Apollo Scrambles to Distance Itself From Leon Black's Ties to Epstein
For decades, Black turned to Epstein for financial advice, even years after the financier was convicted of sex offenses.
(Bloomberg) -- For decades billionaire Leon Black turned to Jeffrey Epstein for financial advice, even years after the enigmatic financier was convicted of sex offenses.
Now Black’s Apollo Global Management is trying to distance itself from Black’s dealings with Epstein, who this month was arrested on federal charges that he molested and exploited teenage girls. Epstein, who’s being held in a Manhattan jail, has pleaded not guilty to the charges.
The New York-based firm conducted an internal review into its involvement with Epstein, a registered sex offender since 2009, to ensure that any ties go no further than the firm’s co-founder, people with knowledge of the matter said. They looked at emails and records to determine there was no connection between the company and Epstein, one of the people said.
Black said in a memo sent to employees that “Apollo has never done any business with Mr. Epstein at any point in time.”
Epstein has “provided professional services to my family partnership and related family entities, involving tax, estate planning and philanthropic advice,” Black said in the memo. He added: “I was completely unaware of, and am deeply troubled by, the conduct that is now the subject of the federal criminal charges brought against him.”
‘Reputational risk’
Investors, including the California Public Employees’ Retirement System, also are expressing concern. The largest U.S. pension has committed more than $5 billion to 11 Apollo funds, was a minority investor in the firm before its 2011 initial public offering and is now the second-largest owner of Apollo shares.
“Calpers takes this issue very seriously,” Wayne Davis, a spokesman for the Sacramento-based pension, said in an email. “The actions our general partners take, both in professional and private contexts, impact our assessment of which firms we desire as long-term partners. We consider any issue, including reputational risk, a serious matter if it impacts a firm’s ability to be successful.”
Apollo has brought vast riches to its co-founders since its formation in 1990. Black is worth $6.5 billion, while Josh Harris and Marc Rowan have at least $2 billion each, according to the Bloomberg Billionaires Index. All three have invested in Apollo’s funds, but have branched out in recent years, creating family offices to oversee their expanding assets.
Black has set up Elysium Management and is one of the world’s foremost art collectors. Harris is a co-owner of sports teams including the Philadelphia 76ers and soccer club Crystal Palace, while Rowan, who invests in New York real estate and businesses in the Hamptons, has RWN Management.
Black has known Epstein since at least the early 1990s. A visitor to Epstein’s New York office in 1994 recalled seeing the private-equity titan leave as he was entering to meet with the enigmatic adviser. At the time, Epstein told the visitor that he had three clients, including billionaire Les Wexner, who has emerged as perhaps the most important figure behind Epstein’s own fortune. Epstein told others that he specialized in providing tax advice to billionaires.
Over the years, the associations between Black and Epstein deepened. Epstein was a director of the Leon Black Family Foundation from at least 2001, according to disclosure forms filed with the U.S. government. His name appeared on these forms until 2012. That was an administrative error, according to a statement from a spokeswoman for Black. Epstein was asked to resign in 2007, but records weren’t kept up to date, she said.
“On a few occasions, I donated money to certain charitable organizations with which Mr. Epstein was affiliated and he made contributions to certain charitable organizations that are meaningful to me,” Black said in the memo.
Between 2011 and 2013, Epstein’s Financial Trust Co., which is registered in the tax haven of the U.S. Virgin Islands, reported a 6% investment in Environmental Solutions Worldwide. In 2008, the auto-parts company issued convertible debentures to a family trust associated with Black, whose sons Benjamin and Joshua are listed as beneficiaries. They joined that company’s board in January 2011, as did Apollo executives John Suydam and John Hannan.
Black and Epstein were still doing some business in 2015. That year, BV70 LLC, a charity controlled by Black, donated $10 million to Epstein’s foundation, Gratitude America.
Rowan attended a meeting at Epstein’s Manhattan townhouse as late as 2015, according to people with knowledge of the matter. Epstein had arranged for Rowan to discuss potential business relationships between Apollo and an investment firm, the person said.
--With assistance from Anders Melin, John Gittelsohn and Josh Friedman.
To contact the reporters on this story: Heather Perlberg in Washington at hperlberg@bloomberg.net;Sonali Basak in New York at sbasak7@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net
To contact the editors responsible for this story: Pierre Paulden at ppaulden@bloomberg.net, Anne Reifenberg, David Gillen
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