The Senate Finance Committee has been engaged in a rigorous investigation for over a year, focusing on the tax implications surrounding billionaire and co-founder of Apollo Global Management Inc., Leon Black’s connections to convicted sex offender Jeffrey Epstein. In his recent statement, Senator Ron Wyden revealed that the committee, which he chairs, is endeavoring to obtain additional information from Black regarding “inconsistencies” found in a report published by law firm Dechert LLC in 2021. This report was released by the Apollo board when Black resigned as CEO of the private-equity firm.
According to Wyden, the investigation has brought to light significant tax concerns and other issues related to trusts and structures implemented by Black, aimed at evading over $1 billion in future gift and estate taxes. Wyden conveyed these concerns through a comprehensive, 16-page letter addressed to Black and his law firm.
Thus far, Black’s responses to the committee’s inquiries about the $158 million he paid to Epstein between 2012 and 2017 for tax and estate planning advice have been deemed inadequate. The Dechert report mentioned that Epstein collaborated with Black to address issues surrounding a grantor-retained annuity trust (GRAT) established by Black in 2006. This trust was designed to facilitate the transfer of assets to his children while avoiding approximately $1 billion in estate and gift taxes. Additionally, the report highlighted a “step-up basis” transaction that Epstein advised on in order to save Black an additional $600 million in taxes.
These transactions raise pertinent questions about whether Black illicitly excluded billions of dollars from his taxable estate, potentially resulting in substantial gift and estate taxes that he may owe. Senator Wyden, who has been actively working on closing apparent tax loopholes benefiting billionaires, emphasized the committee’s concerns regarding the lack of substantiation for Epstein’s compensation scheme, thus casting doubt on whether these payments should be considered income or gifts for tax purposes.
It is worth noting that Epstein, despite lacking a license as a tax lawyer or being a certified public accountant, earned compensation from Black that far exceeded what any other financial advisors received. Moreover, this compensation exceeded the median earnings of Fortune 500 CEOs during the same period, as pointed out by Senator Wyden.
Responding to Allegations: Lawyers Defend Black’s Professional Relationship with Epstein
In response to Senator Wyden’s remarks regarding the professional relationship between Mr. Black and Mr. Epstein, lawyers representing Black have strongly defended their client’s integrity. The lawyers wrote a letter to the Senate Finance Committee, highlighting that any insinuation of illicit or untoward behavior is entirely unfounded.
Addressing the panel’s questions, Black’s attorneys reiterated that their client would not be providing any additional information. They further stated that the questions raised by the committee were not part of any oversight action, but seemed to be designed with the intent to embarrass and criticize individual taxpayers.
Apollo, the firm co-founded by Black, commissioned a comprehensive study conducted by Dechert in 2021. This investigation found no evidence connecting Black to Epstein’s criminal activities at any point in time. In light of these findings, Marc Rowan took on the role of CEO at Apollo in 2021 and continues to hold the position.
In 2020, Black publicly expressed regret for his friendship with Epstein, acknowledging the gravity of Epstein’s conduct. He stated, “With the benefit of hindsight, working with him was a horrible mistake.” Black wholeheartedly expressed his remorse and emphasized his deep condemnation of Epstein’s reprehensible actions.
Recently, the New York Times reported that Black has agreed to pay $62.5 million to the U.S. Virgin Islands, resolving any potential claims arising from the territory’s three-year investigation into Epstein’s sex-trafficking crimes. This settlement, previously undisclosed, follows a previous settlement in November for $105 million between the U.S. Virgin Islands and Epstein’s estate.
Additionally, the U.S. Virgin Islands government filed a federal lawsuit against JPMorgan Chase & Co. in December alleging a 15-year relationship between the bank and Epstein. Seeking damages of at least $190 million, the territory’s lawsuit remains ongoing. JPMorgan Chase has also taken legal action against Jes Staley, the former head of its wealth unit, who had dealings with Epstein.
In a separate legal matter, JPMorgan settled a lawsuit in June with Epstein’s victims for $290 million.
Epstein tragically died in 2019 of an apparent suicide in his jail cell while awaiting trial on federal sex-trafficking charges.
