By Khadeeja Safdar
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 8, 2019).
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.
A lawyer for Mr. Epstein couldn't be reached for comment. A
spokesman for Mr. Wexner declined to comment on whether Mr. Wexner
reported the matter to authorities.
Last month, Mr. Epstein pleaded not guilty to sex-trafficking
charges stemming from what federal prosecutors alleged was a
yearslong scheme to procure and sexually abuse dozens of girls. He
faces up to 45 years in prison if convicted. Mr. Epstein has been
denied bail and is in federal custody.
Mr. Epstein's two-decade relationship with Mr. Wexner, which
extended into the 81-year-old's retail companies, charities and
personal life, became crucial to Mr. Epstein's eventual wealth and
prominence. In 1991, Mr. Wexner gave him sweeping control over his
financial and legal matters through a power-of-attorney document.
The Wall Street Journal has reported that Mr. Epstein made more
than $200 million from Mr. Wexner.
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. When
allegations emerged against Mr. Epstein in Florida a decade ago,
the money manager "vehemently denied" them, according to Mr.
Wexner.
Still, Mr. Wexner decided in the fall of 2007 that Mr. Epstein
should be removed from his role as personal money manager, he wrote
in the letter. The unwinding of their financial ties involved a
legal intermediary. It was during this process that Mr. Wexner
discovered Mr. Epstein had misappropriated funds.
Rabbi B. Elka Abrahamson, the Wexner Foundation's president, in
a statement posted online last month said the charity had received
emails from its community voicing concern about the relationship
between Messrs. Wexner and Epstein. She said the foundation, like
Mr. Wexner, had cut ties with him more than a decade ago and is
"sickened by Mr. Epstein's behavior."
A representative for the Wexner Foundation, which focuses on the
development of Jewish volunteer leaders and Israeli public
officials, couldn't be reached for comment.
The Journal has previously reported how Mr. Epstein became
deeply entwined in the financial lives of his clients, who put him
in charge of their charities, placed his name on deeds for their
properties and let him control their trusts.
"I am embarrassed that, like so many others, I was deceived by
Mr. Epstein," Mr. Wexner wrote Wednesday. "I know now that my trust
in him was grossly misplaced and I deeply regret having ever
crossed his path."
Working in an office in Midtown Manhattan with a few lawyers,
accountants and administrative staff, Mr. Epstein helped with the
retail mogul's taxes, managed his investments and ran his charities
and trusts. He also became president of a company Mr. Wexner set up
to develop the town where he lives near Columbus, Ohio.
Until about 13 years ago, Mr. Epstein served on the board of
several of Mr. Wexner's charities, including the Wexner Foundation,
tax returns show. Mr. Epstein was listed as being in charge of the
accounting books for the Wexner Foundation and the Wexner Heritage
Foundation. The two foundations merged in 2003.
In 2008, soon after Mr. Wexner began severing ties, Mr.
Epstein's company gave $34.3 million in Apple Inc. shares to a
foundation associated with Mr. Wexner's wife, Abigail, tax filings
show. Around the same time, a foundation associated with Mr.
Epstein gave Mrs. Wexner's charity about $12 million in
investments.
Last month, Mr. Wexner sent a companywide message to employees
at L Brands denying knowledge of Mr. Epstein's alleged criminal
behavior. "I would not have continued to work with any individual
capable of such egregious, sickening behavior as has been reported
about him," he wrote in the email.
The board of L Brands recently hired an outside law firm to
conduct a review of Mr. Epstein's role at the company.
--Rebecca Davis O'Brien contributed to this article.
Write to Khadeeja Safdar at khadeeja.safdar@wsj.com
(END) Dow Jones Newswires
August 08, 2019 02:47 ET (06:47 GMT)
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