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Leaked documents show Jeffrey Epstein kept funds offshore. Can the money even be tracked?

Jeffrey Epstein’s attorneys, who were hoping to persuade a judge to release the accused sexual predator on bail while awaiting trial, submitted a bare bones accounting of his financing this week.

Prosecutors — and the judge — were skeptical.

Now, documents obtained by McClatchy and the Miami Herald provide a more detailed — but still very limited — look at Epstein’s wealth. They also underscore the challenge his accusers and the U.S. legal system might face in seeking restitution if he is convicted of the federal sex trafficking charges filed last week.

Documents released without authorization from Swiss banks show that Epstein in February 1997 was ensconced in the offshore banking world, and he appears in other offshore documents, part of an unauthorized release from Appleby, a Bermuda-based law firm specializing in the creation of offshore companies and investment vehicles for the ultra-wealthy. A client bank profile cryptically describes Epstein’s job as “Manager of Fortune.”

These documents also show that from at least 2000 to 2007 Epstein was chairman of a company called Liquid Funding Ltd., which was initially 40 percent owned by the Wall Street investment bank Bear Stearns. Bear Stearns’ spectacular collapse and sale to JP Morgan Chase in March 2008 set in motion what months later devolved into the worst U.S. financial crisis since the Great Depression.

Epstein’s wealth became a flash point as his legal team argued that he deserved to gain his release from jail pending trial. Federal prosecutors in New York cited his enormous wealth as adding to the risk he would flee.

The judge Thursday ruled that Epstein must stay locked up.

When asked to document his wealth, lawyers for Epstein told Senior U.S. District Court Judge Richard M. Berman that the answer is complex.

It’s unclear how long Epstein ran Liquid Funding, which tied back to a similarly named company in Delaware, and how much it contributed to the known narrative of Epstein losing big sums during the financial crisis.

But coupled with the fact that many of his businesses were operated in or with help from Caribbean offshore tax havens, the documents raise the likelihood that Epstein’s wealth is spread secretly across the globe. Wealthy people commonly employ opaque offshore companies to mask their true fortunes from tax authorities and creditors, although the companies also have legitimate business and tax-planning uses.

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The defense team for Jeffrey Epstein submitted this accounting of his assets to the judge considering whether to grant him bail while awaiting trial.

The client profile gives a glimpse into Epstein’s wealth, referencing two separate accounts with money kept in a bank. One listed more than $880,507 in the account in 2006/2007, while another bank account under Epstein’s name held almost $3.46 million at a high point over that period. This pales in comparison to his net worth — reported by his attorneys in court as $559 million — but suggests he had the ability to keep money in far-flung places. A check of the bank coding in the profile suggests that Epstein banked at the time with HSBC Private Bank (Suisse) SA in Geneva.

Some of the Epstein documents were among 13.4 million provided to German newspaper Suddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists. ICIJ assembled a team of international journalists to investigate what became known as the Paradise Papers when published in October 2017.

Other documents appear in a database from Swiss Leaks, a leak of secret bank documents published by ICIJ and its partners in 2015.

Within the Paradise Papers and Swiss Leaks documents, there isn’t much underlying information. For example, it’s unclear why the Epstein client profile spreadsheet that appears in the database references sums of money for the 2006/2007 time-frame.

That’s shortly before Epstein, accused of sexually abusing girls as young as 14, managed to negotiate a lenient state plea agreement, which involved only two minor charges. That deal, called a non-prosecution agreement, became the focus of a Miami Herald investigation in November 2018 that resulted in this month’s resignation of U.S. Labor Secretary Alex Acosta, who in 2008 was the Miami-based U.S. Attorney working the plea arrangement.

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Jeffrey Epstein

That same client sheet on Epstein lists billionaire Leslie Herbert Wexner under “legal entities in relation with profile.”

Wexner is the wealthy founder of clothing company The Limited and co-invested with Epstein in the redevelopment of an area in Ohio where The Limited was headquartered. Both men appear tied in the document to Family Interest LP, which was owned by Financial Trust Company Inc., Epstein’s investment firm in St. Thomas, U.S. Virgin Islands, where he owns an entire island, Little St. James, and where he had registered yachts and planes.

