Jeffrey Epstein was never charged in connection with Towers Financial, and was not named as a defendant in the Illinois action against it. Most of the strongest claims about his role come from Steven Hoffenberg — a convicted fraudster who served eighteen years and then sued Epstein for causing the fraud he had pleaded guilty to. This page separates what is documented from what one interested source asserted, and Hoffenberg died in 2022, so his account can no longer be tested.
This is the origin story, and it matters because it is the template.
The archive documents seven American institutions that had the information or the authority to stop him and did not. The first was the Southern District of New York in 1995, and the first thing it failed to do was ask what Epstein’s role at Towers had been.
Everything that recurs later is present here. A credential he did not earn — a teaching job without a degree, a Wall Street partnership on a student’s word. A departure under a cloud with no enforcement action. An enormous fraud he was adjacent to but not charged in. A wealthy patron whose money was never fully explained.
The Bear Stearns hire is the part people find hardest to believe, and it is the best documented. He taught at Dalton. His student was Lynne Greenberg. Her father Alan “Ace” Greenberg ran Bear Stearns and liked hiring “PSDs — poor, smart and determined,” deliberately against the Ivy League pipeline. The firm’s own culture is what let him in.
And the relationship never really ended. Per ICIJ’s Paradise Papers, he chaired Liquid Funding Ltd. in the mid-2000s — an offshore Bermuda vehicle packaging mortgage securities — partly owned by Bear Stearns, twenty-five years after he left it.
Where the honest limits fall. Wexner remains the documented source of the fortune, not Towers. No accounting has ever traced Towers money into what Epstein later held, and he denied that Hoffenberg “made him.”
But one corroboration does not depend on Hoffenberg at all. James Schacht, then director of the Illinois Department of Insurance, told CBS News he recalled Epstein’s involvement with United Diversified and its insurers. A state regulator, with no stake in the story, placing him inside the transaction.
$25,000 a month — a retainer beginning in 1987.
$2 million — a 1988 loan he was never required to repay.
Offices at the Villard Houses — the Madison Avenue mansion complex.
None of this is disputed. Epstein’s objection was to being called Hoffenberg’s creation — not to having been paid by him.
The money gap →
Section 01
The Record
Epstein begins teaching physics and mathematics at the Dalton School on Manhattan’s Upper East Side. He has no college degree. One of his students is Lynne Greenberg, daughter of Alan “Ace” Greenberg, chief executive of Bear Stearns. She tells her father Epstein might make a good financier.
Dalton lets him go. Bear Stearns hires him on a student’s recommendation. Greenberg’s stated preference was for “PSDs” — poor, smart and determined — in a firm that positioned itself against the Ivy League recruiting of Goldman and Morgan Stanley.
He rises from trader to limited partner, reportedly by the age of twenty-seven. The details of what he actually did there remain unclear, and no major deal of his has ever been documented.
Accounts of why differ. Multiple sources describe a departure amid a dispute over violations of firm policy concerning disclosure to the SEC. He was not charged with anything. He founds Intercontinental Assets Group, later J. Epstein & Co., claiming to manage money only for billionaires.
He said he served billionaires exclusively. The only publicly confirmed client of that era is Leslie Wexner.
Steven Hoffenberg brings him into Towers Financial Corporation, a debt-collection company. Hoffenberg pays him $25,000 a month, gives him a $2 million loan in 1988 he never has to repay, and installs him in offices at the Villard Houses.
Prosecutors later establish that Towers raised more than $400 million selling bonds and promissory notes, using the money to cover operating costs, repay earlier investors and enrich its principals. One of the largest Ponzi schemes before Madoff.
Towers, through United Diversified, acquires two Illinois insurers — United Fire Insurance and Associated Life. State regulators find improper investments and misuse of funds. James Schacht, then director of the Illinois Department of Insurance, later told CBS News: “I recall Mr. Epstein’s involvement with United Diversified Corp., and affiliated insurance companies.”
Epstein and Hoffenberg mount a failed corporate raid on Pan American World Airways, using Towers as the vehicle. In 1991 Epstein works on Hoffenberg’s unsuccessful bid for the New York Post.
Schacht and the Illinois Department of Insurance sue Hoffenberg. Epstein is not named as a defendant.
Hoffenberg says he fired Epstein because “he was stealing too much. I couldn’t supervise him.”
He pleads guilty to mail fraud, tax evasion and obstruction of justice, is sentenced to 20 years, and serves 18. Released 2013. Epstein is never charged in connection with Towers.
