The Senate Finance Committee is attempting an investigation into billionaire investor Leon Black’s payment of $158 million to the late financier and sex offender Jeffrey Epstein.
The investigation is focused on whether this payment was part of a larger strategy aimed at avoiding over $1 billion in federal gift and estate taxes.
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The payments from Black to Epstein were reportedly made in multiple installments between 2012 and 2017, as revealed in an ongoing investigation led by Senator Ron Wyden, who heads the Senate Finance Committee.
The investigation was initiated in June 2022 after inconsistencies were found in a report conducted by Dechert LLP, a law firm hired by the Apollo Board of Directors to investigate Black’s ties with Epstein.
Back in 2006, Jeffrey Epstein provided advice to Leon Black regarding the creation of a Grantor Retained Annuity Trust (GRAT), which involved incorporating stakes in Apollo partnerships. These stakes were subsequently moved into what’s known as a remainder trust. However, this arrangement carried a significant estate-tax liability, potentially surpassing $1 billion.
Epstein allegedly assisted Black in finding a way around this tax liability by suggesting that the trustees of the remainder trust should have authority to determine Black’s distributions. As a result, Black’s advisors later discovered that he was paid an excess amount by the trust, leading to the possibility of facing clawbacks – a process where previously distributed funds are taken back to rectify an overpayment.
Senator Wyden expressed concerns regarding the size of the payments, which appeared to be unusually high compared to other financial advisors and exceeded the median compensation of Fortune 500 CEOs at that time.
In response to the Committee’s inquiry, Black’s legal team declined to share additional information, citing concerns about the invasive nature of the questions and a lack of assurances of confidentiality from the Committee.
They did, however, highlight that Black “voluntarily answered more than a dozen of the Committee’s questions and also voluntarily produced more than 150 pages of personal taxpayer and estate planning documentation — answers and documentation that he was not legally required to provide.”
“The transactions referenced in the Committee’s letter were lawful in all respects, were conceived of, vetted and implemented by reputable law firms and tax and other advisors, and Mr. Black has fully paid all taxes owed to the government,” Whit Clay, a spokesman for Black, said in a statement to CNN.
Leon Black stepped down as CEO of Apollo in 2021 after consulting services between him and Epstein arose. An internal Apollo investigation following these allegations has found no wrongdoing yet.
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