The Wall Street Journal - 13.08.2019

(Ann) #1

A2| Tuesday, August 13, 2019 THE WALL STREET JOURNAL.**

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The mass shooting in El
Paso, Texas, took place on
Aug. 3. A photo caption with a
U.S. News article Monday

about a march in the after-
math of the killings incor-
rectly said they occurred last

Readers can alert The Wall Street Journal to any errors in news articles by
emailing or by calling 888-410-2667.



After Mr. Epstein was re-
moved from suicide watch, he
was downgraded to “special ob-
servation status,” which man-
dated that guards check on him
every 30 minutes and that he
have a cellmate, said a person
familiar with his detention.
But in the hours before Mr.
Epstein’s death, his cellmate had
left and wasn’t quickly replaced
as required, the person said.
The identity of Mr. Epstein’s
cellmate couldn’t be deter-
mined. Mr. Epstein also wasn’t

receiving the mandated regular
check-ins, the person said.
“We will get to the bottom
of what happened, and there
will be accountability,” Mr.
Barr said. The Federal Bureau
of Investigation and the Justice
Department’s inspector general
have devoted additional man-
power and resources to investi-
gate Mr. Epstein’s death.
Lawmakers, meanwhile
ratcheted up pressure on the
department for answers. Bipar-
tisan leaders of the House Ju-

diciary Committee, which has
oversight of the Justice Depart-
ment, wrote in a letter Monday
to Hugh Hurwitz, acting direc-
tor of the Bureau of Prisons,
demanding answers to a num-
ber of questions about officials’
handling of Mr. Epstein.
Mr. Epstein’s death “dem-
onstrates severe miscarriages
of or deficiencies in inmate
protocol,” the letter said.
Mr. Barr on Monday also
promised the Justice Depart-
ment would continue to inves-

tigate people who allegedly
helped Mr. Epstein recruit
young women and girls for sex
“Any co-conspirators should
not rest easy,” Mr. Barr said.
“The victims deserve justice,
and they will get it.”
The Manhattan-based fed-
eral prosecutors handling Mr.
Epstein’s case also could seek
to seize his assets through a
process known as civil forfei-
ture. That process could allow
prosecutors to sue for assets
that were used to facilitate the
alleged sex trafficking, includ-
ing Mr. Epstein’s real estate,
jets and bank accounts.
Money from forfeited prop-
erties goes into a Justice De-
partment fund that can be dis-
tributed to victims.
Through the civil-forfeiture
process, prosecutors could lay
out the evidence they have
gathered against Mr. Epstein
that hasn’t become public, ac-
cording to former federal pros-
ecutors. The government could
use investigative tools such as
search warrants and grand jury
subpoenas, unavailable to vic-
tims suing the estate, said Jai-
mie Nawaday, a former federal
prosecutor who has handled
asset-forfeiture cases.
“It might be in their interest
to let the government go first,”
said Ms. Nawaday, now a part-
ner at Kelley Drye & Warren
LLP. “The government has a
higher rate of success.”
Mr. Epstein’s body was re-
leased after the medical exam-
iner performed an autopsy
Sunday. His only known living
relative is his brother, Mark
Epstein. It couldn’t be deter-
mined if Mr. Epstein had pre-
pared a will, although estate-
law experts said he likely had
one given his wealth.
Lawyers for Mr. Epstein’s ac-
cusers on Monday told a federal
judge in Florida that Mr. Ep-
stein’s death should invalidate a

deal he struck with Florida
prosecutors in 2007, which in-
cludes a provision that immu-
nizes any of his potential co-
conspirators from being
charged with federal sex crimes.
The request was made in a
court filing as part of a lawsuit
filed in 2008 against the gov-
ernment that challenged the
deal on the grounds it violated
victims’ rights under federal
Invalidating that provision
would remove what is likely to
be a key defense argument for
any co-conspirators who are
charged in New York—that
they can’t face federal prose-
cution because it is barred by
the 2007 deal. It would also
allow federal prosecutors in
Florida to pursue any individ-
uals involved in the alleged
scheme who didn’t commit
any crimes in New York.
Regarding Mr. Epstein, fed-
eral prosecutors in Manhattan
had argued they were allowed
to charge him, in part because
they had found new conduct
in New York that wasn’t cov-
ered by the Florida deal.
In a sign that the investiga-
tion was continuing, federal
agents searched Mr. Epstein’s
property in the U.S. Virgin Is-
lands on Monday, according to a
person familiar with the matter.
The move came more than a
month after a search of Mr. Ep-
stein’s townhouse in Manhattan,
during which authorities said
they found hundreds of porno-
graphic photos and a locked safe
filled with cash and diamonds.
Mr. Epstein was arrested last
month on two federal charges
related to sex trafficking of mi-
nors, for which he faced a maxi-
mum sentence of 45 years in
prison. He pleaded not guilty
and had been awaiting trial at
the detention facility.
—Ben Chapman
and Tyler Blint-Welsh
contributed to this article.

