Wexner: Epstein made his money the old-fashioned way -- he stole it

Mystery solved? Jeffrey Epstein built what appears to be a billion-dollar-or-more fortune as an investment manager for a small select clientele — except few people can remember Epstein doing the work necessary for it. How, people wondered, did Epstein go from a private-school teacher to billionaire pedophile weirdo in such a short period of time?

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Leslie Wexner, Epstein’s first and only publicly identified client, has finally spoken publicly about their financial relationship. Wexner published an open letter accusing Epstein of “misappropriated vast sums of money” from him before Wexner cut ties after Epstein’s first arrest for sex-trafficking minors:

Leslie Wexner, the billionaire behind Victoria’s Secret, said his former money manager Jeffrey Epstein misappropriated more than $46 million of his fortune, revealing for the first time some of the financial fallout from his relationship with the disgraced financier.

In a letter Wednesday, the founder and chief executive of L Brands Inc., wrote to members of his Wexner Foundation that the missing funds were uncovered after Mr. Wexner decided in 2007 to sever ties with Mr. Epstein. Mr. Wexner began the separation process after allegations against Mr. Epstein surfaced involving sexual abuse of underage girls.

“We discovered that he had misappropriated vast sums of money from me and my family,” Mr. Wexner wrote in the letter, which was reviewed by The Wall Street Journal. “This was, frankly, a tremendous shock, even though it clearly pales in comparison to the unthinkable allegations against him now.”

In January 2008, Mr. Epstein transferred $46 million worth of investments to a Wexner charitable fund, tax records show. Mr. Wexner said the transfer was only a portion of the funds that his money manager had allegedly misappropriated. “All of that money—every dollar of it—was originally Wexner family money,” he wrote.

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According to the Wall Street Journal’s calculations, the $46 million by itself would have been at least a quarter of all the money Epstein made off of Wexner. That figure was apparently some sort of settlement to unwind allegations of embezzlement as Epstein prepared to fight the Department of Justice over sex-trafficking charges. That might explain why Wexner apparently never filed a complaint over the “misappropriation.”

How many others got burned? It’s tough to say, as so far only Wexner has come forward about it. Although he’s been identified as sort of a Patient One for the building of Epstein’s fortune, Wexner claimed that other clients of Epstein personally vouched for him before Wexner opened up the books:

In the letter, Mr. Wexner explained why he gave Mr. Epstein so much control. He wrote that several friends “vouched for and recommended him as a knowledgeable financial professional.” He added that Mr. Epstein claimed he had many well-known clients.

That may be putting a spin on things, though. Their relationship raised eyebrows from its very inception among Wexner’s associates, noting that Epstein came out of nowhere and displaced friends with more connection to Wexner:

They were introduced by insurance executive Robert Meister, a mutual friend. Epstein, who was coming off a stint at Bear Stearns, pitched himself as a tax expert, and Wexner immediately began spending a lot of time with him — though it’s unclear if there was a formal financial arrangement between the two at the time.

Some associates of Wexner were baffled as to why the billionaire would become so enamored of someone who was such an unknown quantity. “I tried to find out how did he get from a high school math teacher to a private investment adviser,” Robert Morosky, the former vice chairman of The Limited, said. “There was just nothing there.” …

The Times quotes Jim Duberstein, a onetime friend of Wexner’s who had known him for years, as saying that shortly after the Wexner-Epstein bond took hold, Wexner took Epstein’s side over his in a disagreement — then cut him out of his life completely, in what appeared to be a pattern.

“Les Wexner, until the time he quit talking to me, was probably the finest person I ever met in my life,” Duberstein said. He was the most charitable, the most generous, the most understanding. I have nothing but praise for him — until he just cut his umbilical cord.”

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NYMag’s Adam Raymond thinks this letter from Wexner solves at least part of the mystery behind Epstein’s vast fortune:

In the aftermath of Jeffrey Epstein’s arrest, one of the more confounding mysteries surrounded how the man made his money. Some suggested he engaged in an elaborate blackmail scheme, others thought he was a money launder. But it always seemed as if one man was in a particularly good place to know the truth.

For years, Leslie Wexner was the only publicly known client of Epstein’s money management firm. The CEO of L Brands, which controls stores such as Victoria’s Secret and Bath & Body Works, Wexner’s relationship with Epstein raised suspicion from its beginning in the mid ’80s.

Now, for the first time since Epstein’s arrest, Wexner has spoken out in some detail about the relationship and suggested a new theory for how Epstein got rich: He stole millions. In a letter to the Wexner Foundation, the 81-year-old Ohio billionaire wrote that Esptein “misappropriated vast sums of money from me,” stealing more than $46 million in their decade and a half working together.

Raymond’s not totally convinced, however, because Wexner’s lack of action after discovering Epstein’s reported embezzlement also doesn’t make much sense. “Why didn’t he call the cops?” Raymond wonders at the end. That’s a good question, but hardly the only good one from this tale. How did Epstein burrow so quickly into Wexner’s financial empire? How did he manage to do the same with other clients? Did he also steal from them as well — and if he did, why didn’t any of them raise the alarm? It’s tough to believe that Epstein would have only victimized his first and biggest client, after all.

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This is just one secret in the Epstein case to finally emerge. Don’t expect it to be the last, or the worst.

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