Close
Date TimeJuly 14, 2019
Voice

Ponzi Scheme Victims Say Epstein Swindled Them
Photo Illustration by The Daily Beast/GettyIn a court filing last week, prosecutors said they had determined that financier Jeffrey Epstein was worth at least $500 million and earning $10 million a year—the first concrete details about his wealth to emerge in years.But while the documents confirmed that the accused sex trafficker is fantastically wealthy, the source of Epstein’s fortune remains a mystery. How did a money manager with a single confirmed client amass riches including a $77-million Manhattan mansion and his own private Caribbean island?Convicted financial swindler Steven Hoffenberg has offered an explanation: He claims Epstein is a Ponzi schemer who helped him bilk tens of thousands of investors in the 1980s and 1990s.“Epstein and the corporations he formed were my co-conspirators,” Hoffenberg alleged in an affidavit for a federal lawsuit.“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.”REVEALED: We Found Billionaire Pedophile Jeffrey Epstein’s Secret CharityHoffenberg is a cartoonish character who burst onto the public scene in 1993 when then-Gov. Mario Cuomo asked the bill-collection kingpin to rescue the New York Post, then owned by bankrupt real-estate titan Peter Kalikow.Hoffenberg had barely taken control of the paper, while waiting for his deal with Kalikow to go through, when the Securities and Exchange Commission, which had been investigating him for years, filed a civil suit against him and his company, Towers Financial.A year later, Hoffenberg was under indictment, charged with selling $460 million worth of bogus notes and bonds and using the proceeds from some to pay interest to others in what was then one of the biggest Ponzi schemes in history.He pleaded guilty, was sentenced to 20 years in prison, and was released in 2013. Three years later, he filed a lawsuit against Epstein, blaming him for the fraud and claiming that he had tried to warn authorities about Epstein’s financial chicanery for years.Epstein Offers to Put Up Mansion, Jet to Get Out of JailHoffenberg, often described as Epstein’s former mentor, has told journalist Vicky Ward that they met in the 1980s, 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). Epstein was running his own consulting company, International Assets Group Inc., from his New York apartment.Hoffenberg claims he hired Epstein and that his purported protege devised a failed scheme to take over Pan American Airways and Emery Air Freight Corp, financing bids through Towers Financial’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,” Hoffenberg’s lawsuit alleges.Hoffenberg says he and Epstein, and others at Towers, 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 alleges. “This involved multiple brokerage accounts which were controlled by Mr. Epstein.”Feds: Epstein Has Been Paying Off Alleged AccomplicesMeanwhile, Hoffenberg alleges, Epstein was 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; Epstein was not a defendant, but the complaint claimed he and his company improperly received $215,000 worth of checks from the insurance companies’ accounts.When Towers became insolvent in the late 1980s, Hoffenberg and Epstein allegedly masterminded another Ponzi scheme by selling about $272 million in promissory notes. Towers provided investors with “bogus income and asset figures to conceal [its] 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 Towers’ operating expenses.When the feds indicted Hoffenberg and he pleaded guilty, he did not implicate Epstein. But in the 2016 lawsuit, perversely seeking restitution on behalf of the victims, Hoffenberg claimed that for more than 15 years, he “has made every effort to expose Mr. Epstein’s fraudulent Ponzi schemes.”Epstein’s attorney, Bennett Moskowitz, asked Manhattan Federal Judge Richard Sullivan to dismiss the case, noting that another federal judge had previously warned Hoffenberg “against pursuing frivolous or otherwise improper litigation” related to his victims.“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 to the court.Hoffenberg ultimately withdrew the suit, saying the victims “may be in a better position to pursue and assert their own claims” against Epstein.In August 2018, two victims did file 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.”Everything You Need to Know About the Jeffrey Epstein CaseThe 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 alleges 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. In a September 2018 motion to dismiss the victims’ suit, Moskowitz stated “Hoffenberg remains intent on shifting blame for his own massive Ponzi scheme.” He argued the victims’ claims should be dismissed because the statute of limitations had passed and because Epstein’s firm wasn’t even formed until several years after 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.When Epstein was first accused of trafficking underage girls, in Florida in 2005, Hoffenberg was still in prison, serving his sentence for the Ponzi scheme. Epstein dodged a federal indictment and pleaded guilty to a state charge of prostitution, serving 13 months, mostly work release.But Hoffenberg was a free man when Epstein was arrested last week on federal sex-trafficking charges in New York. He gave an interview to Quartz in which he reiterated his claims that Epstein was his accomplice.“He was my colleague daily, seven days a week,” Hoffenberg said.

