EXHIBIT 11¶
PART 1¶
SOCiETY MARCH 2003 ISSUE¶
THE TALENTED MR. EPSTEIN¶
Lately, Jeffrey Epstein 's highe flying style has been drawing oohs and aahs: the bachelor financier Ihrs in New York's largest private residence. claims to take only billionaires as clients. and flies celebrities including Bill Clinton and Kevin Spacey on his Boeing 727. But pierce h is ai r of mystery and the picture changes. Vicky explores Epstein's investment career. his ties to retail magnate Leslie Wexner, and his complicated past.¶
BY VICKY¶
MARCH I. 7003¶
O n Manhattan's Upper East Side, home to some of the most expensive real estate on earth, exists the crown jewel of the city's residential town houses. With its is-foot-high oak door, huge arched windows, and nine floors, it sits on—or, rather, commands —the block of 71st Street between Fifth and Madison Avenues. Almost ludicrously out of proportion with its four- and five-story neighbors, it seems more like an institution than a house. This is perhaps not surprising—until 1989 it was the Birch Wathen private school. Now it is said to be Manhattan's largest private residence.¶
Inside, amid the flurry of menservants attired in sober black suits and pristine MI gloves, you feel you have stumbled into someone's private Xanadu. This is no mere rich person's home, but a high-walled, eclectic, imperious fantasy that seems to have no boundaries.¶
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The entrance■ is decorated not with paintings but with row upon row of individually framed eyeballs; these, the owner tells people with relish, were imported from England, where they were made for injured soldiers. Next comes a marble foyer, which does have a painting, in the manner of Jean Dubuffet ... but the host coyly refuses to tell visitors who painted it. In any case, guests are like pygmies next to the nearby twice-life-size sculpture of a naked African warrior.¶
Despite its eccentricity the house is curiously impersonal, the statement of someone who wants to be known for the scale of his possessions. Its occupant, financier Jeffrey Epstein, go, admits to friends that he likes it when people think of him this way. A good-looking man, resembling Ralph Lauren, with thick gray= hair and a weathered face, he usually dresses in jeans, knit shirts, and loafers. He tells people he bought the house because he knew he "could never live anywhere bigger." He thinks st,000 square feet is an appropriately large space for someone like himself, who deals mostly in large concepts—especially large sums of money.¶
¶
Guests are invited to lunch or dinner at the town house—Epstein usually refers to the former as "tea." since he likes to eat bite-size morsels and drink copious quantities of Earl Grey. (He does not touch alcohol or tobacco.) Tea is served in the leather room," so called because of the cordovan-colored fabric on the walls. The chairs are covered in a leopard print, and on the wall hangs a huge, Oriental fantasy of a woman holding an opium pipe and caressing a snarling lionskin. Under her gaze, plates of finger sandwiches are delivered to Epstein and guests by the menservants in= gloves.¶
Upstairs, to the right of a spiral staircase, is the "office," an enormous gallery spanning the width of the house. Strangely, it holds no computer. Computers belong in the -computer room' (a smaller room at the back of the house), Epstein has been known to say. The office features a gilded desk (which Epstein tells people belonged to banker J. P._), 18th-century black lacquered Portuguese cabinets, and a nine-foot ebony Steinway "D" grand. On the desk, a paperback copy of the Marquis de Sade's The Misfortunes of Virtue was recently spotted. Covering the floor, Epstein has explained, "is the largest Persian rug you'll ever see in a private home—so big, it must have come from a mosque." Amid such splendor, much of which reflects the work of thell. decorator Alberto Pinto, who has worked for Jacques Chirac and the= families of Jordan and Saudi Arabia, there is one particularly startling oddity: a stuffed black poodle, standing atop the grand piano. "No decorator would ever tell you to do that," Epstein brags to visitors. "But I want people to think what it means to stuff a dog." People can't help but feel it's Epstein's way of saying that he always has the last word.¶
In addition to the town house, Epstein lives in what is reputed to be the largest private dwelling in New Mexico, on an $18 million, 7,500 acre ranch which he named "Zorro." "It makes the town house look like a shack," Epstein has said. He also owns Little St. James, a 70-acre island in the U.S. Virgin Islands, where the main house is currently being renovated by Edward Tuttle, a designer of the Amanresorts. There is also a $6.8 million house in Palm Beach, Florida. and a fleet of aircraft: a Gulfstream IV, a helicopter, and a Boeing 727, replete with trading room, on which Epstein recently flew President Clinton, actors Chris Tucker and Kevin Spacey, supermarket magnate Ron Borkle, Lew Wasserman's grandson.- Wasserman, and a few others, on a mission to explore the problems of AIDS and economic development in Africa.¶