Per ICIJ’s Paradise Papers, Epstein chairs Liquid Funding Ltd., an offshore Bermuda vehicle packaging mortgage-backed securities into collateralised loan obligations. It is partly owned by Bear Stearns. Twenty-five years after leaving, the relationship is still live.
Hoffenberg sues Epstein, blaming him for the fraud and claiming he had tried to warn authorities for years. Epstein denied that Hoffenberg “made him,” insisting he already had wealthy clients.
Hoffenberg is found dead at his Connecticut home, aged 77. His account of Epstein’s role can no longer be tested, corroborated or cross-examined.
Section 02
What Is Actually Established
Hoffenberg is the loudest source on this period and the least reliable one. These three tiers keep his claims separate from the documentary record, because collapsing them is how this story usually gets told.
He taught at Dalton without a degree, a student recommended him to her father, and Bear Stearns hired him in 1976. He made limited partner within five years.
Hoffenberg hired him in 1987 at $25,000 a month, made him a $2 million loan he never repaid, and housed him at the Villard Houses. This is not in dispute; Epstein’s objection was to being called Hoffenberg’s creation, not to having worked there.
Towers raised $400m+ between 1988 and 1993 and was a Ponzi scheme. Hoffenberg pleaded guilty and served 18 years.
James Schacht, former director of the Illinois Department of Insurance, told CBS News he recalled Epstein’s involvement with United Diversified and the affiliated insurers. That is corroboration from a state official with no stake in Hoffenberg’s account.
ICIJ’s Paradise Papers show Epstein chairing Liquid Funding Ltd. in the mid-2000s, an offshore vehicle partly owned by Bear Stearns.
“He was my best friend for years… We ran a team of people on Wall Street, investment people that raised these billion dollars illegally. He was my guy, my wingman.”
Hoffenberg described Epstein as his “co-conspirator” in the theft, and said Epstein handled the illegal transfer and sale of bonds out of United Diversified accounts.
“He was stealing too much. I couldn’t supervise him.”
Hoffenberg was a convicted fraudster who served 18 years and then sued Epstein for causing the fraud he had pleaded guilty to. He had every incentive to enlarge Epstein’s role and diminish his own, and he is the origin of most of the strongest claims.
He was never charged in connection with Towers. He was not named as a defendant in the 1991 Illinois action against Hoffenberg.
Epstein denied Hoffenberg “made him.” No accounting has ever traced Towers money into the fortune he later held, and the Wexner relationship remains the documented source.
Accounts describe an SEC-disclosure dispute. No enforcement action against him has ever been produced, and the firm’s own account has never been published.
Section 03
Why 1995 Is the Hinge
Hoffenberg pleaded guilty in 1995 and served eighteen years. Epstein was not charged, and the next thirteen years are the ones that matter.
Consider what a Towers prosecution would have produced. Financial discovery into a man whose income had no visible source. Sworn testimony about his role. A public record, in 1995, of Jeffrey Epstein as a subject of federal investigation — thirteen years before Palm Beach.
Instead the 1990s are when the rest of it is built. The 1991 power of attorney. The townhouse. Ghislaine Maxwell. The properties. The apparatus documented across this entire site is assembled in the decade immediately following a fraud prosecution that did not touch him.
This is not a claim that prosecutors covered anything up. Hoffenberg was the principal, he confessed, and building a case against a peripheral figure with a plausible advisory role is genuinely hard. Charging decisions like this are routine and often correct.
The point is narrower and it recurs. In 2007 a US Attorney had three dozen victims and a sixty-count draft indictment, and took thirteen months. A bank kept him five years past the conviction and settled for $365 million. Every time the system had a chance at him, it took the smaller option. 1995 was the first time.
And the source problem is permanent now. Hoffenberg died in 2022. Whatever he actually knew went with him, and what remains is the account of a man who had eighteen years in prison to decide how the story should be told.
Section 04
Open Questions
Section 05
Sources
The Illinois Regulator
James Schacht recalling Epstein’s involvement with United Diversified and the affiliated insurers — corroboration independent of Hoffenberg.
cbsnews.com →Liquid Funding and the Paradise Papers
The Bermuda vehicle Epstein chaired in the mid-2000s, partly owned by Bear Stearns.
icij.org →Les Wexner
The documented source of the fortune — the 1991 power of attorney and the $1bn+ identified by Congress.
Read the profile →The Money Gap
What was never explained about where any of it came from.
Read the report →Alexander Acosta
The second time the system took the smaller option.
Read the profile →The United States
Seven American institutions that could have stopped it.
Read the report →