Trump tells Democratic congresswomen to 'go back' to 'fix' countries they came from
Acosta’s Sweetheart Deal Likely to Foreclose Epstein’s SDNY Prosecution
Guatemala president calls off US meeting with Trump
Hong Kong police fight with protesters amid rising tensions
Report: A $15 Minimum Wage Would Be an Economic Disaster
This top-rated $50 4K action cam is just as good as a $350 GoPro for most people
India calls off Moon mission launch 56 minutes before blast-off
Dozens detained in Moscow as opposition demands to be included in vote
Boy slips through Heathrow Security to board British Airways flight to Los Angeles
Inside Epstein network, layer upon layer to protect the boss
A healthy lifestyle may offset genetic risk for Alzheimer's
Police: 69-year-old man dies after attacking migrant jail
Puerto Rico governor rejects calls to resign amid scandal
Hurricane Barry photos show an otherworldly city, deep under water
Egypt's 'bent pyramid', a 4,600-year old landmark in ancient construction, opens to visitors
U.S. grants visa to Iran's Zarif for U.N. meeting this week: sources
ICE raids are under way in New York as Trump administration targets 2,000 undocumented immigrants across US
Taiwanese president courts ally Haiti during Caribbean tour
10 deals you don’t want to miss on Sunday: $20 off AirPods 2, SanDisk sale, $60 off Nest, $9 wireless charger, more
Trump claims migrant detention center visited by Pence was ‘clean but crowded’
Rain, flooding follow Storm Barry as it spins north from New Orleans
US deciding how to punish ally Turkey over Russian arms deal
Rouhani says Iran ready to talk to U.S. if sanctions lifted
How America's 30th Infantry Division Laid Waste to Nazi Panzers at Mortain
Trump ‘Go Back’ Tweets at Progressive Congresswomen Spark Furor
Shanghai leads battle against China's rising mountain of trash
Epstein investigation moves to his New Mexico 'Zorro Ranch' as alleged victims interviewed
Man dead after attacking immigration detention facility in Washington state: police
To Defeat Trump, Democrats Should Nominate Michael Bennet
Israeli minister's remarks on gays widely condemned
Hawaiian activists prepare for Mauna Kea telescope convoys
India says Deloitte misreading law in challenging government's call for ban
How the U.S. Navy Took a Battlecruiser and Made It Into an Aircraft Carrier
Hong Kong extradition protesters escalate fight in suburbs
Jennifer Lopez reschedules Madison Square Garden show after NYC blackout
Bass-heavy Bluetooth headphones that beat Beats dropped to their lowest price in this early Prime Day deal
Prospect of immigration raids across US spark anxiety, anger and protests
Pelosi sets spending demands for two-year budget deal
Teacher jailed for 20 years after having sex with 13-year-old boy
Get Ready, NATO: Russia's S-500 Is Coming Soon to a Battlefield Near You
Clashes at latest Hong Kong anti-extradition march
Trump tells Ocasio-Cortez and other female progressives to 'go back' to 'original' countries
James Bond 25 ‘to introduce FEMALE 007’ replacing Daniel Craig in ‘popcorn-dropping’ scene
Novak Djokovic beats Roger Federer in epic five-set match to win Wimbledon men’s title
Police clashes as Hong Kong protest sweeps into neighbourhood popular with Chinese shoppers
New Indictment in New York Alleges R. Kelly, Entourage ‘Used Stardom’ to Recruit Underage Girls for Sex
Trump tells Congresswomen to 'go back' where they're from
Mall clashes at latest Hong Kong anti-extradition march
Bones found after tombs exhumed in hunt for girl who went missing in Vatican City 30 years ago
Trump Blasted Over Racist Tweets Targeting Congresswomen of Color While ‘Fox Friends’ Laughs: ‘Very Comedic’
The Latest: Tropical Storm Barry weakens to 40 mph (65 kph)
Taiwan president travels to Haiti to bolster relations in the region
Storm Barry moves inland from New Orleans, leaves rain and flooding in its wake
JetBlue flight evacuated at Newark Airport after suicide vest photo AirDropped to passenger iPhones
Germany calls for 'coalition of the willing' to take in migrants rescued from Mediterranean
Trump tells progressive freshman congresswomen to 'go back' to their 'broken and crime infested' countries
How a Modified Iraqi Falcon 50 Business Jet Nearly Destroyed a US Frigate
Netanyahu warns of 'crushing' retaliation after Hezbollah chief's remarks
Struggling in White House bid, Democrat Gillibrand seeks bump in Trump country
Donald Trump 'vandalised' Iran deal to spite Barack Obama, say latest leaked cables
Video Of An Uber Driver In South Africa Singing Opera Goes Viral
Camila Cabello Is Liking Shawn Mendes More and More: She’s Now Happy To Show It Publicly
