The Shell Game: Untangling Jeffrey Epstein’s Offshore Money Web

(Bloomberg) -- One shell company, Plan D LLC, owns the Gulfstream G550. Another, Maple Inc., owns the Manhattan mansion. A third, Great St. Jim LLC, owns the bigger of two private islands.

Since Jeffrey Epstein was first arrested, more than a decade ago in Palm Beach, he has employed a web of companies and charities to try to mask part of his fortune, avoid taxes and stay close to the rich and powerful.

More than 30 entities linked to Epstein can be found in public filings in the U.S. Virgin Islands and New York -- in stark contrast to the bare-bones financial disclosure he made in court in Manhattan after his second arrest, on July 6.

Those and other documents fill in a few, tantalizing pieces of the financial puzzle of a man who became very wealthy and befriended politicians, celebrities and Wall Street players over 30 years.

The takeaway is that someone once widely purported to be a brilliant money manager is, in all likelihood, no longer one, if he ever was. Documents for an Epstein entity show that some recent trades didn't even beat the market.

The complicated orbit of Jeffrey Epstein

The sordid Epstein saga entered a new phase on Thursday, when the 66-year-old, now twice accused of sexually abusing teenage girls, was denied bail and returned to the federal Metropolitan Correctional Center to await trial. In New York, Washington and beyond, the speculation keeps growing about whether anyone else will be caught up in the scandal.

“The first thing I do every morning is Google ‘Jeff Epstein,'” said a hedge fund executive who spoke anonymously to avoid being dragged into the mess.

The latest explosive allegations prompted President Donald Trump and former President Bill Clinton, among other prominent figures, to distance themselves from the registered sex offender.

Epstein once rubbed elbows in the worlds of finance, politics and society. After he cut a secretive plea deal in Florida in 2008, he aimed to remain in the game. He added to his collection of shell companies and sought to reinvent himself as a philanthropist, doling out about $2 million in contributions. His private jets traversed the globe, making more than 900 trips to dozens of destinations, from Vancouver to Vienna, a review of flight records provided by JetTrack shows.

Manhattan Events

Over the years, he was spotted in Manhattan at high-profile events -- the premiere of “Wall Street: Money Never Sleeps” in 2010, the TriBeCa Ball benefiting the New York Academy of Art in 2014 -- and dined at his 71st Street mansion with a group including Prince Andrew, as reported earlier by the Hollywood Reporter, and in Silicon Valley with Elon Musk and Jeff Bezos, according to the New York Times.

But Peggy Siegal, a prominent publicist who struck up a friendship with Epstein, said he began spending less and less time in New York after 2014. He had houses elsewhere, after all, including Paris, New Mexico, Palm Beach and the offshore tax haven of the U.S. Virgin Islands. And despite questions about how he accumulated his money, he had a lot to fall back on: Federal prosecutors put his net worth at more than $500 million, and said he had an income of more than $10 million a year.

It was in the USVI that Epstein based much of his little empire, including Financial Trust Co., which he started in New York in 1981 as a money management firm that he liked to claim catered only to billionaires, and Southern Trust Co., a curious outfit founded in 2011 that describes itself as a “database company and services” in filings at the Division of Corporations and Trademarks in St. Thomas.

Flexible Jurisdiction

There is precious little information available at that office, in a strip mall tucked behind a hospital, about any of Epstein's USVI operations. This isn't surprising. “It's a very flexible jurisdiction,” said Tim Richards, a lawyer specializing in international tax at Richards & Partners in Miami. “You can form companies swiftly, effectively and cheaply that provide unique tax benefits and privacy features.”

Among those for Epstein is the roughly 70-acre Little St. James -- he liked to call it Little St. Jeff's -- an island he bought in 1998 for $7.95 million and that is held in a company called Nautilus Inc. Three years ago, he acquired nearby Great St. James, paying about $22.5 million; that's the one owned by Great St. Jim LLC. Another limited liability corporation, LSJE LLC, appears to have been set up to pay his employees on one or both of his islands.

Hasty Pudding

A benefit of having a business in the U.S. territory is that a qualifying company and possibly its owner are eligible for a 90% reduction in corporate income tax and personal income tax if they meet certain conditions, including employing at least 10 residents and investing $100,000 in local industries. Southern Trust is listed at the Economic Development Authority as one of the beneficiaries of these tax incentives.

Epstein registered his nonprofit Gratitude America in St. Thomas in 2012, and began issuing press releases touting his donations to the likes of the International Peace Institute, Harvard's Hasty Pudding Institute and Elton John's AIDS charity. Recipients of the contributions didn't respond to requests for comment. A report by NBC raised questions about whether some of the advertised donations ever actually went through.

Beyond that, disclosures by Gratitude America hardly paint a picture of a financial whiz. The foundation held $8.9 million of assets at the end of 2017 and a statement of its investment income for that year shows a gain of $899,417 from 52 trades.

Quick Trades

Most of the total was thanks to the sale of $1.6 million worth of Chinese internet giant Tencent Holdings Ltd. stock bought in 2016, which reaped a gain of $693,412, and a Western Digital Corp. bond that returned $107,178. The remaining 48 trades were far smaller, with about a third losing money. They followed a similar pattern: A purchase and in a matter of days a sale, sometimes -- as for streaming device maker Roku Inc. and Qudian Inc., one of China's leading online lenders -- around the time of their IPOs.

In recent months, Epstein made some moves that suggest he may have been trying to cut back on expenses. In June, he sold the older and smaller of his two private jets, a Gulfstream IV he bought in 2013. His black Bell 430 helicopter, which ferried him to his private island from St. Thomas, is listed for sale on Controller.com for $1.8 million, the post having been updated the day before federal agents took him into custody after he touched down at Teterboro Airport in New Jersey after a flight from Paris.

Spending Money

But he certainly didn't stop spending money. His lifestyle didn't come cheap; just the property taxes on his U.S. homes came to more than $600,000 last year, according to calculations by Bloomberg.

And on Great St. James, Epstein is pursuing projects that permit documents show include an amphitheater and an underwater office and pool, according to the Virgin Islands Daily News. Epstein and local authorities have been at war over the work on his islands; the Department of Planning and Natural Resources has issued at least one stop-work order over Great St. James and Epstein has paid more than $140,000 in fines imposed over allegations of illegal activity on the smaller isle.

In New York, Leah Kleman, a dealer who sells high-end furniture and other pieces from the Manhattan Art and Antiques Center, said it was just a few months ago that a interior decorator stopped by to look at items Epstein might be interested in: a crystal bamboo chandelier, priced at $50,000, and five oversize, bent architect's pencils, each cast in bronze and asking $10,000.

Epstein had been a regular client for 25 years, Kleman said, dropping $200,000 or $300,000 on decorative objects and paintings. But he always wanted a deal. “When he comes in, he is Jeffrey Epstein and he is entitled to a discount,” she said. She called him a compulsive buyer with a monumental ego who purchased to impress. “He is big into shock value.”

--With assistance from Katya Kazakina, Sophie Alexander and Amanda Gordon.

To contact the reporters on this story: Tom Metcalf in London at tmetcalf7@bloomberg.net;Tom Maloney in New York at tmaloney38@bloomberg.net;Jonathan Levin in Miami at jlevin20@bloomberg.net

To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, ;David Gillen at dgillen3@bloomberg.net, Anne Reifenberg, Marion Dakers

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