Why Would the State Department Rent a Townhouse out to Jeffrey Epstein? Is the Blackmail Story Even More Plausible?

The State Department Once Rented A Townhouse Seized From Iran To Jeffrey Epstein — Then Sued Him For Subletting It

The now-forgotten case — laid out in newspaper clips from the time and extensive court documents — offers a glimpse into a strange facet of Epstein’s life at the time, and constitutes an early example of Epstein popping up in the media as a rich and connected but mysterious New York figure.

Beginning in February 1992, Epstein rented a former Iranian government building that had been taken over by the State Department during the Iranian revolution, at 34 East 69th Street in one of Manhattan’s most expensive neighborhoods, and at a rate of $15,000 a month.

But things went sour when the government sued Epstein in the Southern District of New York, alleging that he had at one point failed to pay the rent on time and had violated the lease by moving out in early 1996 and subletting the place without the State Department’s permission. His subtenant was Ivan Fisher, a New York City criminal defense lawyer who had famously defended members of the French Connection and Pizza Connection drug rings. The government also sued Fisher.

A lawyer for Epstein did not respond to a request for comment, and attempts to reach Fisher were unsuccessful.

A New York Daily News article from the time, headlined “Lawyer Pays Not A Cent For Palatial East Side Digs,” said Fisher had stopped paying rent after learning that the State Department had terminated Epstein’s lease as a result of the conflict over Fisher’s subtenancy, and was thus living in the home for free.

“I’m the perfect tenant,” Fisher told the Daily News. The paper described the home’s opulence: “carved oak doors, a white marble foyer, three kitchens, three bedrooms, a library with floor-to-ceiling bookcases, a steam room, 19th-century chandeliers, brass sconces, and a white marble central staircase.” “I pray to God I can stay,” Fisher told the Daily News.

Epstein is described in the story as a “Palm Beach, Fla., financial advisor.” The incident is also briefly mentioned in Vicky Ward’s 2003 Vanity Fair profile of Epstein.

The government’s complaint rested on its assertion that Epstein had not received permission before installing Fisher as the subtenant, and its grievance with Epstein was only intensified by his charging Fisher $20,000 a month for the rent when State was charging $15,000 — netting Epstein a monthly profit.

The voluminous court documents in the case include a later-amended complaint by the government, which added more defendants to the suit — a clutch of other lawyers whom, the government alleged, were in turn subletting office space from Fisher. In a sworn statement, one of those lawyers, Lawrence Gerzog, told the court that he had given Fisher free legal services in exchange for office space, among several other lawyers.

The government eventually moved to evict Fisher, and the court ordered Fisher and Epstein — who in the course of the process were eventually involved in litigation against each other — to pay the back rent and to vacate the premises. An eviction order was served on July 16, 1998, and the marshal noted on the service receipt that the tenants had moved out.

Photo of a New York Daily News story

A story on the case in the New York Daily News, Dec. 23, 1997.

Getting there wasn’t an easy process for the State Department, which had begun by exchanging strongly worded letters with Epstein’s lawyer, Jeffrey Schantz. These were included in the court filings.

“As you are aware, Mr. Epstein’s apparent departure from the house and his failure to make timely rental payments in February and March of this year have been matters of serious concern to this office,” wrote Thomas E. Burns Jr., then the deputy director of the Office of Foreign Missions, in April 1996 in a letter attached to court filings. Burns wrote that the OFM had already found someone to take over the lease from Epstein, a developer named Xenophon Galinas, and that they would not approve the sublease to Fisher.

In June, Burns wrote again, this time directly to Epstein, to notify him that he had violated the lease by leaving the property and subletting it and give him 30 days to kick Fisher out and move in again himself. In August, Burns wrote again to tell Epstein that because Fisher was still there, the State Department was ending the lease. At the end of October, the government filed suit.

Epstein was accused of carrying out an effort to put someone else in the house in his stead without clearing it with the State Department. When Richard C. Massey, an OFM official who had been the point person for Epstein’s lease, was deposed in 1997 by the defendants’ lawyers, he told them Epstein had appeared to make a concerted effort to put someone else in the property without State knowing. “Mr. Epstein was shopping the property around town without our knowledge, all over town,” Massey said. “We had calls from real estate agents who asked us about it. I do not know how many people in the City of New York had a copy of Mr. Epstein’s lease.”

Massey was not able to be reached for comment.

