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Virgin Islands Will Subpoena Billionaire Investor in Epstein Case

Officials in the U.S. Virgin Islands want the billionaire investor Leon Black, one of the most powerful men on Wall Street, to hand over information about his decades-long business ties to the convicted sex offender Jeffrey Epstein.

The territory’s attorney general, Denise N. George, informed a local court on Thursday that she would issue civil subpoenas to Mr. Black, a founder of the private equity firm Apollo Global Management, and several entities connected to him, the chief clerk of the court said.

The subpoenas, copies of which were filed with the court, seek financial statements and tax returns for a number of entities, including Black Family Partners and Elysium Management, which oversee some of Mr. Black’s $9 billion fortune. Subpoenas will also go to Apollo and entities that help manage Mr. Black’s extensive art collection.

Mr. Black has said Mr. Epstein provided him with advice on tax strategy, estate planning and philanthropy, but has provided no details. A representative for Mr. Black said the financier had no further comment.

Mr. Black and his companies paid millions in fees to Southern Trust Company, which Mr. Epstein set up in the Virgin Islands in 2013, according to three people briefed on the matter who spoke on the condition of anonymity because they were not authorized to speak publicly.

Mr. Epstein had told territorial officials that Southern Trust was developing a DNA data-mining service, although he said the company would also have a “financial arm.” Financial reports filed with the territory show that Southern Trust collected $184 million in fees from 2013 to 2018, although it was not clear how much of that came from Mr. Black.

Mr. Black has said Mr. Epstein did no work for Apollo, which invests more than $300 billion for pension funds and other investors. The company said in a statement that Mr. Epstein did not do business with the firm.

Some of the subpoenas are for companies that Mr. Black, the chairman of the Museum of Modern Art, has used to build a collection that includes paintings by Edgar Degas, Henri Matisse and Pablo Picasso.

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Credit…Gabriella N. Baez for The New York Times

It was not clear when the subpoenas would be served; courts in the Virgin Islands are largely shut down because of the coronavirus pandemic.

The attorney general is seeking documents from Mr. Black related to Southern Trust and other companies and organizations that were controlled by Mr. Epstein, who died last summer in federal custody while facing federal sex-trafficking charges. His death was ruled a suicide.

The requests represent a significant step in Ms. George’s efforts to unravel the mystery of how Mr. Epstein amassed an estate valued at more than $600 million. They are part of a civil forfeiture suit she filed against his estate in January, claiming Mr. Epstein had misled government officials in the Virgin Islands to secure lucrative tax breaks for his businesses while engaging in sex trafficking and the abuse of underage girls.

Ms. George has also sent subpoenas to banks that handled Mr. Epstein’s money, including JPMorgan Chase and Deutsche Bank. Some of the payment information involving Mr. Black surfaced during a review by Deutsche Bank, according to one of the people briefed on the matter. Deutsche Bank recently reached a settlement with regulators in New York who found the bank had done little to vet Mr. Epstein’s financial dealings.

Mr. Black knew Mr. Epstein for more than two decades. Mr. Epstein was one of the original trustees of the Debra and Leon Black Family Foundation, which Mr. Black established in 1997, and stayed on the board for a decade.

Some prominent business figures — including Leslie H. Wexner, the retail mogul behind Victoria’s Secret — cut ties with Mr. Epstein after his 2008 conviction in Florida on a charge of soliciting prostitution from a minor, but Mr. Black did not.

In 2015, a company tied to the Black foundation donated $10 million to one of Mr. Epstein’s charitable organizations. And at Mr. Epstein’s urging, Mr. Black gave an anonymous $5 million donation to the MIT Media Lab, according to a university report, and several million to professors at Harvard University.

Mr. Black has said he was “completely unaware” of the activities that led to the sex-trafficking charges against Mr. Epstein.

Kitty Bennett contributed research.

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Virgin Islands Again Questions Epstein Estate Transactions

A top law enforcement official in the U.S. Virgin Islands contends a small bank set up there by the convicted sex offender Jeffrey Epstein engaged in a series of unexplained transactions involving tens of millions of dollars before and after his death.

The attorney general for the Virgin Islands, Denise N. George, said in a court filing last week that representatives for Mr. Epstein’s estate “have not explained these irregularities” over the transactions. Ms. George offered that as one reason she was opposed to lifting a criminal-activity lien she placed on much of the financier’s $600 million estate because of the federal sex-trafficking allegations against him before he died.

