Regular readers know I talk a lot about Leon Black, the billionaire financier who paid Jeffrey Epstein $170 million for “tax advice”. This week, the journalist and author Bill Cohan published Money to Burn, a biography of Black and his firm, Apollo Global Management, so of course I asked Bill to talk about what he’d uncovered with me.
The book is a sprawling business bio, but the main topic of our conversation was Black’s relationship with Jeffrey Epstein, which he gets to in the last third. Had Bill got close to understanding exactly why Black paid Epstein $170 million?
It’s a question that the House Oversight Committee wants to ask Black - but, as of now, he’s refusing to return to Congress after a previous voluntary hearing was stopped short when the committee asked Black about various NDA’s he has signed with women. He argues that these NDAs - apart from one which he has turned over - had nothing to do with Epstein and are confidential. Right now he’s suing Congress for embarking on a “fishing expedition” and has refused its subpoena to return to sit for more questions.
So…
What did Bill find out?
The bad new is he’s stuck taking Black’s word for what happened, given that Epstein is dead. And two key people - Black’s former tax lawyer Carlyn McCaffrey, and, Andy Levander, the author of an independent investigation into Black, did not talk to Bill, presumably because they’d be disbarred if they did.
Further, Bill did not wind up seeing the actual tax documents that Black talks about. Black balked at this, apparently, and cited privacy. Bill says he thinks this is understandable.
I don’t.
My own view of this is that if Black really wants to clear up this controversy, he needs to go the extra mile and reveal everything, “privacy” be damned. The reason we care about the specific “tax advice” for which he paid Epstein an astronomical amount, is not because we are prurient. It’s because Epstein could not have pulled off his ghastly criminal enterprise without the hundreds of millions of dollars he had behind him and Black is one of the two known chief sources of this money; Leslie Wexner is the other. (Bill mentions in our interview that the financier Glenn Dubin also contributed to Epstein’s piggy bank. True. But not at the same scale as Black and Wexner.) Black and Wexner trusted Epstein sufficiently that they each handed him well north of $100 million for whatever it is he was doing for them. Black admits to Bill he wasn’t even paying attention to exactly how much he was paying Epstein for his services and was shocked to discover the full amount.
I mean, wow.
So, here’s what’s in the book about the improbably gargantuan fee for “tax advice”: According to Black, his original high-priced trust-and-estate attorney at the blue-chip law firm of Weil Gotshal - a woman named “Carlyn McCaffrey” - who now works at another reputable law firm, McDermott, Will and Schulte LLP, - allegedly botched something in documents, exposing Black to a potential $2 billion tax liability.
Bill writes: When he [Black] confronted McCaffrey, he said, at first she denied that there was a potential problem and then conceded there was “a terrible mistake” made that could only be rectified by taking an action explicitly prevented by the documents that McCaffrey had drafted.
Right there, I have a major problem with this version of events. How many top lawyers say to their clients that, yes, they have made a “terrible mistake” and its going to cost the client $2 billion? In many years of reporting about finance, I have never heard of a conversation like this. It doesn’t just sound unlikely. It sounds preposterous. It’s a lawsuit to end all lawsuits the moment the words are uttered.
Because, if a law firm - especially one as well-known as Weil Gotshal - botches something and makes a $2 billion mistake for a client, they are, of course, on the hook to pay that money! That’s why they have insurance! (I phoned around my lawyer friends at top firms to get their take on this..and their off-the-cuff reaction is, yes, of course, they are on the hook, and, of course, that’s why law firms have insurance. And, yes, this story sounds like a fairytale. But without looking at the documents or speaking to McCaffrey, it’s impossible to give a definitive verdict.)
Next, according to Black (and Bill), not only could Weil Gotshal not fix the “terrible mistake,” nor could lawyers at Paul, Weiss and Sullivan and Cromwell.
Hmm. Again, my lawyer friends just do not buy this. One of my sources says “almost everything in tax law is reversible”. But, since Bill did not see the actual documents, he and we are left depending on Black’s word.
So — as the story goes — Black turned to Epstein, who wasn’t a lawyer or an accountant, and had not even graduated college - but who had nonetheless positioned himself to Black as an expert on family offices and tax structuring and was so trusted by Back that he’d even put him on the board of his family foundation. (This, despite the fact that, per Bill, Elliot “Skip” Stein - Black’s friend who had first introduced Epstein to Black suspected that Epstein’s personal wealth in the early 1990s was mostly stolen from European families who had illegally laundered their money into the US.)
Anyhoo…Epstein, according to Black, found a workaround - and Black then had Epstein’s ideas vetted by major law firms, which claimed they worked. Bill says he spoke with lawyers at these law firms - and Black’s story as far as he can tell checks out.
According to Bill, once Epstein had proved himself with the tax issue, he wheedled his way into giving tax advice on Black’s purchase of jets, art, yachts, etcetera. It was money Black says he didn’t even realize he’d spent, until investigators dug it out for an independent report after Epstein’s death. Until he read it in the report, he thought he’d paid Epstein a mere $75 million or so.
Bill says he pushed Black on this:
And I said, oh, come on, Leon. That’s crazy.
Yes, I know you think that’s crazy, Bill, but I own 93 million Apollo shares.
If the stock goes up $1, that’s $93 million. If it goes up $1.50, that’s $150 million.
So that’s, you know, I didn’t think about it.
When you think about this exchange, it’s no wonder that many people believe the pitchforks are coming.
It also partly explains why Leon Black garners zero sympathy for his protestations that he knew nothing of Epstein’s sex crimes and is therefore being unfairly hounded over this. The guy clearly neither knows nor cares how a statement like this comes across in the midst of an affordability crisis.
Bill Cohan is a former investment banker and one of the very best financial journalists operating today. He’s also a friend. Which is why I wanted to talk to him about his book, which is fabulously reported and engagingly written.
But I was struck reading it, at how the culture has changed dramatically. Twenty years ago there was a mass appetite for biographies like this one. In 2010 my first book, The Devil’s Casino, was about Lehman Brothers and the 2008 financial crisis. Back then, we all wanted to know what drove the Kings and Queens of Wall street, what were the characteristics behind their material success - and what caused their failures - and that of the financial system.
Today, I think readers’ appetites have altered. Mine certainly has. Other than trying to understand the Epstein piece of it, I don’t care about Leon Black or how he made his money. I think that in the main we are no longer intrigued by self-made billionaires unless their wealth is created at the cutting edge of AI or industries that directly impact or alter the world we live in; in fact I’d go so far as to say we now abhor the billionaire class unless we see them using their vast wealth to improve other people’s lives in the vein of Mike Bloomberg - or even Black’s one time boss, the rehabilitated Mike Milken.
My suggestion to Black (not that he’s likely to take it): If it’s as easy for him to make money as he tells Bill Cohan, why doesn’t he stop whining about being treated unfairly and repeating that he is shocked and horrified by Epstein’s crimes - and instead set up a charity to protect women and girls against sex trafficking? Not as part of an NDA settlement, or to get himself out of a congressional hearing - but just because he can afford to, and it’s the right thing to do?
That, at least, would be a story I’d be interested to read.
Thank you Heather Le, Jeanne Elbe, Deborah J., Marjory Button, Joanna in AZ, and many others for tuning into my live video with william cohan! Join me for my next live video in the app.
