Private-equity guru Leon Black's family foundation is scrambling to distance itself from sex-offender Jeffrey Epstein, but it's raising more questions
- Apollo Global Management CEO Leon Black and his family foundation are disputing media reports linking the charity to convicted sex offender Jeffrey Epstein.
- Yet their efforts are only raising more questions about the foundation's history with Epstein.
- Business Insider first reported Tuesday that tax filings showed Epstein was listed as the sole director of the Leon Black Family Foundation from 2001 to 2012, which encompasses time after Epstein pleaded guilty to soliciting prostitution in 2008.
- But Wednesday evening, the foundation issued a statement claiming the tax returns were filed in error and that Epstein actually resigned in 2007.
- Non-profit and tax experts expressed confusion and were surprised to see the Blacks blame their accountants.
Apollo Global Management CEO Leon Black and his family foundation sprung into action Wednesday to dispute media reports linking the charity to convicted sex offender Jeffrey Epstein, who previously served as its director. But their efforts only raised more questions about the foundation's history with Epstein.
As Business Insider first reported Tuesday, tax filings show that the Leon Black Family Foundation listed Epstein as its sole director of from 2001 to 2012, which encompasses time after Epstein pleaded guilty to soliciting prostitution in 2008. Leon Black served as president and treasurer, while his wife Debra served as vice president and secretary.
But Wednesday evening, more than a day after the report was published, the foundation issued a statement claiming that the tax returns were filed in error and that Epstein had actually resigned in 2007.
"Jeffrey Epstein resigned in July 2007 at the family's request from the Leon Black Family Foundation and has not been affiliated with or performed any duties for the Foundation since that date," said a spokeswoman. "Due to a recording error, Mr. Epstein's name mistakenly appeared on Foundation 990 Forms from 2008-2012, after which the inaccuracy was discovered and corrected."
To back up the claim, the spokeswoman supplied a document, dated January 30, 2015, which seemed to confirm Epstein's resignation eight years prior. The document, signed by Epstein, the Blacks, and their general counsel, states that Epstein's original 2007 resignation letter could not be found, and that his inclusion on filings after his resignation "was an oversight by the Foundation's tax accountants which was not noticed until 2013." The spokeswoman offered no explanation as to why the document was generated in the first place.
Business Insider has requested copies of the foundation's amended tax returns to confirm they were corrected, though a spokeswoman as of press time had not provided any copies.
"It's a big error," said Doug White, a non-profit expert who had previously expressed confusion about why Black would have kept Epstein on after he pleaded guilty to soliciting prostitution. Without more explanation from the foundation, it "defies logic," White said.
Brian Mittendorf, chair of the accounting department at University of Ohio, said he was surprised to see the Blacks blaming their accountants. Especially with private foundations, accountants usually just rely on information given to them by people running the organization. "You would think they would catch that oversight," he said. "There's only three board members. The reason for this person stepping down was not something minor. You would think they would check that."
Non-profit experts told Business Insider that while the error was significant, they don't expect the IRS to penalize the Black foundation for any mis-reporting, and that the instance would likely be chalked up to an embarrassment that illustrates how wealthy businessmen don't pay much attention to the accounting of their charity foundations. Such instances of what they called "sloppy" accounting are common among private foundations, they said.
"Wealthy people may see it as a formality of boxes they have to check," said Philip Hackney, a non-profit law professor at the University of Pittsburgh who previously spent five years as as an attorney with the IRS.
Regardless of how long Epstein served as director at the Black foundation, it appears the family remained close to the financier years after his resignation. The New York Times reported on Wednesday that Epstein was an investor in a 2011 deal alongside several people close to Black, including his four children.
The ties are notable because Epstein was arrested Saturday evening and charged with trafficking dozens of girls as young as 14 in the early 2000s, according to a federal indictment unsealed Monday. He appeared in court and pleaded not guilty to the charges. The news comes more than a decade after Epstein avoided federal charges in a plea deal that has long drawn scrutiny.
Both Blacks have not responded to follow up questions about Epstein's relationship with the foundation. Neither have been linked to any wrongdoing.