Jeffrey Epstein, the convicted and once-again accused sexual predator, listed $559 million on his audited net worth statement, which was used, unsuccessfully, by his attorneys to try to get him released on bail. But no one on Wall Street can figure out how he made it. There are a number of theories making the rounds. There is the blackmail theory—that his knowledge of the sexual peccadillos of wealthy investors helped make him his money. There is the idea that, like George Soros, he made a killing betting against the British pound once upon a time. There is the theory that he has been providing rich people with tax and estate planning advice—some of which appears to be true, though it’s difficult to see how he could have made a fortune of that size in those businesses. One thing on which most Wall Street people I’ve talked to agree is that they believe he did not make his money trading options or derivatives or from managing other people’s money.
For reasons that are far from obvious, he had a lot of rich friends. Everyone from Prince Andrew to Les Wexner, the billionaire founder of L Brands, makes an appearance in his notorious black book. Leon Black, the billionaire founder of Apollo Management, the private-equity behemoth, is in there too; Black made Epstein a director of his family foundation.
Then there is Glenn Dubin, the billionaire founder of Highbridge Capital Management, a big hedge fund in which Dubin sold a majority interest to JPMorgan Chase in 2004. His relationship with Dubin is a case study in Epstein's complicated, mysterious social life, and how it intersected with his business. The conventional wisdom is that Dubin met Epstein through his wife, Eva Andersson-Dubin, a doctor and former Miss Sweden. Andersson reportedly dated Epstein for years before marrying Dubin. What’s less well-known is that after Andersson married Dubin, Epstein became close to Dubin, too. “Epstein’s the godfather of Glenn’s three children,” says a person who knows Dubin well. “He’s tight, tight, tight with him.” In fact, this person said, when Dubin sold a big chunk of Highbridge to JPMorgan Chase for an undisclosed amount, and then the balance of the business in 2009, it was Epstein who got a big fee for arranging the deal. In an email, a source close to Dubin disputed these assertions, saying that Epstein was not godfather to Epstein's children (“The Dubins are Jewish and Jewish people do not typically do godparents,” he said.).
Dubin’s familial relationship with Epstein also extended into the financial realm. On two occasions over the years, Dubin arranged for Epstein to invest in Dubin’s professional acolytes, start-up hedge funds with direct ties to Highbridge and Dubin. Dubin declined to comment about his relationship to Epstein. According to a statement released after Epstein’s recent indictment, the Dubins have apparently abandoned him. They “are horrified by the new allegations against Jeffrey Epstein,” they wrote. “Had they been aware of the vile and unspeakable conduct described in these new allegations, they would have cut off all ties and certainly never have allowed their children to be in his presence.”
Things were different 15 years ago, especially when it came to directing Epstein’s money—however he made it—to portfolio managers with ties to Dubin. Joseph C. Kusnan, a former portfolio manager at Highbridge, managed one of the funds spun out of Highbridge; Dubin directed around $75 million of Epstein’s money to Kusnan, a source told me. Daniel B. Zwirn, also a former Highbridge portfolio manager, managed the other fund, the D.B. Zwirn Special Opportunities Fund. (Highbridge initially owned a 47% stake in Zwirn's management company, the source said. Dubin directed $150 million of Epstein’s money to the Zwirn fund, which was started around 2003. “Dubin prevailed upon Epstein to invest substantially in [Zwirn’s] fund, touting Zwirn’s reliability and business and investment acumen,” Epstein’s lawyers wrote in a 2010 court filing. The source close to Dubin disputed this. "Mr. Dubin never arranged or directed investments for Mr. Epstein,” the person said. “He is not and was never an investment advisor to Mr. Epstein. On a few occasions, at Mr. Epstein’s request, Mr. Dubin introduced Mr. Epstein to hedge fund managers that Mr. Dubin believed in – just as Mr. Dubin did for others in the industry.”