Epstein is charming. but he doesn't let the charm slip into his eyes. They are steely and calculating, giving some hint at the steady whir of machinery running behind them. "Let's play chess," he said to me, after refusing to give an interview for this article. "You be=. You get the first move." It was an appropriate metaphor for a man who seems to feel he can win no matter what the advantage of the other side. His advantage is that no one really seems to know him or his history completely or what his arsenal actually consists of. He has carefully engineered it so that he remains one of the few truly baffling mysteries among New York's moneyed world. People know snippets, but few know the whole.¶
"He's very enigmatic," says Rosa NIonekton, the former C.E.O. of Tiffany F.: Co. in the U.K. and a close friend since the early 1980s. "You think you know him and then you peel off another ring of the onion skin and there's something else extraordinary underneath. Ile never reveals his hand.... He's a classic iceberg. What you see is not what you get."¶
-F1 ven acquaintances sense a curious dichotomy: Yes, he lives like a "modern maharaja," as Leah Kiernan. one of his art dealers. puts it. Yet he is fastidiously, almost obsessively private—he lists himself in the phone book under a pseudonym. He rarely 4 attends society gatherings or weddings or funerals; he considers eating in restaurants like 'eating on the subway"—Le., something he'd never do. There are many women in his life, mostly young, but there is no one of them to whom he has been able to commit. He describes his most public companion of the last decade, Ghislaine Maxwell, 41, the daughter of the late, disgraced media baron Robert Maxwell, as simply his "best friend' He says she is not on his payroll, but she seems to organize much of his life—recently she was making telephone inquiries to find a California-based yoga instructor for him. (Epstein is still close to his two other long-term girlfriends, Paula Heil Fisher, a former acoriate of his at the brokerage firm Bear Stearns and now an opera producer, and Eva Andersson= a doctor and onetime model. He tells people that when a relationship is over the girlfriend "moves up, not down: to friendship status.)¶
Some of the businessmen who dine with him at his home—they include newspaper publisher Mort Zuckerman, banker Louis Ranieri, Revlon chairman Ronald Perelman, real-estate tycoon. Black, former Microsoft executive Nathan Myhrvold, Toni Pritzker (of Hyatt Hotels), and real-estate personality Donald Trump—sometimes seem not all that clear as to what he actually does to earn his millions. Certainly, you won't find Epstein's transactions written about on Bloomberg or talked about in the trading rooms. "The trading desks don't seem to know him. It's unusual for animals that big not to leave any footprints in the snow," says a high-level investment manager.¶
Unlike such fund managers as Soros and Stanley Druckenmiller, whose client lists and• maneuverings act as their calling cards, Epstein keeps all his deals and clients secret, bar one client: billionaire Leslie Wexner, the respected chairman of Limited Brands. Epstein insists that ever since he left Bear Stearns in 1981 he has managed money only for billionaires—who depend on him for discretion. "I was the only person crazy enough, or arrogant enough, or misplaced enough, to make my limit a billion dollars or more," he tells people freely. According to him. the flat fees he receives from his clients, combined with his skill at playing the currency markets "with very large sums of money," have afforded him the lifestyle he enjoys today.¶
Why do billionaires choose him as their trustee? Because the problems of the mega-rich, he tells people, are different from yours and mine, and his unique philosophy is central to understanding those problems: "Very few people need any more money when they have a billion dollars. The key is not to have it do harm more than anything else.... You don't want to lose your money."¶
H e has likened his job to that of an architect—more specifically, one who specializes in remodeling: 'I always describe [a billionaire] as someone who started out in a small home and as he became wealthier had add-ons. He added on another addition, he built a room over the garage ... until you have a house that is usually a mess.... It's a large house that has been put together over time where no one could foretell the financial future and their accompanying needs."¶
He makes it sound as though his job combines the roles of real-estate agent, accountant, lawyer, money manager, trustee, and confidant. But, as with Jay Gatsby, myths and rumor swirl around Epstein.¶