What was Epstein up to? Why had he abandoned the decadent mansion so abruptly and moved out without getting permission to sublet? Epstein made it publicly known when he was moving out, telling the New York Times in January 1996 that the mansion on East 71st Street that would become famous in the context of his alleged crimes was now his. It belonged to Epstein’s client and mentor Les Wexner. It’s unclear how much Epstein paid for the house, if anything, as it was reportedly transferred without a purchase price from a trust linked to both him and Wexner to a company controlled by Epstein.

Fisher, who reportedly once counseled law students to look into a mirror and practice telling potential clients their retainer was $100,000, was banned from practicing in federal court in the Southern District of New York in 2013 after a court grievance committee ruled that he had stolen money from a client.

 

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Was Jeffrey Epstein Running a Blackmail Scheme Under Cover of a Hedge Fund? Who Were His Investors?

Photo-Illustration: Intelligencer. Photos: Patrick McMullan via Getty Images

Long before Jeffrey Epstein pleaded guilty to prostitution charges in Florida more than a decade ago, his fellow Palm Beach resident and hedge-fund manager Douglas Kass was intrigued by the local gossip about his neighbor.

“I’m hearing about the parties, hearing about a guy who’s throwing money around,” says Kass, president of Seabreeze Partners Management. While stories about young girls swarming Epstein’s waterfront mansion and the sex parties he hosted for the rich and powerful were the talk of the town, Kass was more focused on how this obscure person, rumored to be managing billions of dollars, had become so wealthy without much of a track record.

Kass was well-connected on Wall Street, where he’d worked for decades, so he began to ask around. “I went to my institutional brokers, to their trading desks and asked if they ever traded with him. I did it a few times until the date when he was arrested,” he recalls. “Not one institutional trading desk, primary or secondary, had ever traded with Epstein’s firm.”

When a reporter came to interview Kass about Bernie Madoff shortly before that firm blew up in the biggest Ponzi scheme ever, Kass told her, “There’s another guy who reminds me of Madoff that no one trades with.” That man was Jeffrey Epstein.

“How did he get the money?” Kass kept asking.

For decades, Epstein has been credulously described as a big-time hedge-fund manager and a billionaire, even though there’s not a lot of evidence that he is either. There appears little chance the public is going to get definitive answers anytime soon. In a July 11 letter to the New York federal judge overseeing Epstein’s sex-trafficking case, Epstein’s attorney offered to provide “sealed disclosures” about Epstein’s finances to determine the size of the bond he would need to post to secure his release from jail pending trial. His brother, Mark, and a friend even offered to chip in if necessary.

Naturally, this air of mystery has especially piqued the interest of real-life, non-pretend hedge-funders. If this guy wasn’t playing their game — and they seem pretty sure he was not — what game was he playing? Intelligencer spoke to several prominent hedge-fund managers to get a read on what their practiced eyes are detecting in all the new information that is coming to light about Epstein in the wake of his indictment by federal prosecutors in New York. Most saw signs of something unsavory at the heart of his business model.

To begin with, there is much skepticism among the hedgies Intelligencer spoke with that Epstein made the money he has — and he appears to have a lot, given a lavish portfolio of homes and private aircraft — as a traditional money manager. A fund manager who knows well how that kind of fortune is acquired notes, “It’s hard to make a billion dollars quietly.” Epstein never made a peep in the financial world.

Epstein was also missing another key element of a typical thriving hedge fund: investors. Kass couldn’t find any beyond Epstein’s one well-publicized client, retail magnate Les Wexner — nor could other players in the hedge-fund world who undertook similar snooping. “I don’t know anyone who’s ever invested in him; he’s never talked about by any of the allocators,” says one billionaire hedge-fund manager, referring to firms that distribute large pools of money among various funds.

Epstein’s spotty professional history has also drawn a lot of attention in recent days, and Kass says it was one of the first things that raised his suspicions years ago. Now 66, Epstein didn’t come from money and never graduated from college, yet he landed a teaching job at a fancy private school (“unheard of,” says Kass) and rose through the ranks in the early 1980s at investment bank Bear Stearns. Within no time, Kass notes, Epstein was made a partner of the firm — and then was promptly and unceremoniously ousted. (Epstein reportedly left the firm following a minor securities violation.) Despite this “squishy work experience,” as Kass puts it, at some point after his quick exit, Epstein launched his own hedge fund, J. Epstein & Co., later renamed Financial Trust Co. Along the way, he began peddling the improbable narrative that he was so selective he would only work with billionaires.