tors have found “serious irreg-
ularities” at the federal jail in
New York where Jeffrey Ep-
stein was being held on sex-
trafficking charges, Attorney
General William Barr said Mon-
day, deepening the mystery
surrounding the disgraced fi-
nancier’s death.
Mr. Epstein, 66 years old,
was found dead Saturday at
the Manhattan detention facil-
ity administered by the federal
Bureau of Prisons. The New
York City medical examiner be-
lieves Mr. Epstein’s cause of
deathis suicide by hanging,
but is awaiting additional in-
formation from law enforce-
ment before releasing her offi-
cial findings, a city official said.
Among the primary ques-
tions for investigators is why
Mr. Epstein was taken off sui-
cide watch and left alone with
minimal supervision. After an
earlier incident in which he
was found unconscious in his
cell with marks on his neck,
Mr. Epstein was put in the sui-
cide-watch unit July 23, but
was removed from the watch
days later at the request of his
attorneys and after daily psy-
chological evaluations.
“I was appalled and frankly
angry to learn of the [jail’s]
failure to adequately secure
this prisoner,” said Mr. Barr,
speaking Monday at a confer-
ence for police officers in New
Orleans. “We are now learning
of serious irregularities at this
facility that are deeply con-
cerning and demand a thor-
ough investigation.”


‘Irregularities’ Found at Epstein’s Jail

Attorney general also

says former financier’s

alleged conspirators

‘should not rest easy’

Former financier Jeffrey Epstein was found dead in this federal detention center in Manhattan.


pears to be tiny by comparison,
an asset search shows, but also
hard to assess. A lawyer for
Jeffrey Epstein didn’t respond
to an email seeking comment.
Last month, when Jeffrey
Epstein was seeking bail, his
brother offered to put up a
Florida condo valued at a mod-
est $100,000. Yet last fall, Mark
Epstein and at least one co-
owner donated an 80-foot lux-
ury yacht once valued at nearly
$1 million to a small nonprofit.
At the time of the donation,
Mr. Epstein was facing a
$67,261 federal tax lien, records
show. The lien’s disposition has
not been recorded. As he was
facing other liens a decade ear-
lier, he donated at least
$500,000 to the Cooper Union
for the Advancement of Sci-
ence and Art, his alma mater,
where he became chairman of
the board of trustees. Tax liens
can be signs of financial dis-
tress or of strategies rejected
by tax authorities.
The brothers are linked fi-
nancially through a 200-unit
condominium on Manhattan’s
Upper East Side once owned by
Jeffrey Epstein’s most lucrative
client, retail magnate Leslie
Wexner. The company that
bought the building in the
early 1990s is a former affiliate
of J. Epstein & Co., Jeffrey Ep-
stein’s investment firm, real-
estate records and New York
state filings show. Mark Ep-

stein was once listed in corpo-
rate records as president of
that company.
Asked to discuss his finan-
cial interests and how they in-
tersected with his brother’s,
Mark Epstein, 65 years old, de-
clined. “I don’t have time to
talk about it and I don’t see
any purpose in talking about it
with anybody,” he told The
Wall Street Journal on Thurs-
The Journal also sent him a
list of questions, which he de-
clined to answer. In a subse-
quent email, Mr. Epstein said:
“As a private independent busi-
nessman I don’t feel the need
to share any of the informa-
tion.” In email messages sent
after his brother died, he de-
clined to comment.
Mark Epstein told Crain’s
New York Business last month
that he bought the 16-story
condo building on East 66th
Street from Mr. Wexner based
on a tip from his brother in the
early 1990s. At the time, re-
cords show, the building car-
ried a mortgage of $7.24 mil-
lion. A current valuation of the
building is almost impossible o
know, said Jonathan Miller,
president and chief executive
of Miller Samuel Inc., an ap-
praisal firm.
Real-estate records show
the building and mortgage
were transferred from an Ohio
limited partnership affiliated

with Mr. Wexner, the founder
of retailer L Brands Inc.
The Journal could find no
documents detailing Mark Ep-
stein’s purchase of the build-
ing. Records show the condo-
minium’s owner since 1991 as
Ossa Properties. At that time,
Ossa was an affiliate of J. Ep-
stein & Co., according to a New
York state charter-school filing
and a former employee. In the
Crain’s article, Mark Epstein
said that a New York state doc-
ument erred in stating that J.
Epstein & Co. and Ossa Proper-
ties were affiliated.
But Jonathan Barrett, a

managing director at invest-
ment firm Luminus Manage-
ment, who worked at J. Epstein
and Ossa from 1992 through
1996, told the Journal through
a spokesman that Ossa and J.
Epstein & Co. were affiliated.
New York City work permits
show Anthony Barrett, of Ossa
Properties, as owner of 301 E.
66 Street. Anthony Barrett,
who is Jonathan’s brother,
didn’t return calls seeking
Jeffrey Epstein used some
units at the East 66th Street
building to house his employ-
ees, according to court records.
His address book, posted on-
line, included about 25
blacked-out phone numbers for
different people in various
apartments in the building,
which was marked as “Apt. for
models.” “Other than the obvi-
ous relationship of being
brothers, the only other rela-
tionship between Jeffrey and I
is as landlord/tenant,” Mark
Epstein said in an email.
In 2006, Mark Epstein was
cited in a Dun & Bradstreet re-
port as an executive at Ossa
By 2010, New York City
work permits show, the owner-
ship structure of the East 66th
Street condominium changed
from a partnership to a corpo-
ration, a structure than can
protect investors from liabili-
ties generated by other share-

