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Date TimeJuly 08, 2019
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Indictment Alleges Jeffrey Epstein Created ‘Vast Network’ of Underage Sex Victims as Young as 14
ZUMA Press Inc / Alamy Stock PhotoFederal prosecutors on Monday released an indictment against billionaire financier Jeffrey Epstein, charging him with sex trafficking and accusing him of using his fortune to “create a vast network of underage victims for him to sexually exploit.”Epstein is expected to appear later Monday in Manhattan federal court to be arraigned on the charges, which cover alleged crimes between 2002 and 2005 and involved girls as young as 14.According to the indictment, Epstein “enticed and recruited, and caused to be enticed and recruited, minor girls to visit him” at his Manhattan mansion and Palm Beach estate “to engage in sex acts with him, after which he would give the victims hundreds of dollars in cash.”“Moreover, and in order to maintain and increase his supply of victims, Epstein also paid certain of his victims to recruit additional girls to be similarly abused by Epstein,” the indictment says.“In this way, Epstein created a vast network of underage victims for him to sexually exploit.”The indictment details three victims and refers to three unnamed employees who assisted Epstein in the alleged scheme—and describes what is essentially a sex-trafficking pyramid scheme.Victims were initially lured to Epstein’s homes to provide massages, “which would be performed nude or partially nude, would become increasingly sexual in nature, and would typically include one or more sex acts,” the 14-page indictment alleges.Some of those girls would then be asked to go find other victims and be paid hundreds of dollars for each one they brought back, the court documents say. “In so doing, Epstein maintained a steady supply of new victims to exploit,” the indictment says, adding that some recruiters funneled dozens of girls to him.The indictment alleges that Epstein knew the girls were underage because some of them said how old they were.As The Daily Beast first reported, the mysterious money man was collared on Saturday by the FBI-NYPD Crimes Against Children Task Force. The 66-year-old Epstein—who has palatial homes in Palm Beach, New Mexico, on a private island in the Caribbean, in Paris, and on Manhattan’s tony Upper East Side—was taken into federal custody as he landed at New Jersey’s Teterboro Airport on an international flight from France, according to NBC News. He spent the weekend in the Metropolitan Correctional Center, according to a senior law enforcement official—the high-security prison once dubbed tougher than Guantanamo, which also houses the likes of Paul Manafort and notorious drug lord El Chapo. Epstein's mansion in New York was raided by federal agents on Saturday night as they executed search warrants, with a witness telling the New York Post that authorities broke the door down and “went in with bags.” The indictment seeks forfeiture of the mansion.In an announcement today, Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and William F. Sweeney Jr., the Assistant Director in Charge of the FBI’s New York Field Office, said that Epstein will face one count of sex trafficking of minors and one count of conspiracy to engage in sex trafficking of minors. The hedge fund manager—who has palled around with the likes of Bill Clinton and Donald Trump—is accused of sexually exploiting and abusing dozens of underage victims, some as young as 14, in locations that included his Manhattan and Florida mansions. He would hire the girls for “massages” and then grope or assault them in private, prosecutors say.“Epstein exploited girls who were vulnerable to abuse, enticed them with cash payments, and escalated his conduct to include sex acts, often occurring at his residence on the Upper East Side of Manhattan,” Berman said. “While the charged conduct is from a number of years ago, the victims—then children and now young women—are no less entitled to their day in court. My Office is proud to stand up for these victims by bringing this indictment.”Jeffrey Epstein Shouldn’t Expect to Wiggle Free AgainThe FBI’s Sweeney urged anyone who might be a victim of Epstein to contact the Victim & Witness Services professionals of the U.S. Attorney’s Office for the Southern District of New York, at 866-874-8900, and reference the current case against him.The case is being handled by the SDNY’s Public Corruption Unit with assistance from the Office’s Human Trafficking Co-Coordinator, and is headed up by Assistant U.S. Attorneys Alex Rossmiller, Alison Moe, and Maurene Comey (daughter of one James Comey, former director of the FBI).Epstein’s lawyer Martin Weinberg declined to comment on the arrest or the charges when reached by The Daily Beast on Saturday.  