Towers Financial Corporation

The company, founded in the early 1970s in downtown Manhattan and incorporated in Delaware, was a debt collection agency that paid a penny on the dollar for loans that sellers viewed as worthless, focusing on debts that people owed to hospitals, banks, and phone companies.[3][4][5][2] Steven Hoffenberg was its founder, CEO, President, and Chairman.[6][7][8][9][10][11]

Jeffrey Epstein

Hoffenberg hired Jeffrey Epstein in 1987 to help with the Towers Financial Corporation.[8][1] Hoffenberg set Epstein up in offices in the Villard Houses in Manhattan, and paid him $25,000 ($56,000 in current dollar terms) per month for his consulting work.[8] They unsuccessfully tried to take over Pan Am in a corporate raid with Towers Financial as their raiding vessel. Their bid failed, in part because of the 1988 terrorist bombing of Pan Am Flight 103 over Lockerbie, which ultimately contributed to the airline's bankruptcy. A similar unsuccessful bid in 1988 was made to take over Emery Air Freight Corp.[8]

Between 1988 and 1993, Towers Financial raised over $400 million by selling bonds and promissory notes to investors, luring them in using false financial statements.[12][13][1] Hoffenberg and his associates then used the money they had raised to pay operating costs, repay earlier investors, and to pay themselves.[1] Hoffenberg began using Towers Financial funds to pay for a lavish lifestyle that included a Locust Valley, Long Island mansion, homes on Sutton Place in Manhattan and in Florida, and a number of cars and planes.[8][14] The Ponzi scheme was the largest financial fraud in American history prior to Bernie Madoff's being uncovered.[1]

In February 1993, the Securities and Exchange Commission charged that the company, while fraudulently reporting a profit of $13 million ($24,000,000 in current dollar terms) for the four years ended June 30, 1991, actually lost $137 million ($257,000,000 in current dollar terms).[12][15][2] In March 1993, Towers Financial filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.[16][12]

Hoffenberg pleaded guilty in April 1995 to five criminal charges, cheating thousands of investors out of $462 million, surrendered to the FBI in Manhattan, and was arraigned and released on bail.[17][18][19][20][21][22][1] He was sentenced in 1997 by federal judge Robert W. Sweet to 20 years in prison, and was released in 2013, after serving 18 years.[23][1][16] He was also sentenced to pay restitution of $462 million ($736,000,000 in current dollar terms) and a $1 million fine.[19]

Towers Financial executives Mitchell Brater (Vice Chairman) and Michael Rosoff (chief legal officer) were handed prison sentences of seven to nine years, and Rosoff was disbarred.[24][15][1] Epstein was not charged.[1][12] In July 2019, Hoffenberg claimed that Epstein was his “uncharged co-conspirator” in the Ponzi scheme.[25]

Hoffenberg stated that he didn't turn in evidence against Epstein, mentioning Epstein "had traction with" The United States Department of Justice, and stated further, "You cannot grasp the magnitude of [Epstein's] controlling effect." [26]

In 2020 Hoffenberg added some corroboration to evidence published in a 2019 book indicating that Epstein was a top-level spy for Mossad.[27][28][29] Over three decades after the Towers Financial scandal and six years after his prison release Hoffenberg suggests an overall intelligence aspect to Epstein. He paints a picture of Epstein's long-term ability to avoid justice, stating this was enabled by being "needed by the CIA or the FBI for intelligence, because he was manipulating the American intelligence for the overseas organizations".[27]

In 2007-08 Epstein faced a serious portfolio of charges on statutory rape and sex trafficking. Although Florida Southern Attorney General Alexander Acosta agreed a Federal Non-Prosecution Agreement, reducing all charges to a single instance of solicitation of a girl under 18.[30] This simultaneously shut down an FBI investigation into more victims and conspiring and associated powerful perpetrators of sex crimes. [31] Hoffenberg references how Acosta stated publicly, “This is an intelligence criminal case, this is not a standalone criminal case.”[27]

Epstein's perceived exemption from justice described by Hoffenberg continues after his death. The 2007-08 Non-Prosecution Agreement was retained on appeal in 2020, effectively for the moment preserving the block and preventing future investigation into circumstances, people and organisations surrounding Epstein in those earlier charges.[32][33] Subsequently, in August 2020 an appeal court en banc review hearing of that decision has been ordered. [34][35]

Whilst Hoffenberg states that he was "double-crossed" by Epstein over the Ponzi scheme, he emphasised he has no "axe to grind" against Epstein but instead a "story to tell ... something to explain" over Epstein, about "his mindset, the profile, how Epstein saw things, and how he played the chess board".[27]

In 2020, a year after his alleged suicide while on detention in a Manhattan prison on new charges of sex trafficking involving minors, Epstein was described as having had a "major role" in the Towers Financial Ponzi scheme. [26] It was reported by journalist Vicky Ward that Epstein was "pivotal" in designing how the scheme worked. [26] In mid-2020 the American documentary mini-series Surviving Jeffrey Epstein claimed that Epstein was "at the absolute centre of the operation". [36]