The transactions — totaling $39 million — involved Southern Country International, which Mr. Epstein established in 2014. The bank was an international banking entity permitted to handle money only from nondomestic customers, and Ms. George said some of the transactions appeared to violate the bank’s charter.

Andrew Tomback, one of a team of lawyers working for the estate, did not respond to a request for comment. But in an email included as an exhibit by Ms. George’s office, Mr. Tomback said the issues raised about the bank transactions were “based upon both incomplete information and faulty assumptions, and thus are incorrect.”

In the filing, made Thursday, Ms. George said her office could find no record of a $15.5 million loan the estate said Southern Country had made to Mr. Epstein to pay for his criminal defense. The estate had cited the loan as the reason for some $12 million in net transfers to the bank in December.

Her office also said there was an unexplained transfer of $24 million from the bank to Southern Trust, a company that Mr. Epstein founded and said was engaged in DNA research and analysis.

In April, the estate said Southern Country had repaid a loan late last year to a company associated with Mr. Epstein’s estate, but that filing did not disclose the name of the company or the amount of the payment.

“It is perplexing that one set of transactions is confirmed by relevant records, but that the questioned $15.5 million loan is not,” lawyers for Ms. George’s office wrote in a letter included in the exhibits.

In the same letter, the lawyers also noted that accounts controlled by Darren Indyke and Richard Kahn, the coexecutors of Mr. Epstein’s estate, had deposited about $9 million into the bank in November. Both men were longtime business advisers to Mr. Epstein.

Ms. George’s office imposed the lien after filing a civil-forfeiture lawsuit in January against Mr. Epstein’s estate. Her office has previously criticized the estate for the lack of transparency about its finances. Last month, however, she dropped her objections to the estate’s plan to establish a compensation fund for Mr. Epstein’s accusers.

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Attorney General Sees Too Much Secrecy in Epstein Estate

Some of the same furtive techniques that Jeffrey Epstein employed in life are showing up in the litigation over dividing up the wealth he left behind when he died.

There are mysterious companies, lingering nondisclosure agreements and contractual clauses that some lawyers fear could protect anyone who took part in Mr. Epstein’s wrongdoing.

The estate’s lawyers say they have a plan to fairly distribute money to dozens of women who have accused Mr. Epstein of sexually abusing them as teenagers. But the attorney general of the U.S. Virgin Islands, where Mr. Epstein built a complex web of corporate entities, says Mr. Epstein’s money is still buying silence.

And in the middle is a fortune estimated at well over a half-billion dollars.

“We have a lot of concerns with respect to the transparency of the estate and its finances and the accounting of the estate,” the attorney general, Denise N. George, said in an interview last month.

Ms. George filed a civil forfeiture lawsuit against the estate in January, roughly five months after Mr. Epstein committed suicide while being held in federal custody in Manhattan after his arrest on sex trafficking charges. She said she sued to protect the interests of Mr. Epstein’s accusers and recoup some of the money that Mr. Epstein made during his two decades in the Virgin Islands.

The estate has insisted it is acting in the best interest of Mr. Epstein’s accusers. But it has also provided an incomplete accounting of his finances, according to records reviewed by The New York Times.

At least one business — IGO Company L.L.C., a corporate entity established by Mr. Epstein in December 2006 — was left out of the estate’s court filings. The company, which lists Mr. Epstein as its sole owner, was still active and in good standing as of Monday, according to a U.S. Virgin Islands government site.

Lawyers for the estate did not respond to a request for comment. The co-executors of the estate are Darren Indyke, a lawyer, and Richard Kahn, an accountant. Both men worked closely with Mr. Epstein for many years and were listed as officers for some of his businesses.

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Credit…Gabriella N. Baez for The New York Times
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Credit…Gabriella N. Baez for The New York Times

Much of the fighting between the estate and Ms. George’s office involves a plan to establish a victims’ compensation fund, which would allow accusers to receive payments from the estate without a potentially costly court case. The estate’s representatives say the proposed fund — which would be set up with the help of the specialist who ran the compensation program for victims of the Sept. 11, 2001, terrorist attacks — would allow accusers to receive money quickly and privately.

But Ms. George said the estate wanted to attach too many strings to those payments.

On April 7, Ms. George’s office told the probate court handling Mr. Epstein’s will that she and the estate had reached an impasse over the estate’s demand that victims who take part in the fund agree to a broad release that would bar them from suing any party “whether they participated negligently or intentionally in wrongdoing themselves.”