A Dark Secret and Dozens of GirlsDetails of Epstein’s alleged trafficking—which, prosecutors say, took place between 2002 and 2005—match the reports of scores of underage women who accused the billionaire of molestation and sexual abuse in 2007 in Palm Beach. That year, local Florida police launched an investigation after a 14-year-old and her parents claimed that an older man named “Jeff” had molested her at Epstein’s gaudy tropical mansion. More women soon came forward with similar tales of massages and molestation in exchange for $200 to $1,000 per visit. Some also claimed that Epstein would force them to have intercourse with him or a young woman described as his Eastern European “sex slave.” Epstein’s assistant, Sarah Kellen, allegedly kept a whole rolodex of underage girls to recruit for her employer.The case against Epstein quickly escalated to the U.S. Attorney’s office in Miami, then led by Alexander Acosta.  But the prosecutor (now President Donald Trump’s Labor Secretary) cut a sweetheart plea deal with Epstein and his high-powered lawyers, one that amounted to a mere slap on the wrist: instead of facing federal charges—such as sex trafficking of children by force, fraud or coercion, as laid out in the plea deal—Epstein plead guilty in state court to two minor prostitution charges (solicitation of prostitution and procurement of minors for prostitution). He served a mere 13 months in a county jail with lenient work release privileges. The plea deal also granted immunity to any alleged co-conspirators—“including but not limited to” recruiters Kellen, Adriana Ross, and Lesley Groff, or the alleged sex slave, Nada Marcinkova.The New York charges are hauntingly similar. Prosecutors say Epstein paid his victims “hundreds of dollars in cash” and that, “in order to maintain and increase his supply of victims, Epstein also paid certain victims to recruit additional underage girls whom he could similarly abuse. In this way, Epstein created a vast network of underage victims for him to sexually exploit, often on a daily basis…” The feds also noted that the alleged victims “were, for various reasons, often particularly vulnerable to exploitation,” that Epstein “knew that many of his victims were under 18” because the girls had told him themselves, and that “many victims were abused by Epstein on multiple subsequent occasions.” The new charges could land Epstein in prison for up to 45 years if he’s convicted. Lawyers who represent Epstein’s alleged victims applauded the new charges. “It’s been a long time coming—it’s been too long coming,” attorney David Boies, who represents two Epstein accusers, told The Daily Beast on Saturday night. “It is an important step towards getting justice for the many victims of Mr. Epstein’s sex trafficking enterprise.”Meanwhile, Epstein’s famed lawyer Alan Dershowitz told the Beast that he planned to “wait and see what the evidence is” against his former client. The Harvard law professor has been accused of digging up dirt on victims in the Florida case and trying to portray the girls as unreliable witnesses. (Dershowitz has denied any wrongdoing.) The attorney has also been accused by at least one alleged victim of Epstein’s, Virginia Giuffre, of being involved in the sex-trafficking ring himself—a charge which Dershowitz has vehemently denied.  Epstein’s Wealth The source of Epstein’s wealth has always been obscure, even as he built a lifestyle of fabulous riches and influential friends. Originally a math teacher at the elite private school Dalton, Epstein reportedly landed at Bear Stearns thanks to the firm’s chairman, whose son was a pupil. Critics have long speculated that the financier may have traded insider information about Bear Stearns and its implosion to get his soft plea deal—though FOX Business recently quoted an Epstein attorney and a former federal prosecutor as both saying they didn’t think authorities ever spoke to Epstein about the firm’s collapse. Epstein went on to manage the fortunes of Victoria’s Secret mogul Lex Wexner—his only confirmed client—and a little black book found by Florida police listed Epstein’s luminary connections: Bill Clinton, Britain’s Prince Andrew, former Israeli Prime Minister Ehud Barak, former New Mexico Governors Bill Richardson and Bruce King, the rocker Courtney Love. By the time Epstein got busted in Palm Beach, he’d moved into Wexner’s former mansion on the Upper East Side, secured a private tropical island where he reportedly held wild parties, and jetted about from Paris to New York to his “Zorro Ranch” in New Mexico on his private plane—later dubbed the “Lolita Express” by the press—whose flight logs record the names of celebrity buddies alongside those of mysterious young women. Even after his conviction, the billionaire pedophile enjoyed demonstrating his largesse: as The Daily Beast revealed in an exclusive