Lyon Black agrees to pay $62.5 million to settle Epstein-related claims

Lyon Black agrees to pay $62.5 million to settle Epstein-related claims

Billionaire investor Leon Black agreed to pay $62.5 million to the US Virgin Islands in January to be released from any potential claims arising from the territory’s three-year investigation into disgraced financier Jeffrey Epstein’s sex trafficking operation, according to a copy of the settlement agreement.

The previously undisclosed settlement came after the Virgin Islands reached a $105 million deal with Mr Epstein’s estate in November. The following month, the region sued JPMorgan Chase in federal court over the bank’s 15-year relationship with Mr. Epstein, a registered sex offender who killed himself in a Manhattan jail cell in 2019.

The Virgin Islands government laid out its settlement agreement with Mr. Black in response to a public records request by The New York Times. In January, representatives from both sides held a private mediation session to settle the claims, according to another document reviewed by The Times. A $62.5 million settlement was reached after that session. According to the settlement document, Mr. Black agreed to be paid in cash.

The settlement shows the extent to which Mr. Black, once a veteran of the private equity industry, has gone to limit the investigation into his decades-long social and business relationship with Mr. Epstein. Those transactions, including the revelation that he paid Mr. Epstein $158 million for tax and estate planning services, became a source of embarrassment for Mr. Black in the years following Mr. Epstein’s death.

Mr Black, 71, was forced to step down in early 2021 as chairman and chief executive of Apollo Global Management, the huge private equity firm he co-founded. in 1990, A prominent art collector who made news for the $120 million purchase of a version of Edvard Munch’s “The Scream,” Mr. Black also stepped down as president of the Museum of Modern Art in New York.

The four-page agreement states that nothing in it should be construed as an “admission of liability” by Mr Black.

“For the past several years, the Virgin Islands Department of Justice has made it a priority to support human trafficking victims and enforce laws to prevent and deter human trafficking,” said Venetia H. Velazquez, counsel for the Virgin Islands Attorney General’s Office, which negotiated the settlement.

Mr Black’s spokesman Whit Clay said: “Mr. Black engaged and paid Jeffrey Epstein for legitimate financial advisory services, which, based on everything known so far, he deeply regrets. In line with settlements of other major US banks, Mr. Black resolved potential USVI claims arising from the unintended consequences of those payments. There is nothing in the USVI settlement to suggest that Mr. Black was aware of, or participated in, any misconduct.”

According to a document reviewed by The Times, the scheduled two-day mediation was followed by attorneys for Mr. Black and the Virgin Islands, as well as a plaintiff’s lawyer who represented several of Mr. Epstein’s victims.

Brad Edwards, an attorney for the plaintiffs, said he was “not at liberty to discuss this subject.”

Mr Epstein killed himself in August 2019 while in federal custody in Manhattan on sex trafficking charges. Lawyers for Mr. Epstein’s victims have said that at least 200 women – many of whom were teenagers at the time – were sexually abused by Mr. Epstein at his private island residence in the Virgin Islands, as well as his homes in Manhattan, Florida and elsewhere.

Some of Mr. Epstein’s victims, who received direct settlements from his estate, were allowed by the estate’s executors to pursue claims against a handful of people who had socialized with Mr. Epstein, according to a person with knowledge of the matter. The man said, Mr. Black was one of those people.

The settlement with the Virgin Islands did not cover anyone else’s claims against Mr. Black. But the document states that the agreement cannot be used as “evidence of wrongdoing by Black”.

The Virgin Islands’ inquiry into Mr. Black arose from an investigation that resulted in a $105 million settlement with Mr. Epstein’s estate and the territory’s pending lawsuit against JPMorgan Chase. A trial was underway in the territory, in which Mr. Black was accused of facilitating Mr. Epstein’s sex trafficking operation by paying large sums to Southern Trust, one of Mr. Epstein’s main companies in the Virgin Islands, two people briefed on the matter said.

Mr Black’s decision to step down at Apollo came after an article in The Times suggested his relationship with Mr Epstein was more extensive than previously known. Apollo later hires the law firm Dechert to investigate Mr. Black’s relationship with Mr. Epstein. Dechert clears Mr. Black of any wrongdoing, But the law firm found that Mr Black had paid $158 million to Southern Trust and also provided a $30 million loan to the business.

In his report, Dechert noted that the compensation paid by Mr. Black to Mr. Epstein, who dropped out of college, far exceeded any amounts paid to his other professional advisors.

Planning for mediation sessions with Mr. Black began in December when Denise N. George was still the Attorney General of the Virgin Islands. But he was fired on New Year’s Eve by the US territory’s governor — Albert Bryan Jr. — just days after his office sued JPMorgan.

In its lawsuit against JPMorgan, the Virgin Islands claim the country’s largest bank turned a blind eye to Mr Epstein’s trafficking of teenage girls and young women for sex. It is seeking $190 million in fines.

JPMorgan, which recently won a $290 million settlement with Mr Epstein’s victims on the same grounds, is opposing the suit filed by the Virgin Islands. The bank claims the region should not be entitled to any money from it because government officials did nothing to stop Mr Epstein’s activities.

In 2013, JPMorgan dropped Mr. Epstein as a client after years of red flags were raised by bank compliance staff about doing business with a registered sex offender, according to court filings in the lawsuit.

But other documents reviewed by the Times show that several bank employees continued to speak to Mr. Epstein after 2013 because of his role as tax adviser to Mr. Black, who was also a client of JPMorgan’s private bank. These documents also show that the decision to continue working with Mr. Epstein because he was an advisor to Mr. Black was approved by the bank’s top executives.

“Unlike any one individual, JPMorgan had detailed and comprehensive financial data on Epstein’s activities and had a legal obligation to share that information with law enforcement,” Ms Velazquez said in her statement.

A JP Morgan spokesperson was not available for comment.

The territory’s attorney general’s office said part of the settlement money would be spent on mental health programs and combating sex trafficking on the Virgin Islands.

Jessica Silver-Greenberg And Maureen Farrell contributed to this report.

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