Steph McGovern Confirms She's Pregnant With First Child In Her Own Irrepressible Way
China Claims It Knows What Caused the Fire Outbreak on India's Aircraft Carrier
France trumpets shared European defence on Bastille Day
Manhattan Gets Power Back After Blackout Chaos
Major 7.3 quake hits remote Malukus in eastern Indonesia
Top Puerto Rico officials resign in group chat scandal that ensnares governor
Storm Area 51: US military 'ready' to confront 600,000 alien-hunters threatening to break into top-secret base
Tropical storm Barry threatens heavy rains and floods as it makes landfall in Louisiana
Hungry brown bears who took over Slovenia's forests face being shot before they reach the villages
Stalled Idlib campaign shows limits of Syrian, Russian power
UK says seized Iranian oil tanker could be released
Climate change forum loses sponsor after dispute over story
Donald Trump says immigration raids across US will start on Sunday
Russia launches X-ray telescope to find 'millions' of black holes
Every Photo of Kate Middleton and Meghan Markle at Wimbledon 2019 Together
Friends, Family, Fugitives Remember Beth Chapman Of ‘Dog the Bounty Hunter’ In Aurora
Spider-Man: Far From Home Writers Explain That Big Captain Marvel Connection
Egypt Opens 2 Ancient Pyramids for the First Time Since 1965
‘Is Bernie going to come?’ Warren seizes on Sanders' Netroots absence
New York's power is restored after Manhattan spent hours in the dark
Glee's Lea Michele Honors Cory Monteith 6 Years After His Death
Scarlett Johansson Talks Freedom of Film Casting
Trump says nationwide immigration arrests to begin Sunday
Oliver Stone’s Latest Piece of Pro-Putin Propaganda May Be His Most Shameless Move Yet
2020 Democratic hopefuls: party needs to embrace progressive ideals, not Trump voters
Feds: Epstein Has Been Paying Off Alleged Accomplices
Jeffrey Epstein's New Mexico ranch linked to investigation
Sandy Hook parents lose state court appeal against Newtown over school shooting
10 deals you don’t want to miss on Saturday: $9 color LED smart bulbs, $14 Wi-Fi extender, $189 Nest, AirPods 2, more
Russia's Real Reasons for Partnering with Iran
Agony of Yazidi women torn between IS kids, or return home
Clashes erupt as Hong Kong protest targets Chinese traders
Dairy Queen worker says she was sacked after making marijuana-themed cake due to ‘manager mistake’
Why Canada Must Protect its 5G Networks from Huawei
Poker Player Dennis Blieden Charged With Embezzling $22M From StyleHaul
Planned ICE raids show Trump runs the U.S. like his business — with no idea what he's doing
Canada says another citizen detained in China amid row
Trump 'pulled out of Iran nuclear deal to spite Obama', suggests Kim Darroch in new leaked memo
See How the Army's Would-Be Stealth Helicopter Borrowed from the F-35
House Democrats who tangled with leader not backing down
Turkey receives first delivery of Russian S-400 missile system: Ankara
Meet Sturmgewehr 57: Sig Sauer's Very First 'Battle' Rifle
UK envoy said Trump ditched Iran deal to spite Obama: report
Michigan Man Allegedly Shot Two Men ‘Because They Were Gay’: Prosecutors
UK police identify suspect behind leaked envoy memos: Sunday Times
Storm Area 51: More than 600,000 people sign up to raid secretive military base to ‘see them aliens’
Appeals court blocks Trump's attempt to allow firms to deny insurance coverage for birth control on moral grounds
Police: Man dies after attacking immigration prison
Vatican mystery over missing girl deepens as bones are found
Hong Kong protesters clash with police on border with mainland China
Curiosity rover is seen creeping up a rugged Martian mountain
Facebook's $5 billion fine adds $10 billion to company's value
TV presenter Emily Hartridge dies in scooter crash
Teacher Brittany Zamora, 28, who had sex with boy, 13, while his pal watched gets 20 years jail
Corbyn And McCluskey Round On Watson Over Anti-Semitism Row With Labour Boss
A sorority canceled its convention because of Hurricane Barry. Members donated 17,000 meals to storm victims
Simona Halep stuns Serena Williams to win first Wimbledon title
This Was Sig Sauer's Plan to Crush Glock's Best Guns
Sprawling storm Barry intensifies into a hurricane
How the Battle of Saipan Ended the Japanese Empire
Trump announces US ambassador to run for Tennessee Senate
Woman suing landlord for evicting her after ‘having African American guest over’
Pence views overcrowded, bad-smelling facility for detained migrants in Texas
California Utilities Get $21 Billion Backstop in Newsom Win
Merchant ships urged to avoid using private armed teams in Mideast Gulf
China says US should not allow visit by Taiwan's leader
Epstein philanthropy since sex plea included all-girl school