Oddly, Epstein also claimed to do all the investing by himself while his 150 employees all worked in the back office — which Kass says reminds him of Madoff’s cover story. Though it now appears that Epstein had many fewer employees than he claimed, according to the New York Times:

Thomas Volscho, a sociology professor at the College of Staten Island who has been researching for a book on Mr. Epstein, recently obtained [a 2002 disclosure] form, which shows [Epstein’s] Financial Trust had $88 million in contributions from shareholders. In a court filing that year, Mr. Epstein said his firm had about 20 employees, far fewer than the 150 reported at the time by New York magazine.

Given this puzzling set of data points, the hedge-fund managers we spoke to leaned toward the theory that Epstein was running a blackmail scheme under the cover of a hedge fund.

How such a scheme could hypothetically work has been laid out in detail in a thread on the anonymous Twitter feed of @quantian1. It’s worth reading in its entirety, but in summary it is a rough blueprint for how a devious aspiring hedge-fund manager could blackmail rich people into investing with him without raising too many flags.

Kass and former hedge-fund manager Whitney Tilson both emailed the thread around in investing circles and both quickly discovered that their colleagues found it quite convincing. “This actually sounds very plausible,” Tilson wrote in an email forwarding the thread to others.

“He somehow cajoled these guys to invest,” says Kass, speaking of hypothetical blackmailed investors who gave Epstein their money to invest, but managed to keep their names private.

The fact that Epstein’s fund is offshore in a tax haven — it is based in the U.S. Virgin Islands — and has a secret client list both add credence to the blackmail theory.

So what did Epstein do with the money he did have under his management, setting aside the questions of how he got it and how much he had? One hedge-fund manager speculates that Epstein could have just put the client money in an S&P 500 index fund, perhaps with a tax dodge thrown in. “I put in $100 million, I get the S&P 500 minus some fees,” he says, speaking of a theoretical client’s experience. Over the past few decades, the client would have “made a shitload” — as would Epstein. A structure like that wouldn’t have required trading desks or analysts or complex regulatory disclosures.

Kass has kicked around a similar idea: Maybe Epstein just put all the client money in U.S. treasuries — the simplest and safest investment there is, and the kind of thing one guy actually can do by himself.

If the blackmail theory sounds far-fetched, it’s worth keeping in mind that it was also floated by one of Epstein’s victims, Virginia Roberts Giuffre. “Epstein … also got girls for Epstein’s friends and acquaintances. Epstein specifically told me that the reason for him doing this was so that they would ‘owe him,’ they would ‘be in his pocket,’ and he would ‘have something on them,’” she said in a court affidavit, according to the investigative series in the Miami Herald that brought the case back to the public’s attention late last year.

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Epstein and Acosta… Acosta Resigns, Epstein’s Victims Still Entitled to Justice

Trump speaks after Labor Secretary Acosta resigns

Jeffrey Epstein, Alex Acosta, Cutting the Budget for Trafficking Investigations and How Many Children at Risk?

Image result for ALEX ACOSTA AND EPSTEIN

VIDEO: https://publish.dvlabs.com/democracynow/360/dn2019-0711.mp4?start=3214.0

Alex Acosta Enabled Jeffrey Epstein’s Sex Crimes. Now He’s Gutting Funding for Trafficking Victims 

During a press conference Wednesday, Labor Secretary Alexander Acosta dismissed calls for his resignation and defended the 2008 plea deal given to the billionaire serial child sex abuser Jeffrey Epstein while he was the U.S. attorney in Florida. Acosta has also come under fire for his proposal to cut funding for victims of sex trafficking. His 2020 budget proposal for the Department of Labor includes an almost 80% decrease in funds for the Bureau of International Labor Affairs, the office tasked with fighting child sex trafficking. Critics of the proposal argue it would effectively dismantle many programs aimed at preventing child sex trafficking and put large numbers of children at risk. We speak with Taina Bien-Aimé, executive director of the Coalition Against Trafficking in Women.

Transcript
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now! I’m Amy Goodman, with Nermeen Shaikh.

NERMEEN SHAIKH: Labor Secretary Alexander Acosta is rejecting calls to resign and is defending his role in a 2008 plea deal given to the wealthy serial child sex abuser Jeffrey Epstein. At the time, Acosta was a U.S. prosecutor in Florida. The Miami Herald has described the plea deal as, quote, “one of the most lenient deals for a serial child sex offender in history.”

AMY GOODMAN: Acosta has also come under fire for his proposal to cut funding for victims of sex trafficking. His 2020 budget proposal for the Department of Labor includes an almost 80% decrease in funds for International Labor Affairs Bureau. Acosta was questioned when he held an almost hour news conference to justify the extremely lenient deal he made with Epstein back in 2008 when he was the U.S. attorney in Florida. But this is what he said when questioned about the budget around sex trafficking.