expose, Epstein’s secret charity has continued to dole out money to Harvard's Hasty Pudding Club, M.I.T., the nonprofits of Deepak Chopra and Elton John, a private girls’ school, and to a doctor linked to President Trump.REVEALED: We Found Billionaire Pedophile Jeffrey Epstein’s Secret CharityThe trail of Epstein’s money appears to be a twisted one. Epstein’s former mentor, convicted Ponzi schemer Steven Jude Hoffenberg, told Vanity Fair’s Vicky Ward that he met Epstein shortly after Bear Stearns gave Epstein the boot over “illegal operations.” Ward would discover a 1989 deposition for a civil case, in which Epstein admitted to a possible “Reg D” violation (allegedly loaning a friend $20,000 to buy stock) which led to his departure from the investment bank.Hoffenberg, who was sentenced to 20 years in prison, claims he tried to warn authorities about Epstein’s alleged financial misdeeds for years.In May 2016, he filed a lawsuit against Epstein to seek restitution on behalf of the victims of his own Ponzi scheme. The complaint, filed in the Southern District of New York, was withdrawn because those individuals “may be in a better position to pursue and assert their own claims” against Epstein, Hoffenberg’s lawyer noted in a letter to Judge Richard Sullivan. The withdrawal came after Epstein’s attorney asked Sullivan to dismiss the case, noting in a letter that another federal judge had previously warned Hoffenberg “against pursuing frivolous or otherwise improper litigation” related to his victims.Epstein’s lawyer, Bennet Moskowitz, argued Hoffenberg’s complaint should be dismissed, in part, because he lacked standing to sue Epstein and the statute of limitations had passed. “Hoffenberg’s victims, whom he is prohibited from contacting, are better positioned to pursue their own rights than the man who defrauded them,” Moskowitz wrote.As the former CEO of Towers Financial Corporation (TFC), Hoffenberg claimed Epstein and his firm, The Financial Trust Company, were co-conspirators in a Ponzi scheme that led to more than 200,000 people losing $500 million. The individuals purchased bonds and promissory notes from TFC during the late 1980s and mid-1990s.According to the complaint, Epstein devised a failed scheme to take over Pan American Airways and Emery Air Freight Corp, financing bids through TFC’s acquisition of two ailing insurance companies in Illinois: Associated Life and United Fire. Epstein made trades through others, because he didn’t have a broker’s license, and he “misappropriated the proceeds for personal use in connection with his investment business,” the lawsuit alleges.Hoffenberg says he and Epstein, and others at TFC, promised to invest $3 million into the companies, in order to persuade the Illinois Department of Insurance to approve their acquisition. But instead, they used $3 million of the companies’ bonds to buy Pan Am and Emery stocks, the complaint states. As a result, the insurance companies allegedly lost more than $1 million.Epstein also “manipulated the price of Emery stock to minimize the losses which occurred when Mr. Hoffenberg’s and Mr. Epstein’s bids failed and the share price began to fall,” the lawsuit states. “This involved multiple brokerage accounts which were controlled by Mr. Epstein.”Meanwhile, Hoffenberg accused Epstein of misappropriating and transferring the insurance companies’ investments and cash to brokerage accounts in New York.In 1991, the director of insurance for the state of Illinois sued Hoffenberg. As part of the complaint, the director claimed Epstein and his company improperly received $215,000 worth of checks from the insurance companies’ accounts. (Epstein, however, was not a defendant in the state’s suit.)When TFC became insolvent in the late 1980s, Hoffenberg and Epstein allegedly masterminded another Ponzi scheme by selling about $272 million in promissory notes. TFC provided investors with “bogus income and asset figures to conceal TFC’s true financial condition,” court papers allege.In 1990, the duo fraudulently sold about $210 million in bonds and again provided phony financial statements, the lawsuit says. The proceeds from the sale of bonds and promissory notes were used to pay TFC’s operating expenses.The Securities and Exchange Commission, which in 1989 launched an investigation into TFC, would sue the firm four years later. TFC filed for bankruptcy in 1993, and Hoffenberg was indicted one year later. About 100 lawsuits were filed in the mid-1990s against TFC in connection to the fraud.After pleading guilty to one of the largest, pre-Madoff Ponzi schemes in history, Hoffenberg tried to pin part of the blame on Epstein. “Mr. Hoffenberg, for over 15 years, has made every effort to expose Mr. Epstein’s fraudulent Ponzi schemes,” the lawsuit states, adding that Epstein continues to deny his involvement and wrongfully possess the