And on a curious note, given courtroom revelations about Epstein having an Austrian passport listing a Saudi address from the 1980s and a fake name, the client profile provides Epstein’s U.S. passport number but a date of birth of Jan. 20, 1963. He was born on that day in 1953. It’s unclear if he provided a false date, had a false passport or if officials simply fat-fingered an incorrect date.

Officials did not respond to emails seeking comment about the offshore business provider’s relationship to Epstein. Neither did one of Epstein’s attorneys.

On another client spreadsheet, Epstein appears with his St. Thomas address. But the client profile lists a Palm Beach mansion address and 457 Madison Ave. in New York. That is a historic property called the Villard House, and the building is currently owned by the Sultan of Brunei.

In a notation on the client profile, correspondence to that New York address is directed to Harry Beller, whose LinkedIn profile shows that at that time he worked for New York Strategy Group, a financial advisory firm to clients worth $1 billion and up.

Beller is a partner today in Louis J Septimus & Co, a New York firm offering tax, accounting and financial planning to corporations, partnerships, trust and estates. A person at the office confirmed that Beller had worked as an accountant for Epstein’s business, but said Beller was vacationing out of the country and unreachable.

The most voluminous document about Epstein in the Paradise Papers is a 541-page one detailing Liquid Funding Ltd., a company that was innovative for its time in trying ways to broaden the kind of debt that is accepted on the repurchase, or repo, market. These instruments involve a lender giving a borrower cash in exchange for securities that the borrower will buy back at an agreed upon date for a fixed price.

Rather than having stocks and bonds as the underlying security, Liquid Funding had commercial mortgages and investment-grade residential mortgages bundled into complex securities. The three main credit rating agencies — Standard & Poor’s, Fitch Ratings and Moody’s Investors Service — all helped Bear Stearns create the securities in a way that would allow the creative product to get a gold-plated AAA rating.

The early directors of this company included some big-name investors. One was Paul A. Novelly, CEO of St. Louis-based FutureFuel Corp., a fuel, biofuel and chemicals company. He is also CEO of Apex Oil Company Inc., a privately held oil company in St. Louis. He did not respond to requests for comment to his investor relations department.

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The Upper East Side New York estate of multimillionaire Jeffrey Epstein. Damage on the front doors of Epstein’s residence was caused by agents serving a search warrant following Epstein’s arrest at a nearby New Jersey airport Saturday July 6, 2019 . Epstein has been charged with sex trafficking of minors in New York and Palm Beach, Fl. and remains behind bars awaiting a bond hearing. Emily Michot emichot@miamiherald.com

Documents show Novelly was replaced as a director by James R. Burritt, at the time a hedge fund executive at Thomas H. Lee Capital but today managing director of alternative investments for California insurer Pacific Life. Burritt did not respond to numerous requests for comment.

A third director was Austrian national Marcus Klug, now a member of the governing board of Bundespensionskasse AG, a large Austrian pension fund. Reached by phone he confirmed he was a director when he worked for an Austrian insurance company that had invested in Liquid Fund, leaving the post in 2005.

Directorships of this company were not the same as a directorship of a brick-and-mortar company and instead were part of the structure of the investment vehicle.

“There was neither a physical board meeting or a call between board members,” Klug explained, adding of Epstein, “I never met him.”

After publication, Appleby responded, saying the release of documents was due to an external hack rather than an internal leak.

The story has been updated to indicate that Jeffrey Epstein was denied bail, corrected to reflect that some of the referenced documents came from the Swiss Leaks database, and to correct that in 1997 Epstein first appears in a bank client profile in Swiss Leaks, not Appleby in the Paradise Papers.

McClatchy D.C. data reporter Ben Wieder contributed to this report.
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Investigative reporter Kevin G. Hall shared the 2017 Pulitzer Prize for the Panama Papers. He was a 2010 Pulitzer finalist for reporting on the U.S. financial crisis and won of the 2004 Sigma Delta Chi for best foreign correspondence for his series on modern-day slavery in Brazil. He is past president of the Society of American Business Editors and Writers.
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Nicholas Nehamas is an investigative reporter at the Miami Herald, where he was part of the Pulitzer Prize-winning team that broke the Panama Papers in 2016. He and his Herald colleagues were also named Pulitzer finalists in 2019 for the series “Dirty Gold, Clean Cash.” He joined the Herald in 2014.
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