YAMICHE ALCINDOR: As labor secretary, you’ve tried repeatedly to cut a program that deals with human trafficking in the Labor Department by up to 80%, going before Congress advocating for that. Why should people trust you to focus on human trafficking and protect victims, if you’ve done that? And I’d like a follow-up question.

LABOR SECRETARY ALEXANDER ACOSTA: So, you’re referring to grants that go to foreign countries, for foreign country labor-related work. As part of the budget every year, those grants have been removed, as have other grants for foreign countries. And let me just add, as part of the budget every year, those grants are put right back in by Congress. This is what happens in Washington. And I fully suspect that those grants will remain in this year.

AMY GOODMAN: To talk more about Alex Acosta’s record, we’re joined now by Taina Bien-Aimé, executive director of the Coalition Against Trafficking in Women.

We’re not as much talking right now about the case of Jeffrey Epstein, which we talked about over the last few days, but this issue of his cutting of the budget. Can you explain what this means?

TAINA BIEN-AIMÉ: So, the Department of Labor has a bureau called ILAB, which is the International Labor Affairs Bureau. And their primary responsibility is to combat forced labor, child trafficking, both labor and sex trafficking, and human trafficking in general. So, what Secretary Acosta is saying, that it goes primarily—that this money goes primarily to international programs, is correct, but it also goes to domestic programs.

So, if he slashes—so, he has a budget of $68 million. What he is proposing is for the bureau, ILAB, to be reduced by 80%, to $18 million. Congress will fight him on that; the Appropriations Committee will fight him on that. But what it means is that we are faced with an administration that wants to reduce its efforts to this very complex human rights violation called human trafficking. So, it’s not just jeopardizing the work that we are doing to combat child sex trafficking, but also child labor trafficking. So, many of—the State Department also works on human trafficking and also provides services and programs to combat it, but they rely on DOL, on the Department of Labor, and specifically for child labor trafficking.

So, for instance, cocoa production, right? So, there are three major U.S. companies—Hershey, Mars and Nestlé—that cannot even—they committed to ensuring to the consumers that no child labor trafficking is involved in the production of cocoa. What will happen to those commitments? Right? We don’t even know whether they are fulfilling their commitments to ensure that whenever you buy a bag of M&M’s or Skittles, that that doesn’t involve child trafficking.

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Epstein – Court Ordered Check-In Skipped and NYPD Ambivalent

NYPD let convicted pedophile Jeffrey Epstein skip judge-ordered check-ins

Convicted pedophile Jeffrey Epstein never once checked in with city cops in the eight-plus years since a Manhattan judge ordered him to do so every 90 days — and the NYPD says it’s fine with that.

After being labeled a worst-of-the-worst, Level 3 sex offender in 2011, Epstein should have reported in person to verify his address 34 times before he was arrested Saturday on federal child sex-trafficking charges.

Violating requirements of the state’s 1996 Sex Offender Registration Act — including checking in with law enforcement — is a felony punishable by up to four years in prison for a first offense.

Subsequent violations carry a sentence of up to seven years each.

But the NYPD hasn’t required the billionaire financier — who owns a $77 million Upper East Side townhouse — to check in since he registered as a sex offender in New York over the controversial 2008 plea bargain he struck in Florida amid allegations he sexually abused scores of underage girls in his Palm Beach mansion.

Several current and former high-ranking NYPD officials were shocked to learn from The Post that the department had given Epstein a pass on his periodic check-ins, with one saying, “It makes no sense.”

“The NYPD can’t modify a court order,” a source said. “If the judge says he has to report here, he has to report here.”

Another source said Epstein was “supposed to go to SOMU,” an acronym for the NYPD’s Sex Offender Monitoring Unit, located in the Manhattan criminal courthouse at 100 Centre St.

“If he didn’t, then he’s in violation and they could have arrested him,” the source said.

The NYPD maintains that Epstein, 66, wasn’t required to check in with New York cops because he claims his primary residence is a private island, Little St. James Island, in the US Virgin Islands.

But state Supreme Court Justice Ruth Pickholz considered and rejected that very argument by defense lawyer Sandra Musumeci during the Jan. 18, 2011, hearing.

Musumeci insisted that Epstein wasn’t a “resident of New York” and that his seven-story townhouse at 9 E. 71st St. was a “vacation home” at which he had no plans to ever stay “longer than a period 10 days.”

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