Here are some of the hard facts about Epstein—ones that he doesn't mind people knowing: lie grew up middle-class in Brooklyn. His father worked for the city's =department. His parents viewed education as 'the way out-for him and his younger brother, Mark. now working in real estate. Jeffrey started to play the piano—for which he maintains a passion—at five, and he went to Brooklyn's Lafayette High School. He was good at mathematics, and in his early 205 he got a job teaching physics and math at Dalton. the elite Manhattan private school. While there he began tutoring the son of Bear Stearns chairman Ace Greenberg and was friendly with a daughter of Greenberg's. Soon he went to Bear Stearns, where, under the mentorship of both Greenberg and current Bear Stearns C.E.O. James Cayne, he did well enough to become a limited partner—a rung beneath full partner. He abruptly departed in 1981 because, he has said, he wanted to run his own business.¶
Thereafter the details recede into shadow. A few of the handful of current friends who have known him since the early 198os recall that he used to tell them he was a "bounty hunter," recovering lost or stolen money for the government or for very rich people. He has a license to carry a firearm. For the last 15 years, he's been running his business, J. Epstein & Co.¶
Since Leslie Wexner appeared in his life—Epstein has said this was in 1986; others say it was in 1989, at the earliest—he has gradually, in a way that has not generally made headlines, come to he accepted by the Establishment. He's a member of various commissions and councils: he is on the Trilateral Commission, the Council on Foreign Relations, and the Institute of International Education.¶
His current fan club extends to Cayne, Henry Rosovsky, the former. of Harvard's Faculty of Arts and Sciences, and Larry Summers, Harvard's current president. Harvard law professor Alan Dershowitz says, "I'm on my loth book.... The only person outside of my immediate family that I send drafts to is Jeffrey." Real-estate developer and philanthropist Marshall M. who has worked with Epstein on projects in New Albany, Ohio, for Wexner, says, "He digests and decodes the information very rapidly, which is to me terrific because we have shorter meetings."¶
Also on the list of admirers are former senator Mitchell and a gaggle of distinguished scientists, most of whom Epstein has helped fund in recent years. They include Nobel Prize winners Gerald Edelman and Gell-M, and mathematical biologist Nowak. When these men describe Epstein, they talk about "energy" and "curiosity," as well as a love for theoretical physics that they don't ordinarily find in laymen. Gell-= rather sweetly mentions that -there are always pretty ladies around" when he goes to dinner chez Epstein, and he's under the impression that Epstein's clients include the Queen of England. Both Nowak and Dershowitz were thrilled to find themselves shaking the hand of a man named "Andrew" in Epstein's house. "Andrew" turned out to be Prince Andrew, who subsequently arranged to sit in the back of Dersho6itz's law class.¶
Epstein gets annoyed when anyone suggests that Wexner "made him." "I had really rich clients before," he has said. Vet he does not deny that he and Wexner have a special relationship. Epstein sees it as a partnership of equals. "People have said it's like we have one brain between two of us: each has a side."¶
'I think we both possess the skill of seeing patterns," says Wexner. 'But Jeffrey sees patterns in politics and financial markets, and I see patterns in lifestyle and fashion trends. My skills are not in investment strategy, and, as everyone who knows Jeffrey knobs, his are not in fashion and design. We frequently discuss world trends as each of us sees them.'¶
y the time Epstein met Wexner, the latter was a retail legend who had built a $3 billion empire—one that now includes Victoria's Secret. Express, and Bath & Body Works—from S5,000 lent him by his aunt. 'Wexner saw in Jeffrey the type of person who had the potential to realize his [Jeffrey's] dreams," says someone who has worked closely with both men. 'He gave Jeffrey the ball, and Jeffrey hit it out of the park."¶
Wexner, through a trust, bought the town house in which Epstein now lives fora reported $13.2 million in 1989. In 1993, Wexner married Abigail Koppel, a 31-year-old lawyer, and the newlyweds relocated to Ohio; in 1996, Epstein moved into the town house. Public documents suggest that the house is still owned by the trust that bought it, but Epstein has said that he now owns the house.¶
Wexner trusts Epstein so completely that he has assigned him the power of fiduciary over all of his private trusts and foundations, says a source close to Wexner. In [992, Epstein even persuaded Wexner to put him on the board of the Wexner Foundation in place of Wexner's ailing mother. Bella Wexner recovered and demanded to be reinstated. Epstein has said they settled by splitting the foundation in two.¶
