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20 - ORGANIZATIONS/PRIVATE/Financial Trust Company.md
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@ -53,7 +53,7 @@ The articles do not name Epstein. Epstein's own 2009 verified complaint against
According to documents released by the [[Virgin Islands Economic Development Authority]] in February 2020, Epstein was first granted tax benefits for Financial Trust Co., Inc. in 1999 by the authority's predecessor, the Virgin Islands [[Industrial Development Commission]]. The certificate, signed by commission director [[Frandelle Gerard]], granted a 90 percent exemption from income tax and 100 percent exemptions from gross-receipts and excise taxes for ten years, and a 100 percent exemption of taxes "on real property used for the business of financial and economic consulting, money management, investment advisory and fiduciary services for its clients."[^5]
The certificate was amended in 2012 under the [[Economic Development Commission]], which added "special conditions": at least 100,000 dollars a year to "various Virgin Islands charities, youth sports organizations and clubs; and symposiums held in the Virgin Islands," scholarships of 10,000 dollars a year for five years at Kean and Charlotte Amalie high schools, 22,500 dollars to the commission's Workforce Development fund, and 3,000 dollars a year to the Territorial Scholarship fund. The amended certificate was signed by the commission's chairman, [[Albert Bryan]], then serving under Governor [[John de Jongh]]; Bryan also signed the later certificate for Southern Trust Company and was elected governor in 2018. De Jongh's wife, [[Cecile de Jongh]], worked for Epstein from 1998 and was listed as the office manager of both companies.[^5][^6]
The certificate was amended in 2012 under the [[Economic Development Commission]], which added "special conditions": at least 100,000 dollars a year to "various Virgin Islands charities, youth sports organizations and clubs; and symposiums held in the Virgin Islands," scholarships of 10,000 dollars a year for five years at Kean and [[Charlotte Amalie]] high schools, 22,500 dollars to the commission's Workforce Development fund, and 3,000 dollars a year to the Territorial Scholarship fund. The amended certificate was signed by the commission's chairman, [[Albert Bryan]], then serving under Governor [[John de Jongh]]; Bryan also signed the later certificate for Southern Trust Company and was elected governor in 2018. De Jongh's wife, [[Cecile de Jongh]], worked for Epstein from 1998 and was listed as the office manager of both companies.[^5][^6]
In January 2020 the authority's assistant chief executive, [[Wayne Biggs Jr.]], told the Virgin Islands Daily News that Epstein "was in the program before he was convicted of any sex crimes under Financial Trust. And he changed from Financial Trust to Southern Trust." Authority officials declined to disclose how much any of the commission's 72 beneficiary companies received in tax breaks each year, and the value of the Financial Trust exemptions was not published at the time. The same reporting noted that Epstein owned 50 percent of [[American Yacht Harbor]] in Red Hook, where Southern Trust kept its office, and that the marina was still receiving commission tax breaks in 2020.[^5]
@ -61,17 +61,17 @@ In January 2020 the authority's assistant chief executive, [[Wayne Biggs Jr.]],
Financial Trust was Epstein's principal vehicle for his long relationship with Bear Stearns, where he had worked from 1976 to 1981. In an August 5, 2009 verified complaint filed in the [[District Court of the Virgin Islands]], the company stated that "Epstein has had a relationship with Bear Stearns beginning in 1976. Since 1981, Epstein has conducted hundreds of millions of dollars in transactions with Bear Stearns for his own, as well as his clients', accounts and he conducted this business with the senior management of Bear Stearns." Financial Trust then held 120,000 Bear Stearns shares in a [[Merrill Lynch]] brokerage account, and Epstein alone made its investment decisions on the stock.[^2]
The complaint alleged that Bear Stearns induced Financial Trust to keep its shares because "other large investors would view Financial Trust's sale of a significant block of shares of Bear Stearns stock as a loss of confidence in Bear Stearns by a company owned and managed by a person seen by such large investors as close to the firm," at a time when the firm's valuations were being examined by the press, "including Landon Thomas at the [[New York Times]]," after the collapse of two [[Bear Stearns Asset Management]] hedge funds in the summer of 2007. Financial Trust sold 56,350 shares on August 6, 2007 at 101.38 dollars. That day, according to the complaint, Epstein spoke by telephone from the Virgin Islands with chief executive [[James Cayne]], who told him the problems were "contained to those two funds," described a pending one billion dollar capital infusion from [[CITIC Group|China Citic Group]], and advised him to "hold tight." The company sold its remaining 120,000 shares for 34.99 dollars (20,000 shares, March 14, 2008) and 3.41 dollars (100,000 shares, March 17, 2008) as [[JPMorgan Chase]] took over the firm. The complaint sought compensatory and punitive damages for fraudulent and negligent misrepresentation, naming Cayne, [[Alan Greenberg]], [[Warren Spector]], [[Samuel Molinaro]] and [[Alan Schwartz]] as the officers whose statements Epstein had relied on. It was verified by the company's vice president and filed by the St. Croix lawyer [[John K. Dema]].[^2]