Both Zwirn and Kusnan had worked briefly at Lazard, the 171-year-old investment bank, and it was Kusnan who introduced Zwirn to Dubin around 2002. (I know Zwirn from our days together at Lazard and wrote an article about him in Businessweek in 2012, when his hedge fund subsequently ran into trouble with the Securities and Exchange Commission and was later liquidated. I did not know Kusnan.) Zwirn wasn’t allowed to speak with Epstein about Epstein’s large investment in Zwirn’s new fund. “Epstein was Glenn Dubin’s relationship,” someone familiar with them both tells me. “Dubin brought the relationship [to Zwirn] and Dubin maintained the relationship with Epstein.” Epstein made the investment through something called Jeepers, Inc. No one asked any questions about where Epstein got the money to invest in Zwirn’s fund or about Epstein’s sexual proclivities. Epstein was “a known billionaire,” says someone familiar with the Zwirn funds. “We didn’t ask our investors how they got their money. He was a well-known, wealthy guy.” Says the person familiar with both Dubin and Epstein, “It was a lot of dough.” The source close to Dubin maintains that Dubin “did not maintain” any relationship with Epstein regarding Zwirn or Zwirn's fund; he only introduced Epstein to Zwirn. (Zwirn declined to comment for this article.)
On the other hand, Kusnan did have a brief meeting with Epstein at his palatial mansion on East 71st in Manhattan. According to someone who has heard the story, Kusnan went to Epstein’s townhouse and was ushered into a little room by a butler. There, Kusnan saw Epstein sitting atop a “raised platform, like a throne, with two strikingly gorgeous young Eastern European women standing beside the chair.” Epstein asked Kusnan a few questions and then quickly declared that he “was dismissed.” The butler escorted Kusnan out of the mansion. “He walked backed to his office and sitting on the fax machine was the signed paperwork” from Epstein agreeing to make the multi-million-dollar investment in Kusnan’s fund, this person says. It was that simple and quick, thanks to Dubin. Zwirn’s fund also had an investment in Kusnan’s fund and performed “back-office” services for him. Kusnan did not return a call placed to his cell phone for comment about his relationship with Dubin and Epstein.
This curious saga may help to answer other Epstein riddles—including the mystery of his finances. One of the Zwirn fund executives had regular contact with Harry Beller, who worked for Epstein as his tax and accounting expert. This executive tells me that dealing with Beller each quarter was a “completely weird” experience. He said Beller was always fixated about whether any of the annual profits from the Zwirn fund—which averaged returns in excess of 20% a year before it ran into trouble with the SEC—had income sourced from New York State, because Epstein “did not want to pay taxes” in New York State. He says he “never got a single question from [Beller] about the [Zwirn] fund’s strategy or returns. All [Beller] would ask me every quarter was what was the percentage of New York–sourced income. Epstein was legally a U.S. Virgin Islands resident and didn’t want to pay New York State taxes.”
Since February 2014, Beller has worked as a partner at Louis J Septimus & Co, a New York firm offering tax, accounting, and financial planning to corporations, partnerships, trusts, and estates. A person answering his phone said he was not in the office. But there are reasons to believe he might know more than has been revealed about Epstein’s empire. Beller, the Zwirn executive told me, is “the guy people should be trying to track down and interview. He holds the keys to kingdom.”
Like any Wall Street morality play, the story of Daniel Zwirn and Glenn Dubin, and their involvement with Epstein, doesn’t have a simple ending. After four years of stellar returns and a hedge fund with some $12 billion of assets, Zwirn had amassed a personal fortune of some $700 million, as well as a $17 million condominium on Central Park South, a home in Quogue, in the Hamptons, and an $18 million Gulfstream jet. It all began to come crashing down for Zwirn in 2007 when he discovered that the fund’s chief financial officer had moved money around without authorization between his international fund and his domestic fund and had done some unauthorized movement of money in order for Zwirn’s management company to buy the Gulfstream jet. Zwirn reported the infractions voluntarily to the SEC, and both he and his firm were later completely absolved of any wrongdoing by the agency. But that took four years. By then, though the fund was sunk by investor redemptions and an inability to get investors the tax forms they needed to file their tax returns. The remnants of the Zwirn funds were later managed and liquidated by the Fortress Investment Group, another hedge fund.
Jeffrey Epstein sued Zwirn’s fund to get back the money he had invested in it, and prevailed in court, receiving almost all of the $150 million plus what he had made on an annual basis, according to someone familiar with what happened. In 2010 the dispute between Epstein and Zwirn went to private arbitration, which Epstein won.
For his part, Dubin has since left Highbridge. JPMorgan Chase recently announced it was substantially changing the focus of the $2 billion fund, which is part of the bank’s $150 billion portfolio of alternative investments. Dubin now has his own eponymous investment firm, among other investment vehicles, and is focusing on his philanthropy. One of the people who knows him and Epstein well says he doubts Dubin’s reputation as a “philanthropic socialite” will any longer be enhanced by his and his wife’s association with Epstein.
This article has been updated to include remarks and other details from a source close to Dubin.
