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Apollo’s Leon Black offers mea culpa for paying Jeffrey Epstein millions

The firm’s co-founder Leon Black is under scrutiny for his connections with the late financier.

Scrutiny has intensified over Apollo Global Management CEO Leon Black's ties to Jeffrey Epstein. (Andrew Toth/Getty Images)


Facing pressure from investors, Apollo Global Management CEO and co-founder Leon Black used the firm’s Thursday earnings call to present a history of his ties to Jeffrey Epstein and issue another apology for paying the convicted sex offender tens of millions of dollars for various consulting and professional services.

The intense scrutiny of Black’s business dealings with Epstein is a sign that the billionaire, long considered one of private equity’s founding fathers, could face an uncertain future at the firm he helped launch more than 30 years ago.

Black’s statement came a little more than two weeks after The New York Times reported that he had paid Epstein $50 million or more between 2012 and 2017, years after Epstein had pleaded guilty to soliciting prostitution from a minor. At Black’s request, the Apollo board hired law firm Dechert last week to conduct an investigation of the 69-year-old executive’s ties to Epstein. Shortly thereafter, the Pennsylvania Public School Employees Retirement System opted to at least temporarily halt new commitments to funds managed by Apollo.

“This matter is now affecting Apollo, which my partners and I spent 30 years building,” Black said. His statement came about 20 minutes into Apollo’s quarterly call, which was otherwise peppered with talk about investment strategy and fund performance.

“It’s also causing deep pain for my family,” Black said. “Knowing all that I have learned in the past two years about Epstein’s reprehensible and despicable conduct, I deeply regret having had any involvement with him. With the benefit of hindsight, working with him was a horrible mistake on my part.”

Black’s connection to Epstein first came to light last year, but the story took on new life after this month’s report by the Times. In a letter sent to Apollo’s limited partners earlier this month, Black apologized and said the payments to Epstein were for services including estate planning, philanthropic advice, and for helping Black manage an art collection estimated to be worth over $1 billion. He reiterated that explanation on Thursday, also noting that all of Epstein’s work was vetted by Black’s legal team and other advisers.

“Let me be clear: There has never been an allegation by anyone that I engaged in any wrongdoing, because I did not,” Black said. “And any suggestion of blackmail or any other connection to Epstein’s reprehensible conduct is categorically untrue.”

Black emphasized that Epstein didn’t work directly with Apollo or any of its portfolio companies, nor did Epstein invest in any Apollo funds.

He also presented a chronology for his business relationship with Epstein. The Apollo co-founder said he first met Epstein around 1996, and that he was convinced to work with the financier due to the many prominent names in politics, finance, business and other arenas who were already Epstein clients.

Black said he wasn’t aware of Epstein’s criminal conduct until 2006, when the first public reports emerged that he was under investigation. But Black hired Epstein again after he was released from prison and returned to his financial advisory work in 2009, again citing the many other luminaries among Epstein’s clientele.

“The distinguished reputations of these individuals gave me misplaced comfort in retaining Epstein’s services in 2012,” Black said. “Like many other people I respected, I decided to give Epstein a second chance. This was a terrible mistake. I wish I could go back in time and change that decision, but I cannot.”

Black said he didn’t learn about Epstein’s “sickening and repulsive” conduct until late in 2018, saying that if he had known earlier, he “wouldn’t have had anything to do with him.”

Black did not take any questions from analysts or reporters during the conference call, citing the investigation from Dechert. The firm said it hopes the review will be wrapped up by the end of the year. Apollo’s stock price is down about 20% since the start of the month.

From a performance perspective, Apollo had mixed results in the third quarter. The firm reported net income of $272.4 million, or roughly $1.11 per share, down from $363.3 million, or $1.63 per share, in the same period a year earlier. However, the firm grew its assets under management to $433.1 billion in the quarter, up from $413.6 billion in Q2. Apollo’s private equity portfolio appreciated 8% in Q3, compared with the S&P 500’s 8.5% growth.

What the future will hold, though, is still up in the air. On the earnings call, fellow co-founder Josh Harris sounded optimistic but uncertain about how the legal review of Black could affect the firm’s relationship with limited partners.

“We have incredibly long and durable relationships with our clients spanning over 30 years,” Harris said. “We’ve delivered for them, we’re deeply in contact with them. Obviously, they’re awaiting results of the review that Leon discussed.”

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    About Adam Lewis
    Adam Lewis was a financial writer covering private equity for PitchBook. He covered dealmaking, company and investor news for the PitchBook newsletter and blogs about the intersection of private equity and politics. A graduate of the WSU’s Edward R. Murrow College of Communication, Adam was previously a sportswriter covering the Mariners and Seahawks.
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