The complaint alleged that Bear Stearns induced Financial Trust to keep its shares because "other large investors would view Financial Trust's sale of a significant block of shares of Bear Stearns stock as a loss of confidence in Bear Stearns by a company owned and managed by a person seen by such large investors as close to the firm," at a time when the firm's valuations were being examined by the press, "including Landon Thomas at the [[New York Times]]," after the collapse of two [[Bear Stearns Asset Management]] hedge funds in the summer of 2007. Financial Trust sold 56,350 shares on August 6, 2007 at 101.38 dollars. That day, according to the complaint, Epstein spoke by telephone from the Virgin Islands with chief executive [[James Cayne]], who told him the problems were "contained to those two funds," described a pending one billion dollar capital infusion from [[CITIC Group|China Citic Group]], and advised him to "hold tight." The company sold its remaining 120,000 shares for 34.99 dollars (20,000 shares, March 14, 2008) and 3.41 dollars (100,000 shares, March 17, 2008) as [[JPMorgan Chase]] took over the firm. The complaint sought compensatory and punitive damages for fraudulent and negligent misrepresentation, naming Cayne, [[Alan Greenberg]], [[Warren Spector]], [[Samuel Molinaro]] and [[Alan Schwartz]] as the officers whose statements Epstein had relied on. It was verified by the company's vice president and filed by the [[St. Croix]] lawyer [[John K. Dema]].[^2]
Epstein was also an investor in the funds themselves. Fox Business reported in 2019 that he had put about 60 million dollars into the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage Fund, "making him one of its largest investors," and that a plan for investors to take control of the fund was put to him in the summer of 2007 and "fizzled." The [[Securities and Exchange Commission]] charged the funds' managers, [[Ralph Cioffi]] and [[Matthew Tannin]], in June 2008 with misleading investors before the funds collapsed in June 2007 with losses of about 1.8 billion dollars; the release does not name individual investors.[^7][^8]
### Apollo Shares and the Leon Black Payments
The law firm [[Dechert]], reporting to the conflicts committee of Apollo Global Management in January 2021, found that "in 2011, one of Epstein's entities, Financial Trust Company, purchased 263,257 shares of Apollo's stock in its initial public offering" through a directed share offering program, and that the shares "appear to have later been transferred to a second Epstein entity, Southern Financial LLC, and appear to have been held through at least September 2019." The same review found that Apollo's co-founder [[Leon Black]] paid Epstein 158 million dollars for work performed from 2012 through 2017; the written 2013 service agreement it described was with Southern Trust Company, Inc., which received the first payments. Dechert reported no evidence that Black paid Epstein for anything other than "legitimate advice."[^9]
The law firm [[Dechert]], reporting to the conflicts committee of Apollo Global Management in January 2021, found that "in 2011, one of Epstein's entities, Financial Trust Company, purchased 263,257 shares of Apollo's stock in its initial public offering" through a directed share offering program, and that the shares "appear to have later been transferred to a second Epstein entity, [[Southern Financial LLC]], and appear to have been held through at least September 2019." The same review found that Apollo's co-founder [[Leon Black]] paid Epstein 158 million dollars for work performed from 2012 through 2017; the written 2013 service agreement it described was with Southern Trust Company, Inc., which received the first payments. Dechert reported no evidence that Black paid Epstein for anything other than "legitimate advice."[^9]
### The 2007 Grand Jury Subpoena
The company was subpoenaed in the federal investigation that ended in Epstein's [[Epstein non-prosecution agreement|non-prosecution agreement]]. The investigation timeline kept by the [[U.S. Attorney's Office for the Southern District of Florida]] records subpoenas on May 31, 2007 to Financial Trust Company, Inc., returnable June 12, 2007, and to the J. Epstein Virgin Islands Foundation, Inc., J. Epstein & Company, Inc. and "Epstein Interests," returnable June 21, 2007, with the defense lawyer [[Gerald Lefcourt]] as the correspondent, and a "Production response to 5/31/07 subpoenas" from all four on June 13, 2007. The same log lists earlier subpoenas to Chase and JPMorgan Chase in 2006 and 2007 and a subpoena to Bear Stearns returnable September 4, 2007.[^10]
The company was subpoenaed in the federal investigation that ended in Epstein's [[Epstein non-prosecution agreement|non-prosecution agreement]]. The investigation timeline kept by the [[U.S. Attorney's Office for the Southern District of Florida]] records subpoenas on May 31, 2007 to Financial Trust Company, Inc., returnable June 12, 2007, and to the [[Jeffrey Epstein VI Foundation|J. Epstein Virgin Islands Foundation, Inc.]], J. Epstein & Company, Inc. and "Epstein Interests," returnable June 21, 2007, with the defense lawyer [[Gerald Lefcourt]] as the correspondent, and a "Production response to 5/31/07 subpoenas" from all four on June 13, 2007. The same log lists earlier subpoenas to Chase and JPMorgan Chase in 2006 and 2007 and a subpoena to Bear Stearns returnable September 4, 2007.[^10]
### The Towers Financial Allegations