Following the Money
July 9, 2019

There are lots of gross and prurient aspects to the lurid case unfolding around Jeffrey Epstein, a mysterious, well-connected, and evidently very wealthy self-professed financier, convicted sex offender, and alleged sexual abuser and trafficker of young girls, but there are also lots of basic questions. For one: Where did Epstein get all his money?

Until Epstein flew former President Bill Clinton to Africa with Kevin Spacey and Chris Tucker in 2002, few people paid him any heed. Then a 2002 profile of Epstein in New York laid out his origin story: Born and raised in Coney Island, Brooklyn; attended but did not graduate from Cooper Union and NYU; was recruited to Bear Stearns while teaching high school calculus and physics at the tony Dalton School; worked his way up to partner; left Bear Stearns under mysterious circumstances in 1981; founded his own wealth management company in which he would take on only billionaire clients who agreed to hand him total control of their money; yada yada yada multiple mansions, a fleet of private jets, his own island, and powerful friends.

In 2003, a Vanity Fair profile by Vicky Ward tore a few holes in that story, and in 2015, Ward wrote in The Daily Beast that in her extensive reporting on Epstein "no one I spoke to believed" that "the hidden source of his wealth" was "managing the money of billionaires and taking a commission." Some of Epstein's friends "speculated that retailer Les Wexner was the real source of Epstein's wealth," Ward wrote, but while the billionaire founder of Victoria's Secret is Epstein's only known client — or former client — Wexner wouldn't comment on the idea.

A decade ago, Epstein's lawyers said his wealth was in the nine-figure range, but "today, so little is known about Epstein's current business or clients that the only things that can be valued with any certainty are his properties," including the $77 million Manhattan mansion federal agents raided over the weekend and his properties in New Mexico, Paris, Palm Beach, and the U.S. Virgin Islands, where his "black box" of a company is now incorporated, Bloomberg News reports. There's even mystery about the Manhattan mansion: The only New York property record on the 1990s transfer of the mansion from Wexner to Epstein was filed in 2011, with a transfer price of $0, Bloomberg says. "Epstein signed for both sides of the transaction." Peter Weber

April 30, 2019

Lawyers representing President Trump, his three grown children, and seven Trump Organization companies filed a suit late Monday in a bid to prevent Deutsche Bank and Capital One from complying with congressional subpoenas. Two weeks ago, the House Financial Services Committee and House Intelligence Committee subpoenaed the two banks, requesting information reportedly including potential evidence of money laundering by people in Russia and Eastern Europe.

The lawsuit, filed in federal court in Manhattan, is the latest bid by Trump to shield his personal and business financial records from House Democrats and the public. He has already asked the Treasury Department not to hand over his tax returns and sued his accounting firm and House Oversight Committee Chair Elijah Cummings (D-Md.) to thwart another subpoena.

Monday's lawsuit argues that the House subpoenas "have no legitimate or lawful purpose" and instead are meant to "harass" Trump and "cause him political damage." In a statement, Trump's lawyers Marc Mukasey and Patrick Strawbridge called the subpoenas a "sweeping, lawless, invasion of privacy."

Claiming the House subpoenas are illegitimate or politically motivated is a "frivolous argument, even if it's true," Stanford Law professor David Alan Sklansky tells The Washington Post. "That is not a basis for quashing a subpoena," and in fact, "that's how subpoena power works — it's about getting information that people would like to be kept private." Still, while "this isn't a close legal question," he added, it could delay the House investigation.

The heads of the House committees, Reps. Maxine Waters (D-Calif.) and Adam Schiff (D-Calif.), called the lawsuit "meritless" and "only designed to put off meaningful accountability as long as possible." A Deutsche Bank spokeswoman said the German bank, Trump's largest known lender, remains "committed to providing appropriate information to all authorized investigations and will abide by a court order regarding such investigations." Peter Weber

April 13, 2017

On Wednesday, Paul Manafort — President Trump's campaign manager from April through late August — said he will retroactively register with the Justice Department as a foreign agent for his work in Ukrainian politics, citing advice from federal authorities. But two reports on Wednesday also shed some light on Manafort's murky financial history in the U.S. and abroad.

First, The Associated Press reported that Manafort's political consulting firm in Virginia had received at least $1.2 million of the $12.7 million in secret money apparently earmarked for him by the political party of deposed Ukrainian President Viktor Yanukovych in a so-called Black Ledger discovered after Yanukovych's ouster. The money had been wired to Manafort's firms in two installments, in 2007 and 2009, through shell companies in Belize. Manafort, who had previously maintained that the ledger was fake, defended the payments on Wednesday, saying they were legal because they were made through wire transfers not cash, as Ukrainian lawmakers had alleged.

Also on Wednesday, The New York Times reported that Manafort filed papers to create a new shell company, Summerbreeze LLC, on Aug. 19, 2016 — the same day he was pushed out of the Trump campaign — and soon filled it with $13 million in loans from firms with ties to Trump and Ukraine. One loan of $3.5 million came from the private lending arm of Spruce Capital, co-founded by sometime Trump hotel developer Joshua Crane; the other, for $9.5 million, came from Federal Savings Bank of Chicago, headed by Trump economic adviser Stephen Calk. Both loans were reportedly unusual for the lending firms.

"The transactions raise a number of questions, including whether Mr. Manafort's decision to turn to Trump-connected lenders was related to his role in the campaign, where he had agreed to serve for free," The New York Times said. "They also shine a light on the rich real estate portfolio that Mr. Manafort acquired during and after the years he worked in Ukraine," including luxury houses in Los Angeles, homes in Virginia and Florida, and apartments and condos in New York, notably one in Trump Tower — a $3.7 million purchase that apparently endeared him to Trump.

The Treasury Department's financial crimes unit is investigating Manafort's offshore financial transactions in Cyprus, and he is also reportedly a major focus of the FBI's investigation into Russia's meddling in the U.S. presidential election. There is no evidence linking the new revelations to either of those inquiries, and Manafort hasn't been charged with any crime. Peter Weber

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