Leon Black, Chairman, CEO and Director, Apollo Global Management, LLC, speaks at the Milken Institute’s 21st Global Conference in Beverly Hills, California, May 1, 2018.
Lucy Nicholson | Reuters
Apollo Global Management CEO Leon Black paid child sex predator Jeffrey Epstein $158 million for financial advice from 2012 through 2017, despite knowing Epstein pleaded guilty to paying an underage girl for sexual services in 2008, a probe by a law firm retained by Apollo has found.
Those newly disclosed payments are a whopping three times more than the minimum of $50 million in payments Black was reported in October to have made to the controversial money manager Epstein during that time frame.
But Apollo also said that the investigation by the law firm Dechert found no wrongdoing by Black or by the investment company.
However, Black said he will retire as CEO by the end of July.
Black said he will remain as chairman of the firm he co-founded with Marc Rowan, who will become CEO.
Black said that he had decided that “one way I can begin to address the grievous error” of having a professional relationship with Epstein was to pledge $200 million toward gender-equality initiatives, and supporting survivors of domestic violence, sexual assault and human trafficking.
That large amount of money is just a small fraction of the value of Epstein’s advice in Black’s mind.
“As a result of Epstein’s work, Black believed, and witnesses generally agreed, that Epstein provided advice that conferred more than $1 billion and as much as $2 billion or more in value to Black,” the report by Dechert said.
Epstein killed himself in a federal jail in August 2019 after being arrested the prior month on child sex trafficking charges.
Prosecutors have said he sexually abused dozens of underage girls from 2002 through 2005 at his luxurious residences in New York City and Palm Beach, Florida.
Apollo previously has said that Black cut ties with Epstein, a former friend of Presidents Donald Trump and Bill Clinton, by 2018 over a “fee dispute.”
Dechert’s report said that Black made two loans to Epstein between 2013 and 2017 totaling $30.5 million, in connection with an art transaction by Epstein.
When Black demanded repayment of the loans in early 2018, Epstein repaid just $10 million, but failed to pay any more before his death, “despite Black’s repeated demands for repayment in full,” the report said.
Apollo in a news release on Monday said that Dechert’s investigation found that Apollo had never retained Epstein for any services and that Epstein never invested any funds managed by the company.
The company said that Dechert also confirmed that while Epstein had “regularly advised” Black on trust and estate planning, tax issues and other operations of his family office, all fees paid to Epstein by Black or his family office were for “bona fide” services.
And “the amounts were intended to be proportional to the value” of Epstein’s work, the probe found, according to Apollo.
“Epstein’s advice was vetted by respected professional advisors; and Dechert found no evidence that Mr. Black was involved in any way with Mr. Epstein’s criminal activities at any time,” Apollo said in a news release.
Dechert said in its report that many of the witnesses the firm questioned “believed Epstein provided significant value to Black and the Family Office in the areas of estate and tax planning.”
The report said, “It was generally agreed that Epstein was an active participant who provided unique solutions to several issues raised in the family office.”
“The findings of the report are consistent with statements made by Mr. Black and Apollo regarding the prior relationship,” the company added.
The report itself said, “Black and others at Apollo and the Family Office were aware that Epstein had been convicted in 2008 for the charges of solicitation of prostitution and procuring a person under 18 for prostitution” in Florida state court.
“There is no evidence suggesting knowledge of any other of Epstein’s criminal activity or the scope and details of such activity, at any time prior to such activities being public,” the report said.
“When Black first retained Epstein, he believed that Epstein had served his time for the originally charged offenses and believed that it was not inappropriate to give Epstein a second chance, as many other prominent figures in business, science, politics and academia had done,” the report said.
“Black viewed Epstein as a confirmed bachelor with eclectic tastes, who often employed attractive women,” the report said. “However, Black did not believe that any of the women in Epstein’s employ were underage. Black has no recollection of ever seeing Epstein with an underage woman at any time.”
“Black compensated Epstein for his work in amounts that were intended to be proportional to the value provided by Epstein,” Dechert said in its report.
“Those payments for work performed over the period 2012 through 2017 totaled $158 million. In 2013, payments were memorialized in signed and unsigned agreements. After that point, payments were made on an ad hoc basis based on Black’s perceived value of Epstein’s work,” the report said.
“Dechert has seen no evidence suggesting that Black ever compensated Epstein for any service other than Epstein’s legitimate advice on trust and estate planning, tax issues, issues relating to artwork, Black’s airplane, Black’s yacht, and other similar matters, philanthropic issues, and the operation of the Family Office. Moreover, such advice was vetted consistently by Black’s other advisors, including Family Office employees, Paul Weiss, and other outside legal, accounting and tax professionals.”
Dechert also found that, “Beginning in 2016, Black and Epstein’s professional and personal relationship deteriorated over a payment dispute that had long been brewing, with Black refusing to pay Epstein tens of millions of dollars that Epstein believed he had earned.”
“Black’s last payment to Epstein was made in April 2017; in 2018, Epstein repaid a portion of two loans that were outstanding to Black but never repaid the balance,” the report said.
“Black and Epstein ceased communications in or around the fall of 2018, prior to the renewed public revelations of Epstein’s conduct and Epstein’s arrest and suicide.”
Jeffrey Epstein attends Launch of RADAR MAGAZINE at Hotel QT on May 18, 2005.
Patrick McMullan | Getty Images
Black said in a statement, “After a three-month investigation, which included reviewing more than 60,000 documents and interviewing more than 20 individuals, the Dechert report on behalf of the Apollo Board Conflicts Committee confirms the key facts I have previously disclosed concerning my relationship with Jeffrey Epstein.”
Those facts, Black said, included “that I was completely unaware of Mr. Epstein’s abhorrent misconduct that came to light in late 2018, that I did not engage in any wrongdoing or inappropriate conduct, that all fees paid to Mr. Epstein were for legitimate professional advisory services.”
Black also said, “It is important for me to stress again how deeply I regret having had any involvement with Mr. Epstein and I thank the Committee and its counsel for their tireless work over the last few months.”
Black in a separate statement announcing his planned retirement as CEO by this summer said, “I am extraordinarily proud of the firm I have helped build over the past 30 years and the value we bring to our clients, investors and communities.”
“Since our IPO in early 2011, we have focused on transforming Apollo and developing the next generation of leadership to position the firm for continued growth for decades to come. Given the extraordinary strength and depth of Apollo’s management team and consistent with best-in-class governance practices, I have advised the Apollo Board that I will retire as CEO on or before my 70th birthday in July and remain as Chairman,” Black said.
He also said that in the role of chairman, “I look forward to focusing on strategic planning, growth initiatives, investment opportunities and supporting Apollo, which has been my life’s work, in whatever ways I can.”