EXCLUSIVE: Disgraced financier and sex offender Jeffrey Epstein accused of swindling $1 billion from investors in lawsuit

  • Epstein is accused of rip­ping off 200,000 small to mid-size investors in the suit brought by for­mer busi­ness part­ner Steven Hof­fen­berg
  • Hof­fen­berg was sen­tenced to 20 years in jail in 1995 prison for his role in a Ponzi scheme and ordered to repay $475 mil­lion
  • He had pleaded guilty to swin­dling investors at Tow­ers Finan­cial Cor­po­ra­tion in one of the biggest Ponzi schemes in US his­tory
  • Hof­fen­berg claims in his law­suit that Epstein was involved in the scam
  • The mil­lion­aire had then used the ill-gotten gains to fund his cham­pagne lifestyle, the suit alleges
  • Epstein, con­victed of solic­it­ing an under­age girl for pros­ti­tu­tion in 2005, is a multi mil­lion­aire with numer­ous prop­er­ties includ­ing a pri­vate island

Sex offender financier Jef­frey Epstein is being sued by a for­mer busi­ness part­ner who accuses him in a $1bn law­suit of rip­ping off up to 200,000 investors, accord­ing to papers filed in a United States fed­eral court.

Epstein, 63, is a fab­u­lously wealthy Wall Street prodigy with ties to some of the world’s most pow­er­ful and famous peo­ple, includ­ing Prince Andrew, Bill Clin­ton and film­maker Woody Allen.

But he is also a con­victed sex offender in his week­end home of Palm Beach, Florida, who has to reg­is­ter with author­i­ties each time he moves to a dif­fer­ent loca­tion eight years after he pleaded guilty to procur­ing teenage girls for pros­ti­tu­tion.

Sex offender financier Jeffrey Epstein is being sued by former business partner Steven Hoffenberg who accuses him in a $1bn lawsuit of ripping off up to 200,000 investorsSex offender financier Jeffrey Epstein is being sued by former business partner Steven Hoffenberg who accuses him in a $1bn lawsuit of ripping off up to 200,000 investors

Sex offender financier Jef­frey Epstein (left) is being sued by for­mer busi­ness part­ner Steven Hof­fen­berg (right) who accuses him in a $1bn law­suit of rip­ping off up to 200,000 investors

And now, the multi-millionaire is being accused in a new civil law­suit brought by a for­mer busi­ness part­ner of rip­ping off 200,000 small to mid-size investors out of what could amount to $1 bil­lion, includ­ing inter­ests.

The law­suit could finally lift the veil on how the secre­tive Epstein became rich enough to hire a dream team of lawyers to rep­re­sent him in his now-closed under­age sex crim­i­nal case, includ­ing star defense lawyer Alan Der­showitz and for­mer Mon­ica Lewin­sky pros­e­cu­tor Ken Starr.

In an unusual com­plaint filed late Fri­day, for­mer New York Post pub­lisher Steven Hof­fen­berg, the plain­tiff, accuses Epstein of help­ing him defraud investors in the mid-1990s when Hof­fen­berg and, allegedly, Epstein ran a clas­sic pyra­mid scheme through Hoffenberg’s Tow­ers Finan­cial Cor­po­ra­tion.

The duo allegedly used money from the sale of bonds and secu­ri­ties and promis­sory notes from early investors to cover losses they incurred on behalf of newer investors and affil­i­ated busi­ness, and per­sonal expenses to keep a jet-setting-and-champagne lifestyle.

Accord­ing to the law­suit, the duo suf­fered losses in failed attempts to buy now-defunct Pan Amer­i­can Air­ways as well as a freight air car­rier Emery.

Epstein, 63, a fabulously wealthy Wall Street prodigy, was convicted of soliciting an underage girl for prostitution in 2005 (pictured in court in 2008) 

Epstein, 63, a fab­u­lously wealthy Wall Street prodigy, was con­victed of solic­it­ing an under­age girl for pros­ti­tu­tion in 2005 (pic­tured in court in 2008)

Steven Hoffenberg, himself convicted of a Ponzi scheme in 1995, has sued Epstein claiming that he was an accomplice and helped rip off 200,000 small to mid-size investors out of what could amount to $1 billion, including interests 

What’s unusual about the new law­suit is that Hof­fen­berg, who also hap­pens to run a major PAC for pres­i­den­tial can­di­date Don­ald Trump, is also a con­victed felon.

He was sen­tenced to 20 years in a fed­eral prison for his role in the Ponzi scheme he ran from the late 1970s until 1993, when author­i­ties fig­ured out what was hap­pen­ing.