victims’ funds.In August 2018, two victims filed a class-action lawsuit against Epstein in New York, describing him as “an uncharged co-conspirator” of Hoffenberg’s Ponzi scheme and claiming Epstein used his ill-gotten gains “to support a lavish lifestyle.”The complaint, filed by Marvin Gerber and Kalma Koenig, contains the same allegations surrounding the failed Pan Am and Emery acquisitions. Epstein, they said, manipulated the stock price by opening a number of brokerage accounts to execute false trades and artificially inflate the price of Emery stock. “As the puppet master of Emery stock fraud, Epstein was making sizeable profits off his trading on insider information,” the lawsuit states.The victims’ complaint states that prosecutors offered Hoffenberg a reduced sentence in exchange for divulging information about his co-conspirators, but Hoffenberg didn’t provide any intel on Epstein—until his lawsuit in May 2016. It’s unclear why Hoffenberg didn’t implicate Epstein at the outset.In an affidavit filed in the victims’ case, Hoffenberg says he was introduced to Epstein in the mid-1980s, when Epstein was running his own consulting company, International Assets Group Inc., from his New York apartment. “Epstein and the corporations he formed were my co-conspirators,” Hoffenberg stated. “Epstein has remained free and has used and benefited from the ill-gotten gains he amassed as a result of his criminal and fraudulent activities.”In a motion to dismiss, filed in September 2018, Moskowitz stated “Hoffenberg remains intent on shifting blame for his own massive Ponzi scheme.” The lawyer pointed to multiple other cases over the years where judges shut down Hoffenberg’s attempts to sue on behalf of TFC’s victims.Again, Moskowitz argued the victims’ claims should be dismissed because the statute of limitations had passed. While the victims claim they knew nothing about Epstein’s involvement until recently, Moskowitz stated they should have known, given Vanity Fair’s 2003 feature that dug into Hoffenberg’s accusations.Among other arguments for dismissal, Moskowitz said the victims’ complaint states Epstein’s firm, The Financial Trust Company, was formed in 1996—several years before the Ponzi scheme in question.In October 2018, Gerber and Koenig voluntarily dismissed their complaint, without prejudice, leaving them open to filing claims in the future. Tip of the IcebergEven as Epstein faces sex-trafficking charges in New York, other cases threaten to further expose the financier. In Florida, a judge has ruled that Acosta’s 2007 plea deal with Epstein violated the Crime Victims’ Rights Act because it was brokered in secret, without the knowledge of the young women involved. While the government’s attorneys are recommending that the plea deal should be upheld—to protect the privacy of the women, they say, as well as the monetary settlements some have won against Epstein, who agreed not to contest damages—the judge has yet to issue a final ruling. Meanwhile, some alleged victims continue to press for the plea deal to be tossed and for Epstein to face federal charges in Florida—or for the files in the case to be made public. Meanwhile, other alleged victims, in other locations, have started to emerge. A woman named Maria Farmer claimed in April in an affidavit that Epstein sexually assaulted her at Les Wexner’s mansion in Ohio in 1996, and that he molested her 15-year-old sister in New Mexico. She also said that Dershowitz used to frequent Epstein’s Upper East Side mansion as girls in school uniforms paraded in for “modeling” calls. (Dershowitz denies the claims. Wexner and Epstein did not respond to requests for comment.)And Virginia Giuffre—who claimed that as an underage teen, she was loaned out for sex by Epstein and his girlfriend, the British socialite Ghislaine Maxwell, to famous friends like Prince Andrew and Dershowitz (the two men deny it)—is at the center of a fight that could turn explosive. A defamation suit was brought against Giuffre by Maxwell, and settled before it got to court. But the Miami Herald and others have sued to have documents in the case unsealed—and just last week, the court agreed. In the ruling, the court warned the public that allegations in the documents were just that—accusations not yet proven. But such an admonition may hint at bombshells ahead for Epstein and his friends. “I’ve known Jeff for fifteen years—terrific guy,” Trump told New York Magazine in 2002. “He’s a lot of fun to be with. It is even said that he likes beautiful women as much as I do, and many of them are on the younger side. No doubt about it—Jeffrey enjoys his social life.” That “social life” will likely be on full display in Manhattan federal court in the months to come.Jeffrey Epstein, Alan Dershowitz, and Pals Accused of Sex-Trafficking Ring

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