holders, among other benefits.
By the late 2000s, Mark Ep-
stein became a major donor to
Cooper Union, the New York
art, architecture and engineer-
ing college from which he
graduated in 1976. By 2009, he
had donated between $500,
and $999,000 to the school, ac-
cording to a donor report pub-
lished by the college. That year,
he was named chairman of its
board of trustees; he resigned
from the board in 2015, follow-
ing the board’s controversial
decision to drop the school’s
longstanding policy of full tu-
ition scholarships for all stu-
A Cooper Union spokes-
woman responded to an email
seeking comment about Mr.
Epstein by reciting his history
with the institution.
The 80-foot yacht was do-
nated last November to the
Marine Science and Nautical
Training Academy of Charles-
ton, S.C. Transformed into a
marine-research vessel for high
school and college students, its
website said, the yacht would
ply the waters of the British
Virgin Islands.
The Little Saint James, an
island owned by Jeffrey Ep-
stein, is in the nearby U.S. Vir-
gin Islands.
—Khadeeja Safdar,
Joe Palazzolo, Elisa Cho
and Michael Tobin
contributed to this article.

Jeffrey Epstein claimed a
net worth of $550 million when
he was asking to be released
on bail from the jail where he
was found dead from an appar-
ent suicide on Saturday.
Lawyers for women who say
the financier sexually abused
them believe there is more
money hidden. They will likely
look to offshore bank accounts,
Mr. Epstein’s close associates
and to his only surviving close
relative, his brother Mark Ep-
stein, for additional assets as
they explore potential civil
cases against Jeffrey Epstein’s
“We’re just getting started,”
said Lisa Bloom, a lawyer for
some of the alleged victims, in
a tweet Saturday after the 66-
year-old Mr. Epstein was found
During a March 2010 depo-
sition in a civil lawsuit brought
by two alleged sex-abuse vic-
tims, Jeffrey Epstein declined
to answer a question about
whether he transferred assets
to defraud potential creditors,
citing his Fifth Amendment
right not to incriminate him-
self, court documents show.
The sources behind Jeffrey
Epstein’s wealth have long
beena mystery, and his assets
have been housed in partner-
ships that sometimes obscure
ownership. Mark’s wealth ap-


Wealth of Financier’s Brother Is Also Hard to Assess

Mark Epstein


on benefits and interest pay-
ments, pushing the deficit
even wider despite robust
economic growth that usually
shrinks budget shortfalls.
Part of the increase in the
deficit so far this fiscal year,
which began Oct. 1, can be at-
tributed to calendar quirks,
which made the gap appear
slightly larger. If not for a
shift in the timing of certain
payments, the deficit would
have been 20% higher during
the first 10 months of the fis-
cal year, the Treasury said.
Larger deficits have forced
the government to ramp up
borrowing since early 2018,
due in part to slumping reve-
nue following the tax cut and
a 2018 budget deal that lifted
domestic and military spend-
ing for two years.
Over the 12 months that
ended in July, the deficit to-
taled $961.8 billion, or 4.5%
as a share of gross domestic

product. Revenues over the
previous 12 months rose
2.4%, while federal spending
Much of the increase in
revenue collection so far this
fiscal year has occurred in
the past few months, the se-
nior Treasury official said,

thanks in part to a sturdy
economy that has boosted tax
receipts. Net individual taxes
are up 7% since April, or $
billion, and net corporate
taxes have grown 30% since
then, the official said.
Revenue from tariffs, or

customs duties, also in-
creased 75% through July, a
significant boost from the
year-earlier period but just
2% of total receipts collected
during that time.
The Treasury said last
month it expects to borrow
more than $1 trillion this cal-
endar year for the second
year in a row, as the annual
budget gap is on track to ex-
ceed $1 trillion for fiscal year
2019, which ends Sept. 30.
A recently enacted budget
deal, which President Trump
signed this month, will main-
tain the current government
spending trajectory and add
further to federal deficits
over the next two years.
More broadly, deficits are
projected to continue increas-
ing over the coming decades
as a wave of retiring baby
boomers pushes up govern-
ment outlays on Social Secu-
rity and Medicare.

budget gap widened further
in July as federal spending
outpaced revenue collection,
bringing the deficit to $
billion so far this fiscal year,
a 27% increase from the year-
earlier period.
The Treasury Department
said on Monday that federal
receipts rose 3% from Octo-
ber through July, totaling
$2.9 trillion, while outlays
climbed 8%, to $3.7 trillion. A
senior Treasury official said
federal revenue collection
has picked up significantly
since April compared with a
year earlier, when lower tax
rates implemented under the
2017 tax overhaul weighed on
At the same time, rising
enrollment in Medicare and
higher interest rates have led
to higher government costs


U.S. Budget Gap Widened 27% in Period

Percentage outlays climbed
from October through July
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