Apollo’s Leon Black explains why he still did business with Jeffrey Epstein

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On Thursday, Apollo Global Management cofounder Leon Black offered his most comprehensive public statement yet regarding his ties with convicted sex offender Jeffrey Epstein, saying his decision to give the financier a second chance had been a “terrible mistake.”

The statement comes just after the cofounder’s ties with Epstein were brought under the microscope once again earlier this month, when the New York Times reported that Black paid Epstein at least $50 million for advice and services in the years after Epstein was convicted of soliciting prostitution from a teenage girl in 2008.

In the aftermath of the report, Apollo clients have threatened to take action: The Pennsylvania Public School Employees’ Retirement System has said it will not consider new investments with Apollo, as investigations over Epstein’s ties to Black continue. Cambridge Associates, a consultant to investors and endowments, is also weighing whether to stop recommending Apollo as an option altogether, per Bloomberg. The California Public Employees’ Retirement System meanwhile is said to be pressing the private equity firm over the issue. 

While Apollo and Black have repeatedly denied any connection between Black and the firm itself, so important is Black to the company’s operations that shares of Apollo still remain down some 14% since the information first went public.

“Like many other people I respected, I decided to give Epstein a second chance. This was a terrible mistake,” Black said during the earnings call, acknowledging that he had done business with the convicted sex offender—and paid him millions of dollars annually between 2012 to 2017—after he was first released from jail in 2009. “Had I known any of the facts about Epstein’s sickening and repulsive conduct, which I learned in late 2018, more than a year after I stopped working with them, I never would have had anything to do with him. I understand and appreciate that concerns remain.”

Still, it is confusing: Media covered Epstein’s 2008 arrest and case thoroughly. Here’s a New York Times piece from back in 2008 about Epstein turning himself in to authorities after he was accused of paying women—at least one who was 14—to give him massages that at times turned into sexual favors. Here’s one from the Guardian. And the New York Post with no shortage of details. Was that alone not disturbing enough—or were the reports dismissed?

Here’s more from Black, explaining his thinking at the time and acknowledging he knew Epstein was under investigation in 2006: “I was not aware of Epstein’s criminal conduct until it was publicly reported that Epstein was being investigated by Florida state and Federal prosecutors and law enforcement officials beginning in late 2006. In 2009, after being released from jail, Epstein returned to his previous financial advisory activities and once again began working and associating with many prominent individuals, spanning the worlds of finance, academia, science, technology, philanthropy, business, and government. The distinguished reputations of these individuals gave me misplaced comfort in retaining Epstein’s services in 2012 for my personal estate planning, tax structuring, and philanthropic advice. … I wish I could go back in time and change that decision, but I cannot.”

This statement stands in stark contrast to how Black addressed the issue back when Epstein, who died in his jail cell in the summer last year, was arrested in July 2019 on sex trafficking charges. During Apollo’s earnings call that month, Black made no mention of his dealings with Epstein after 2008, saying only that his family entities had retained the financier’s services from time to time.

The firm’s conflict committee meanwhile has retained law firm Dechert LLC to conduct an independent review of Black’s ties to Epstein, with which Black says he is cooperating fully. The process could be completed by the end of the year.

Editor’s note: A previous version of this newsletter quoted Black stating he not know of Epstein’s criminal conduct until 2018. It has been updated with another quote in which Black acknowledges he was aware of investigations into Epstein’s criminal activity as early as 2006.