To Ms. George, the estate’s conduct was a reminder of the legal maneuvers that surrounded Mr. Epstein’s guilty plea 12 years ago to soliciting prostitution from a minor in Florida. In 2007, federal prosecutors agreed to a wide-ranging nonprosecution agreement that covered Mr. Epstein’s named and unnamed co-conspirators. (A federal appeals court this month rejected a legal challenge brought by one of his victims to the agreement.)

Ms. George’s office said the estate now wanted to “secure similarly broad protection for Epstein’s compatriots-in-crime from their victims.”

Lawyers for the estate reject that argument. In their response, they said Ms. George had mischaracterized the situation and said two lawyers representing several accusers were ready to move forward with the fund. The estate’s lawyers contend the liability release is “modeled on releases employed in multiple voluntary compensation programs.” Its intent, they say, is to make sure a victim does not double-dip by getting compensation from the fund and then suing an individual affiliated with the estate who might be entitled to be legally reimbursed by the estate.

The particulars of how Mr. Epstein made his millions have long been a mystery, in particular after his 2008 conviction. Financial filings the estate has made so far have raised as many questions as they have answered.

In January, the estate filed a required report that, along with routine transactions to pay bills and other expenses, showed the estate had transferred more than $12 million to Southern Country International, a little-known private bank Mr. Epstein had established in 2014.

The magistrate judge overseeing the probate of the will, Carolyn Hermon-Purcell, questioned the estate’s lawyers about the transfers and asked for a fuller accounting. The estate has not yet filed an explanation; the territory’s courts have granted blanket extensions because of the coronavirus outbreak.

But according to four people familiar with the matter, the estate’s $12 million payment to the bank involved preparations for Mr. Epstein’s criminal case. Mr. Epstein used the bank to pay a $12 million retainer fee to the criminal defense attorney Reid Weingarten, according to the people, who spoke on the condition of anonymity because the matter has not been made public.

In mid-December, Mr. Weingarten’s law firm, Steptoe & Johnson, returned the unused portion of that retainer — roughly $11 million, according to the estate’s first quarterly filing. The next day the estate sent that money to the bank.

What happened to the money in Southern Country after that is not clear; the estate reported the bank had a year-end balance of just $500,000.

Southern Country is an unusual kind of bank: an international banking entity, which is limited to conducting business for customers overseas. Mr. Epstein was approved for his license in 2014, but the bank had not commenced doing business as of April 2018, according to a letter the bank sent to its regulator.

According to two people briefed on the matter, Mr. Epstein began to move money to Southern Country last spring after Deutsche Bank, his longtime bank, decided to sever all ties with him in response to a series of stories about Mr. Epstein by The Miami Herald.

Ms. George’s office is small compared with her mainland counterparts, and she has bulked up its resources by hiring a forensic accountant and outside lawyers with Motley Rice, a large plaintiffs’ litigation firm. But it has been active.

In recent weeks, Ms. George’s office sent a subpoena seeking bank records for Mr. Epstein’s businesses in the Virgin Islands, according to two people briefed on the matter. She also subpoenaed some records from the Virgin Islands Economic Development Authority, the government agency that granted lucrative tax benefits to Mr. Epstein’s companies, said Tracy Bhola, an authority lawyer.

According to one person familiar with the matter, Ms. George’s office has also made a demand for information from Mr. Epstein’s former girlfriend and business associate Ghislaine Maxwell, who recently filed a lawsuit against the estate asking it to cover her legal fees for any claims brought against her by his accusers.

Ms. George’s office has also reached out to some of Mr. Epstein’s former employees in the Virgin Islands. She said her office was trying to navigate around nondisclosure agreements that Mr. Epstein had signed with many of his them. She said the estate should commit to releasing the employees from those agreements.

“Just the existence of an N.D.A. casts a shadow or chilling effect on anyone speaking freely,” she said.

While many of Mr. Epstein’s companies — including IGO Company L.L.C. — continue to exist on paper, there is little left of their physical operations.

Those include Southern Trust, once Mr. Epstein’s main business venture, which generated $300 million in profits in just six years. Mr. Epstein had said it was a DNA research firm, although Ms. George said her office had found no evidence it engaged in that kind of work. Southern Trust alone is valued at $234 million, and the estate has yet to disclose where most of its assets are being held.

For months after his death, employees still showed up at the company’s office in the American Yacht Harbor club on St. Thomas. That stopped in late February, and by the start of last month the office doors were secured with a padlock.