Unprecedented fires burn the Arctic
UK's Johnson says his comments about U.S. envoy were a factor in his resignation
‘They're well cared for’: Mike Pence defends Trump administration’s treatment of migrants on tour of detention centres
Hypersonic War: The Weapons of the Future Have Arrived
Most Germans say Merkel's health is a personal issue
Clashes as Hong Kong protesters vent at China border traders
Residents slapped with eviction notices after AP story
U.S. House passes $733-billion defense policy bill after Trump threatens veto
Pelosi’s House of Pain
U.S. lawmakers will delay Mueller testimony by a week
Police officer who lost his job after shooting an unarmed man is ‘rehired to collect lifetime pension’
Analysis: Trump pattern is create a crisis, retreat, move on
J. Lo gives Carli Lloyd a lap dance onstage to celebrate World Cup win
Serena Williams: 'I don't read' stories about BFF Duchess Meghan
Why Dog the Bounty Hunter hasn't fulfilled late wife Beth Chapman's final wishes
Federal R. Kelly Investigation Uncovered 20 Underage Sex Tapes
Tropical Storm Barry: New Orleans flooding risk; storm path; track; latest weather forecast, live updates
Trump Says Ocasio-Cortez Was ‘Very Disrespectful’ Toward Pelosi
Taiwanese president shores up support in crisis-hit Haiti
Billionaire's New Mexico ranch linked to investigation
Chevron spills 800,000 gallons of oil, water in California
London police officer who spiked drink and raped Tinder date is jailed for 15 years in Antigua
Dead Drone: Are Iran and America Headed Towards a Bloody War?
US man accused of sex abuse at Kenyan orphanage he founded
The Jewish Group Taking on ICE — and the ‘Concentration Camp’ Taboo
Sudan's desert nomads untouched by Bashir's downfall
Hong Kong protesters march near border to target traders from China
Will Nationalism Poison Ukraine's New President?
Just How Stealthy Are France's Rafales F4.2s?
E Jean Carroll says she received death threats after accusing Trump of rape
New Mexico AG wants new sex offender law amid Epstein probe
New Zealanders give up weapons after mosque killings
R. Kelly appears in court on federal sex crime charges; singer to remain in custody until at least Tuesday
Body camera video shows Hannah Williams fatally shot by officer on freeway appeared to have handgun
Pence visits migrant detention facilities and calls on Congress to act
Labor Secretary Acosta resigns amid fallout over Epstein plea deal
Ruining a country near you soon: the beta males who think they’re alphas | Marina Hyde
Tyler Skaggs' mother threw out the first pitch. Then his teammates threw a no-hitter
Hawaii governor declares emergency for Maui wildfires
Hong Kong protests augur murky outlook for financial hub
Air Canada flight makes emergency landing in Hawaii
'It's powerful': Tropical storm starts lashing Louisiana
Appeals court gives Trump a win in sanctuary city case
Trump asks Supreme Court to unfreeze border wall money
Jeffrey Epstein Dodged Questions About Sex With His Dalton Prep-School Students
Hawaii governor declares emergency for Maui wildfire
Trump official resigns after climate change warning is blocked
The Latest: Mississippi River won't be as high as feared
Ninth Circuit Hands Trump Administration Win in Sanctuary-City Case
The Latest: US aware Turkey taking Russian missile system
The Queen Is the Reason Boris Johnson Would Struggle to Suspend Parliament
Epstein’s Defenses: From Due Process to Done Deal, a Glimpse
Bill Clinton Failed to Mention His Intimate 1995 Dinner With Epstein
US House votes to curb Trump powers to start Iran war
Vice President Pence Tours Border Patrol Facility With Almost 400 Men in ‘Crowded’ Cages, ‘Horrendous Stench’
AOC’s Chief of Staff Admits the Green New Deal Is Not about Climate Change
Why the Sexual Predator in the White House Needed to Get Rid of Acosta
Britain sends second warship to Gulf after Iran tanker standoff
Flynn's absence leaves hole at trial of ex-business partner
Police: Oilfield workers, truck driver killed in fiery crash
South Africa sends troops into 'warzone' township
Trump and Bill Clinton Worry About Creepy Jeffrey Epstein Connection in ‘Our Cartoon President’
Washington AG opens inquiry into NRA's financial affairs
How the Tragic Death of 1 Aircraft Carrier Sealed Imperial Japan's Fate
China to impose sanctions on US firms in Taiwan arms sale
Crackdown on immigrant families to start Sunday, Trump says
India prepares to land rover on moon in global space race
The Latest: Prosecution: Epstein could influence witness
Trump vs. Darroch: Whose Government Is 'Inept' and 'Dysfunctional?'
Pregnant woman, son die after car swept away in heavy rains
Hezbollah chief says has reduced fighters in Syria
Close