While pros­e­cu­tors allegedly offered to reduce Hoffenberg’s sen­tence in exchange for infor­ma­tion about Epstein’s role in the scam, Hof­fen­berg refused to coop­er­ate.

He served 18 years before being placed on super­vised release for three years. He also paid $1 mil­lion in fines and was ordered to reim­burse investors about $475million.

So far, Hof­fen­berg has ponied up $200 mil­lion.

Accord­ing to Hoffenberg’s new law­suit, how­ever, Epstein has been enjoy­ing the spoils of the scam for the past 30 years.

In addi­tion to a lux­ury town­house at 9 East 71st Street in Man­hat­tan, Epstein owns a $10.7 million-house in Palm Beach and a pri­vate island in the Vir­gin Islands. That’s where he lives cur­rently, accord­ing to the Florida sex offend­ers reg­istry.

What’s more, Epstein is the CEO of The Finan­cial Trust Com­pany, which runs a hedge fund esti­mated to be in the $50 billion-range. And if you believe Hoffenberg’s law­suit, writ­ten by Man­hat­tan attor­ney Alan P. Fraade, Epstein started that busi­ness by sell­ing worth­less secu­ri­ties for Hof­fen­berg.

Mr. Epstein … was a full-time asso­ciate and expert con­sul­tant for Mr. Hof­fen­berg in finan­cial ser­vices includ­ing rais­ing cap­i­tal by sell­ing secu­ri­ties,” the law­suit reads.

Epstein’s com­pany, the law­suit claims, was “cre­ated entirely with the monies in excess of $500 mil­lion fraud­u­lently acquired through fraud­u­lent Ponzi schemes.”

Epstein, who owns several luxury properties around the world - including his high end New York apartmet, is accused of running a classic pyramid scheme through Hoffenberg’s Towers Financial Corporation

Epstein, who owns sev­eral lux­ury prop­er­ties around the world — includ­ing his high end New York apart­met, is accused of run­ning a clas­sic pyra­mid scheme through Hoffenberg’s Tow­ers Finan­cial Cor­po­ra­tion

Hoffenberg claims the millionaire had then used the ill-gotten gains to fund his champagne lifestyle (pictured is Epstein's private private Caribbean island, Little St James)

Hof­fen­berg claims the mil­lion­aire had then used the ill-gotten gains to fund his cham­pagne lifestyle (pic­tured is Epstein’s pri­vate pri­vate Caribbean island, Lit­tle St James)

Because he didn’t have a broker’s license, the law­suit reads, Epstein made his pur­chases traded stocks and bonds through third par­ties then used pro­ceeds on him­self.

How­ever, Hof­fen­berg claims in his fil­ing, Epstein wasn’t as good as he believed.

At one point, he lost at total $1.080 mil­lion in a failed attempt to buy fail­ing Pan Am months before the down­ing of Flight 103 over Locker­bie, Scot­land, and pur­chase of a major­ity shares in Emery air freight.

Hof­fen­berg accuses Epstein of manip­u­lat­ing Emery’s stock to min­i­mize his losses while cost­ing Tower investors mil­lions.

The law­suit is for fraud, unjust enrich­ment, breach of fidu­ciary duty and neg­li­gence. It’s ask­ing a jury to order Epstein to make whole Tower investors as well as pay unspec­i­fied dam­ages.

Epstein made news over the past few years for his friend­ship with Prince Andrew and allow­ing for­mer Pres­i­dent Clin­ton to use his pri­vate jet repeat­edly.

In unre­lated law­suit cur­rently pend­ing in Florida, uniden­ti­fied women who claim they were abused by Epstein in the early 2000s when they were teens claim he made them into sex slaves who’s be passed on to his friends.

In a crim­i­nal court in Palm Beach County in 2008, Epstein was accused of hav­ing staff mem­bers recruit­ing trou­bled high school girls in sub­ur­ban West Palm Beach to travel to his nearby man­sion for mas­sages, sex­ual per­for­mances and sex.

The vic­tims claimed a room in Epstein’s water­front man­sion was set up to look like a dun­geon.

In an unusu­ally lenient deal with fed­eral pros­e­cu­tors that sparked alle­ga­tions Epstein ben­e­fited from high-level polit­i­cal pro­tec­tion, Epstein was allowed to plead guilty to charges he pro­cured minors for pros­ti­tu­tion.

He was sen­tenced to 18 months in a county prison. He ended up serv­ing 13 months, mostly on week­ends.