Leon Black’s nine-figure payment to alleged convicted pedophile sex trafficker Jeffrey Epstein has the legal world scratching its head.
Black’s Apollo Global Management revealed Monday that its billionaire CEO and co-founder paid Epstein, who committed suicide in prison in August 2019, between $ 158 million between 2013 and 2017 for professional advice on tax audits, management of heritage and heritage planning.
That’s much more than Black’s paid advisors, including Paul Weiss, the preeminent wealth and tax planner Black hired to run according to Epstein’s ideas, according to a report by the Dechert law firm, which was hired by Apollo to investigate the Black’s ties to Epstein.
“It is clear that the compensation paid by Black to Epstein far exceeded the amounts Black paid to his other professional advisers,” Dechert reported.
Black justified it by explaining that he paid Epstein “in amounts that were intended to be proportional to the value provided,” Dechert said. And Black, Dechert says, believed Epstein “provided advice that conferred more than $ 1 billion and up to $ 2 billion or more in value.”
But the report, released Monday, also raises questions about the value Epstein really was worth by painting a picture of an adviser that sometimes caused more headaches than it provided solutions.
When hiring Epstein, 69-year-old Black ignored his 2008 conviction for having sex with a 17-year-old because he “believed that Epstein had misunderstood that he was older,” the report said.
“Black saw Epstein as a confirmed bachelor with eclectic tastes, who often employed attractive women. However, Black did not believe that any of the women working at Epstein were minors. ”
The report applauded some of Epstein’s work, including his “fire drill” plans to test how Black’s estate might be treated. “Despite Epstein’s lack of formal training in law or accounting, his fire drill plans were … detailed and comprehensive,” witnesses said.
But people also complained that Epstein came up with ideas that seemed brilliant just to get rid of quickly.
“Epstein presented several ideas on many different tasks, handing out long lists of ideas that he believed should be pursued,” the report said. “Many of these ideas would seem plausible at face value, but they were not kept under control.”
“There was a general consensus that some of Epstein’s ideas were unique in being creative and useful, while others were unremarkable or unviable,” the report said.
Some witnesses also described Epstein as creating a toxic and destructive work environment for Black’s family office, saying good ideas would be recognized regardless of their involvement, according to the report.
The report also said the criminal tried to use the personal information he collected in his time with Black to extract more money from the billionaire amid a fee dispute that led to the separation of the men.
“Epstein … would invoke his friendship with Black in those emails,” the report says. “Even referring to personal issues that Black had shared with Epstein with confidence.”
And while Epstein allegedly told Black that his fees, which amounted to about $ 31.6 million a year for four years, would be tax deductible, they were not, according to the report.
Tax and estate experts say they are confused. “Paying tens of millions to a rookie is very rare,” said a lawyer from a top law firm.
A tax lawyer added: “Maybe there’s some justification, but I’d like to see what it is.”
“Frankly, I’m offended on behalf of Paul Weiss,” said Joe Patrice, editor of the legal news site Above the Law and former Cleary Gottlieb litigant. “Imagine giving advice considered to be world leaders and discovering that it gives millions to this guy.”
Neither Black nor Paul Weiss responded to a request for comment.