Senate Committee Presses Leon Black on Epstein Tax Advice

A Senate committee is investigating whether or not $158 million that the billionaire investor Leon Black paid the disgraced financier Jeffrey Epstein for tax and property planning providers ought to have been categorised as a present, as a part of a broader inquiry into tax-avoidance schemes by ultrawealthy people, in keeping with a letter reviewed by The New York Times.

In addition to the charges that Mr. Black mentioned he had paid Mr. Epstein, the Senate Finance Committee is wanting into a number of trusts that Mr. Black used to save lots of on taxes and recommendation that Mr. Epstein gave on artwork purchases, in keeping with the letter, which the committee’s chairman, Senator Ron Wyden, despatched to the personal fairness mogul on Monday.

Mr. Wyden, Democrat of Oregon, wrote that the committee was dissatisfied with the data that Mr. Black, a co-founder of Apollo Global Management, had offered it to this point and requested his cooperation.

“A significant number of open questions remain regarding the tax-avoidance scheme you implemented with Epstein’s assistance, including whether the exorbitant amounts paid to Epstein should have been classified as a gift for federal tax purposes,” the senator wrote. Gifts exceeding an annual threshold in worth are topic to federal taxes starting from 18 to 40 p.c.

A spokesman for Mr. Black, 71, mentioned he had “cooperated extensively with the committee.” Whit Clay, the spokesman, added: “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 advisers; and Mr. Black has fully paid all taxes owed to the government.”

In 2020, a legislation agency discovered that Mr. Epstein’s work had saved Mr. Black and his 4 kids $2 billion in property and reward taxes. The agency, Dechert, which Apollo’s board had retained to overview Mr. Black’s dealings with Mr. Epstein, discovered that he had not completed something fallacious. Mr. Black stepped down as chairman and chief govt of the personal fairness behemoth in 2021.

The investigation by the Senate Finance Committee is a part of an inquiry into tax shelters that the superrich use to “avoid or evade paying federal taxes, including gift and estate taxes,” in keeping with the 16-page letter. In April, the committee requested data from Harlan Crow, a billionaire actual property developer, about his tax therapy of presents to Justice Clarence Thomas of the Supreme Court.

Mr. Wyden despatched the letter simply days after The Times reported that Mr. Black, who’s value an estimated $9 billion, had staved off a attainable lawsuit by the U.S. Virgin Islands with a $62.5 million settlement.

The settlement, reached in January however not disclosed on the time, arose from potential claims that the Virgin Islands had developed in opposition to Mr. Black throughout its three-year investigation into Mr. Epstein’s sex-trafficking operation run partly from his personal island residence off St. Thomas.

“Jeffrey Epstein used the money Black paid him to partially fund his operations in the Virgin Islands,” in keeping with the settlement.

Mr. Black was a longtime social and enterprise acquaintance of Mr. Epstein, who killed himself in 2019 after his arrest on federal sex-trafficking expenses. Lawyers for his victims have estimated that Mr. Epstein, a school dropout with little coaching in tax and property work, sexually abused 200 younger girls, lots of them youngsters.

The Senate committee started investigating Mr. Black in June 2022 with a letter to Apollo, after which sought data from two main legislation corporations that had labored for Mr. Black. The attorneys instructed the committee that he was unwilling to reply questions concerning the funds to Mr. Epstein.

Mr. Black’s attorneys did present some details about a number of grantor retained annuity trusts, or GRATs, that have been arrange in 2006 to allow him to go on shares in Apollo to his kids in a tax-advantaged method — whereas letting him proceed to earn earnings from the funding. But Mr. Wyden mentioned Mr. Black had not offered sufficient data for the committee to find out if the work carried out by Mr. Epstein was a legit tax technique.

Beginning in 2014, Mr. Epstein supposedly helped restructure the trusts to keep away from a $1 billion reward and property tax hit to Mr. Black and his household, in keeping with the Dechert report.

A GRAT is a classy funding car that allows an individual to maintain accumulating earnings from property of every kind — together with shares, actual property and artwork — after which hand them off to relations with out paying the massive reward or property taxes usually related to such transfers.

Mr. Epstein had usually boasted that he was an professional in such trusts and picked up hefty charges for serving to a small variety of rich individuals lower your expenses in taxes.