Epstein does not care that he comes between family members. In fact, he sees it as his job. He tells people, "I am there to represent my client, and if my client needs protecting—sometimes even from his own family—then it's often better that people hate me, not the client."¶
'You've probably heard I'm vicious in my representation of my clients," he tells people proudly; Leah Kiernan describes his haggling over art prices as something like a scene out of the movie Mad Max: Beyond Thunderdome. Even a former mentor says he's seen "the dark side" of Epstein, and a Bear Stearns source recalls a meeting in which Epstein chewed out a team making a presentation for Wexner as being so brutal as to be "irresponsible."¶
One reporter, in fact, received three threats from Epstein while preparing a piece. They were delivered in a jocular tone, but the message was clear: There bill be trouble for your family if I don't like the article.¶
On the other hand. Epstein is clearly very generous with friends. Joe Pagano, an Aspen-based venture capitalist, who has known Epstein since before his Bear Stearns days, can't say enough nice things: "I have a boy who's dyslexic, and Jeffrey's gotten close to him over the years.... Jeffrey got him into music. He bought him his first piano. And then as he got to school he had difficulty ... in studying ... so Jeffrey got hint interested in taking flying lessons."¶
Rosa Monckton recalls Epstein telling her that her daughter, Domenica, who suffers from Down syndrome, needed the sun, and that Rosa should feel free to bring her to his house in Palm Beach anytime.¶
Some friends remember that in the late 8os Epstein would offer to upgrade the airline tickets of good friends by affixing first-class stickers; the only problem was that the stickers turned out to be unofficial. Sometimes the technique worked, but other times it didn't, and the unwitting recipients found themselves exiled to coach. (Epstein has claimed that he paid for the upgrades, and had no knowledge of the stickers.) who benefited from Epstein's largesse claim that his generosity comes with no strings attached. "I never felt he wanted an, e in return," says one old friend, who received a first-class upgrade.¶
n about town as a man who loves women—lots of them, mostly young. Model types have been heard saying they itude to Epstein for flying them around, and he is a familiar face to many of the Victoria's Secret girls. One young woman recalls being summoned by Ghislaine Maxwell to a concert at Epstein's town house, where the women seemed to outnumber the men by far. "These were not women you'd see at Upper East Side dinners," the woman recalls. 'Many seemed foreign and¶
dressed a little bizarrely.-This same guest also attended a cocktail party thrown by Maxwell that Prince Andrew attended, which was filled. she says, with young Russian models. 'Some of the guests were horrified,' the woman says.¶
"He's reckless." says a former business associate, 'and he's gotten more so. Money does that to you. lie's breaking the oath he made to himself—that he would never do anything that would expose him in the media. Right now, in the wake of the publicity following his trip with Clinton, he must be in a very difficult place.-¶
A ccording to S.L.C. and other legal documents unearthed by VANITY FAIR, Epstein may have good reason to keep his past cloaked in secrecy: his real mentor, it might seem, was not Leslie Wexner but Steven Jude Hoffenberg, 57, who, for a few months before the S.E.C. sued to freeze his assets in 1993, was trying to buy the New York Post. lie is currently incarcerated in the Federal Medical Center in Devens, Massachusetts, serving a 20-year sentence for bilking investors out of more than Sq5o million in one of the largest Ponzi schemes in American history.¶
When Epstein met Hoffenberg in London in the 1980s, the latter was the charismatic, audacious head of the Towers Financial Corporation, a collection agency that was supposed to buy debts that people owed to hospitals, banks, and phone companies. But Hoffenberg began using company funds to pay off earlier investors and service a lavish lifestyle that included a mansion on Long Island, homes on Manhattan's Sutton Place and in Florida, and a fleet of cars and planes.¶
I loffenberg and Epstein had much in common. Both were smart and obsessed with making money. Both were from Brooklyn. According to Hoffenberg, the two men were introduced by Douglas Leese, a defense contractor. Epstein has said they were introduced by John Mitchell, the late attorney general.¶
