Jeffrey Epstein likened bankrupt Detroit to a petri dish primed for monetary experimentation in an email to wealthy investors and separately was accused of involvement in a Ponzi scheme that allegedly defrauded the city’s general retirement system, according to the U.S. Department of Justice’s latest release of documents related to the late sex offender.
The email and court filing are among several documents in the latest DOJ dump that name-check Detroit, revealing the disgraced financier’s network extended into one of the nation’s poorest cities.
Epstein was previously connected to Michigan through the Traverse City-area Interlochen Arts Camp, where he was a donor and accused of luring a 13-year-old girl in 1994, whom he allegedly went on to groom and sexually assault.
“what does the detroit bankruptcy do?” Epstein asked in an August 2013 email sent two weeks after the city filed for Chapter 9 municipal bankruptcy. The email was to Julian Leese, a now-deceased real estate speculator and son of a British defense contractor, who the New York Times reported helped Epstein grow his global network early on.
“spoke to joi about using detroit as a petrie (sic) dish for new currency ideas,” Epstein wrote in an email the following month to LinkedIn founder Reid Hoffman and Japanese venture capitalist Joi Ito. “bankrupt. desperate. no exchange of goods etc.”
Media representatives at LinkedIn and The Chiba Institute of Technology, where Ito is president, did not immediately respond to requests for additional information.
Epstein accused in Ponzi scheme with Detroit link
A separate document released by DOJ points to a potential link between Epstein and a massive Ponzi scheme run by his former mentor Steven Hoffenberg, who was sued by Detroit’s retirement system in 1994, court records show.
Hoffenberg pleaded guilty in 1995 to swindling investors out of $460 million from 1988 to 1993 through his bill-collection company, Towers Financial Corporation, and was sentenced to 20 years in prison and ordered to pay restitution. He was released in 2013.
Hoffenberg said Epstein, who was a consultant for TFC, orchestrated the scheme. Epstein was never charged, but in 2016, Hoffenberg sued him for monetary damages in the U.S. District Court for the Southern District of New York.
A filing in the 2016 case that was among the documents recently released by DOJ indicates Detroit’s retirement system was among the victims of the Ponzi scheme and considered joining the suit against Epstein to seek $125 million in damages.
The filing is a response to a request from Epstein’s attorney to dismiss the suit. In it, Hoffenberg attorney Alan P. Fraade — pronounced “Fraud,” as per the New York Post — says former Detroit City Council Member George Cushingberry Jr, “originally introduced Mr. Hoffenberg to the Retirement System City of Detroit, which is now one of the TFC Victims.”
“Cushingberry Jr., Esq.’s legislative Aid and friend of Mr. Hoffenberg, Mr David Cavanagh … recently advised Mr Hoffenberg that the retirement system city of Detroit may join this pending lawsuit before the court to recover one hundred twenty-five million ($125,000,000) dollars in damages from Mr. Epstein for his fraudulent actions pursuant to the TFC Ponzi Fraud set forth in the complaint,” Fraade wrote in the June 2016 filing.
The retirement system was never added as a party to the suit against Epstein, which was dismissed shortly after, federal court records show.
A lawyer for the system was unable to provide the Free Press with additional information Wednesday, saying current staff were not in place at the time and had no information.
“I have asked for a review of records but as you are aware this matter is over 30 years old,” Michael VanOverbeke said in an email. “I am not aware of any filing of a cause of action against Jeffrey Epstein on behalf of the General Retirement System of the City of Detroit.”
Cushingberry said in a text message that he did not introduce Hoffenberg to the pension board. Cavanagh could not be reached through an associate.
Real estate speculator friend pointed Epstein to southeast Michigan
Epstein was also courted by an international real estate company that specialized in distressed sales in Detroit’s suburbs, the DOJ records show.
Real Time Investments’ managing director told Epstein in a September 2013 letter that the company had the “capacity to deliver 25 fully stabilized properties per month (i.e. refurbished and tenanted)” equating “to monthly capital expenditure of $1,125,000 on acquisition and refurbishment.”
In return, the company promised “a 2 year rental guarantee of 12%.”
A company listing presented to Epstein advertised a three-bedroom colonial in Eastpointe for $58,000 with a 14% “net yield.”
The Real Time Investment representative’s letter referenced prior conversations between Epstein and “Julian.” A 2018 Detroit News article that reported Julian Leese helped conceive of the “Dented Badge” nonprofit program to honor slain Detroit police officers described him as “a British native and real estate speculator who was in Detroit to purchase property.”
Leese died of cancer last year, according to the London Times.
Violet Ikonomova is an investigative reporter at the Free Press focused on government and police accountability in Detroit. Contact her at vikonomova@freepress.com.
This article originally appeared on Detroit Free Press: Epstein declared bankrupt Detroit ‘desperate,’ worth experimenting in
Reporting by Violet Ikonomova, Detroit Free Press / Detroit Free Press
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