was over her head.”A spokesperson for Black said he had no comment.In Ohio, the Yahoo emails show, Epstein had wide influence over Wexner’s world. He dictated time off for the members of the billionaire’s family office, orchestrated the movement of money, advised on the payment plan for his wife’s private jet, suggested how to structure the purchase of a condo for a security staff member and passed judgment on senior executives at Wexner’s retail empire, L Brands. He nicknamed one of them “mighty mouse,” after the cartoon, calling him incompetent and delusional in a pair of notes to Wexner in 2006 and 2007. The second email also warned him about one of his company’s directors: “He has NO judgement.. BE careful.!!.”A spokesperson for Wexner declined to comment.Epstein, front row, at the Victoria’s Secret fashion show in New York in 2005. Wexner, the then-owner of the Victoria’s Secret brand, is on the far left. Source: Billy Farrell/Patrick McMullan/Getty ImagesEpstein advised the rich, powerful and well-connected.

When Nili Priell Barak—whose husband, Ehud Barak, had been Israel’s prime minister—was making high-level introductions to clients for a fee, she turned to Epstein. In early 2008, she sent the text of her client agreement: Taurus Ltd., a consulting firm, would, for $30,000 a year, identify strategic partnerships, screen business opportunities and introduce clients to “Israeli business and public opinion leaders.” Even though she’d already started sending it out, Epstein’s lawyer reviewed the text, then explained, step by step, how it should be “redrafted in its entirety.” Priell Barak didn’t respond to messages left with a doorman.Opportunities kept coming for Epstein, even in his final years. In January 2018, he heard from a deputy of music mogul Tommy Mottola about investing in a musical he was producing that covers the life of disco queen Donna Summer. The executive, Joanne Oriti, told Bloomberg News that the documents “were sent to dozens and dozens of people” and “Epstein did not invest.”That April, Summer: The Donna Summer Musical opened on Broadway. Federal prosecutors charged Epstein with sex trafficking minors one year later.Additional reporting by Ava Benny-Morrison and Dhruv MehrotraEdited by Lauren Etter and John VoskuhlDesigned by Chris NosenzoProduced by Emily Engelman, Thomas Houston, Eugene Reznik and Margaret SutherlinPhotos edited by Jane YeomansStay connected: Don’t miss hearing about upcoming reporting: Sign up for the weekly newsletter written by Bloomberg’s senior investigative reporter Jason Leopold.More On Bloomberg