EFTA00128645¶
DEC 26 2001¶
JEFFREY E. EPSTEIN¶
The Villard House¶
457 Madison Avenue¶
Fourth Floor¶
New York, New York 10022¶
Telephone:¶
Telecopier:¶
December 19, 2001¶
VIA TELECOPIER (¶
AND FIRST CLASS MAIL¶
Hon. Joseph J. Farnan, Jr.¶
United States District Court¶
District of Delaware¶
J. Caleb Boggs Federal Building¶
844 N. King Street¶
Room 6325, Lockbox 27¶
Wilmington, DE 19801¶
Re: Winstar Communications Inc.¶
Dear Judge Farnan:¶
I am writing in regard to the proposed acquisition (the “Acquisition”) of Winstar Communications Inc. by Wintel Telecom Holdings Inc. (“Wintel”). I feel it necessary to advise the Court and Debtor’s counsel of questionable conduct which I have observed in connection with an attempt by Wintel’s principals to obtain $15,000,000 of bridge financing from me for the Acquisition.¶
Approximately ten days ago, I was approached by Mr. Laurence Zimmerman who requested that I provide Wintel with immediate bridge financing in the amount of $15,000,000 for the Acquisition. Mr. Zimmerman claimed that because of the requirement by the Court of an immediate $15,000,000 earnest money deposit by the winning bidder, there was insufficient time for him to close a loan for the money he required for the Acquisition. He claimed to be negotiating this loan with The Bank of New York.¶
EFTA00128646¶
In order to induce me to make the $15,000,000 bridge loan to him, he offered to post as collateral, among other things, $15,000,000 worth of 10 year US Treasury Bonds (the “Bonds”). A copy of the proposed term sheet for the $15,000,000 bridge loan, which he faxed to me on December 12, 2001, is attached. As indicated in that term sheet, Mr. Zimmerman initially advised me that the bridge loan had to be funded by no later than 12:00 pm on December 14, 2001.¶
As documentary evidence of Wintel’s rights in and to the Bonds, on December 13, 2001, Mr. Zimmerman faxed to me a copy of a Bloomberg screen printout relating to $15,514,000 of US. Treasury Bonds. On December 17, 2001, he also faxed to me copies of an Institutional Custodial Safekeeping Receipt, an Institutional Receipt and a Special Addendum to the Institutional Custodial Safekeeping Receipt, relating to $20,000,000 of US Treasury Bonds, each of which instrument purported to be issued by Williams Management and Capital Group, Ltd. on December 13, 2001 and was purportedly signed by Mark S. Williams and Charles C. King, as the President and Counsel, respectively, of Williams Management and Capital Group, Ltd. (the “Collateral Instruments”). The Collateral Instruments indicated that Wintel was the assignee of Century Capital, S.A., which was purportedly the beneficiary of the Collateral Instruments. On each of the Collateral Instruments there appeared a space for a “Bank Officer Verification and Bank Stamp”. Each such space was purportedly signed on behalf of Wells Fargo Bank NA by Kevin “Keon” of the Lynwood, Washington branch of the bank, and was stamped with what appeared to be Mr. Keon’s official bank stamp. Copies of the screen printout and the three Collateral Instruments are attached.¶
On December 17, 2001, Mr. Zimmerman’s associate, James P. Whittier faxed to me wire transfer instructions for the loan, and another associate Jay Phillip Parker faxed to me a form letter to the Court, pursuant to which I was to confirm the commitment to immediately fund $15,000,000 to an account designated by Wintel. Mr. Parker instructed me to sign and return the letter to Mr. Whittier. Copies of these faxes are attached.¶
In an effort to independently verify the authenticity of the Collateral Instruments, I personally called the Lynwood, Washington branch of Wells Fargo Bank N.A. At that time, I was advised that there is no person by the name of Kevin “Keon” who works in the Lynwood, Washington branch of the bank, but there is a person named Kevin “Keo” who works in the Monroe branch of the bank. I spoke with Mr. Keo, personally, who advised me that he never signed any of the Collateral Instruments purporting to be signed by Mr. “Keon”, that the bank never received or reviewed any of the foregoing instruments and that his supervisor advised him that the bank was investigating other questionable conduct of Williams Management and Capital Group, Ltd.¶
On December 18, 2001, I received the attached correspondence from Mr. Zimmerman.¶
Needless to say, I will not be funding the $15,000,000 bridge loan, and consequently, there seems to be little reason for me to further investigate this matter.¶
EFTA00128647¶
Nevertheless, in light of Winstar Communication Inc.’s current status, I thought that the Court and Debtor’s counsel might find these events particularly relevant.¶
Jeffrey E. Epstein¶
cc: Mark J. Shapiro, Esq.¶
Shearman & Sterling¶
599 Lexington Avenue¶
New York, NY 10022¶
Fax:¶