Epstein had been running International Assets Group Inc. (I.A.G.), a consulting company, out of his apartment in the MIbuilding on East 66th Street in New York. Though he has claimed that he managed money for billionaires only, in a 1989 deposition he testified that he spent 8o percent of his time assisting people recover stolen money from fraudulent brokers and lawyers. He was also not above entering into risky, tax-sheltered oil and gas deals with much smaller investors. A lawsuit that Michael Stroll, the former head of Electronics Inc., filed against Epstein shows that in 1982 I.A.G. received an investment from Stroll of $450,000, which Epstein put into oil. In 1984 Stroll asked for his money back; four years later he had received only Slo,000. Stroll lost the suit, after Epstein claimed in court, among other things, that the check for $10,000 was for a horse he'd bought from Stroll. -My net worth never exceeded four and a half million dollars." Stroll has said.¶
Hoffenberg, says a close friend, "really liked Jeffrey.... Jeffrey has a way of getting under your skin, and he was under Hoffenberg's." Also appealing to Hoffenberg were Epstein's social connections; they included oil mogul Cece Wang (father of the designer Vera) and Mohan Murjani, whose clothing company grew into Gloria Vanderbilt Jeans. Epstein lived large even then. One friend recalls that when he took Canadian heiress Wendy Belzberg on a date he hired a Rolls-Royce especially for the occasion. (Epstein has claimed he owned it.)¶
In 1987, Hoffenberg, according to sources, set Epstein up in the offices he still occupies in the Villard House, on Madison Avenue. across a courtyard from the restaurant Le Cirque. Hoffenberg hired his new protége as a consultant at S25,000 a month, and the relationship flourished. -They traveled everywhere together—on Hoffenberg's plane, all around the world, they were always together," says a source. Hoffenberg has claimed that Epstein confided in him, saying, for example, that he had left Bear Stearns in 1981 after he was discovered executing "illegal operations.'¶
Several of Epstein's Bear Stearns contemporaries recall that Epstein left the company very suddenly. Within the company there were rumors also that he was involved in a technical infringement, and it was thought that the executive committee asked that he resign after his two supporters, Ace Greenberg and Jimmy Cayne, were outnumbered. Greenberg says he can't recall this; Cayne denies it happened, and Epstein has denied it as well. "Jeffrey Epstein left Bear Stearns of his own volition," says Cayne. "It was never suggested that he leave by any member of management, and management never looked into any improprieties by him. Jeffrey said specifically, 'I don't want to work for anybody else. I want to work for myself. Yet, this is not the story that Epstein told to the S.E.C. in 1981 and to lawyers in a 1989 deposition involving a civil business case in Philadelphia.¶
In 1981 the S.E.C.'s Jonathan Harris and Robert Blackburn took Epstein's testimony and that of other Bear Stearns employees in part of what became a protracted case about insider trading around a tender offer placed on March IL 1981, by the Seagram Company Ltd. for St. Joe Minerals Corp. Ultimately several Italian and Swiss investors were found guilty, including Italian financier Giuseppe Tome, who had used his relationship with Seagram owner Edgar Bronfman Sr. to obtain information about the tender offer.¶
After the tender offer was announced, the S.E.C. began investigating trades involving St. Joe at Bear Stearns and other firms. Epstein resigned from Bear Stearns on March 12. The S.E.C. was tipped off that Epstein had information on insider trading at Bear Stearns, and it was therefore obliged to question him. In his S.E.C. testimony, given on April 1, 1981, Epstein claimed that he had found `offensive the way Bear Stearns management had handled a disciplinary action following its discovery that he had committed a possible 'Reg D" violation —evidently he had lent money to his closest friend. (In the 1989 deposition he said that he'd lent approximately $20,000 to Eisenstein, to buy M.) Such an action could have been considered improper, although Epstein claimed he had not realized this until afterward.¶
According to Epstein, Bear Stearns management had questioned hint about the loan around March 4. The questioners, Epstein said, were Michael (Mickey) Tarnopol and Alvin Einbender. In his 1989 deposition Epstein recalled that the partner who had made an "issue of the matter was Marvin Davidson. On March 9, Epstein said, he had met with Tarnopol and Einbender again. and the two partners told him that the executive committee had weighed the offense, together with previous "carelessness" over expenses, and he would be fined 82,500.¶
-There was discussion whether, in fact, I had ever put in an airline ticket for someone else and not myself and I said that it was possible.... since my secretary handles my expenses," Epstein told the S.E.C. In his 1989 testimony he stated that the -Reg D" incident had cost him a shot at partnership that year.¶
What the S.E.C. seemed to be especially interested in was whether there was a connection between Epstein's leaving and the alleged insider trading in St. Joe Minerals by other people at Bear Stearns:¶
Q: Sir, are you aware that certain rumors may have been circulating around your firm in connection with your reasons for leaving the firm?¶
A: Em aware that there were many rumors.¶
Q: What were the rumors you heard?¶
A: Nothing to do with St. Joe.¶
Q: Can you relate what you heard?¶
A: It was having to do with an illicit affair with a secretary.¶
Q: Have you heard any other rumors suggesting that you had made a presentation or communication to the Executive Committee concerning alleged improprieties by other members or employees of Bear Stearns?¶
A: I, in fact, have heard that rumor, but its been from Mr. Harris in our conversation last week.¶
Q: Have you heard it front anyone else?¶
A: No.¶
A link later the interview focuses on James Cayne:¶
Q: Did you ever hear while you were at Bear Stearns that Mr. Cayne may have trader or insider information in connection with St. Joe Minerals Corporation?¶
Q: Did Mr. Cayne ever have any conversation with you about St. Joe Minerals?¶
Q: Did you happen to overhear any conversations between Mr. Cayne and anyone else regarding St. Joe Minerals?¶
A: There's no relationship with Bear Stearns.¶
Q: Pardon?¶
A: Other than Bear Stearns, no.¶
Q: Have you been a participant in any type of business venture with Mr. Cayne?¶
Q: Do you have any expectation of participating in any business venture with Mr. Cayne?¶
Q: Have you had any business participations with Mr. Theram?¶
A: No; nor do I anticipate any.¶
Q: Mr. Epstein. did anyone at Bear Stearns tell >vitt in words or substance that you should not divulge anything about St. Joe Minerals to the staff of the Securities and Exchange Commission?¶
Q: Has anyone indicated to you in any way, either directly or indirectly, in words or substance, that your compensation for this past year or any future monies coming to you from Bear Stearns ssill be contingent upon your not divulging information to the Securities and Exchange Commission?¶
A: No.¶
Despite the circumstances of Epstein's leaving. Bear Stearns agreed to pay him his annual bonus—which he anticipated as being approximately Sroo.000.¶
The S.E.C. never brought any charges against anyone at Bear Stearns for insider trading in St. Joe, but its questioning seems to indicate that it was skeptical of Epstein's answers. Some sources have wondered why, if he was such a big producer at Bear Stearns, he would have given it up over a mere 52,500 fine.¶
Certainly the years after Epstein left the firm were not obviously prosperous ones. His luck didn't seem to change until he met Hoffenberg.¶
O ne of Epstein's first assignments for Hoffenberg was to mastermind doomed bids to take over Pan American World Airways in 1987 and Emery Air Freight Corp. in 1988. Hoffenberg claimed in a 1993 hearing before a grand jury in Illinois that Epstein came up with the idea of financing these bids through Towers's acquisition of two ailing Illinois insurance companies, Associated Life and United Fire. -He was hired by us to work on the securities side of the insurance companies and Towers Financial. supposedly to make a profit for us and for the companies; Hoffenberg reportedly told the grand jury. He also alleged that Epstein was the -technician." executing the schemes, although, having no broker's license, he had to rely on others to make the trades. Much of Hoffenberg's subsequent testimony in his criminal case has proven to be false, and Epstein has claimed he was merely asked how the bids could be accomplished and has said he had nothing to do with the financing of them. Yet Richard the former treasurer of United Fire, recalls seeing Epstein two or three times at the company. He and another executive say they had direct dealing with Epstein over the finances. And in his deposition of 1989, Epstein stated that he was the one who executed "all" Hoffenberg's instructions to buy and sell the M . He called it 'making the orders: He could not recall whether he had chosen the brokers used.¶
To win approval from the Illinois insurance regulators for Towers's acquisition of the companies, Hoffenberg promised to inject $3 million of new capital into them. In fact, in his grand-jury testimony Hoffenberg claimed that he, his chief operating officer, Mitchell Brater, and Epstein came up with a scheme to steal $3 million of the insurance companies' bonds to buy Pan Ant and Emery M. "Jeffrey Epstein and Mitch Brater arranged the various brokerage accounts for the bonds to be placed with in New York, and I think one in Chicago, Rodman & Renshaw," Hoffenberg reportedly said. Then, said Hoffenberg, while making it appear as though they were investing the bonds in much safer financial instruments, they used them as collateral to buy the-. 'Epstein was the person in charge of the transactions, and Mitchell Brater was assisting him with it in coordination on behalf of the insurance companies money,' Hoffenberg claimed at the time.¶