Southern Trust Company

Southern Trust Company was a U.S. Virgin Islands corporation controlled by Jeffrey Epstein, incorporated on November 18, 2011 as Financial Informatics, Inc. and used from 2013 as the successor to his earlier territorial entity Financial Trust Company; it reported assets of about 391 million dollars in 2015.¹ It applied to the Virgin Islands Economic Development Authority in October 2012 for benefits under the Economic Development Commission program and received a ten-year incentive package, on the representation that it would build a DNA-database and data-mining, or "informatics," business. A January 2020 civil enforcement complaint by the territory's Attorney General alleged that the company conducted no such business and existed to fund Epstein's criminal activity and properties, and the 2022 settlement with his estate required repayment of roughly 80 million dollars in the benefits it had obtained.²³

Formation and the Economic Development Commission Benefits

Epstein's territorial operation began with Financial Trust Company, incorporated in St. Thomas on November 6, 1998 (a 2018 investor complaint gave the year as 1996), which received territorial tax exemptions from 1999 and was the principal company managing his wealth and client investments. Southern Trust Company, incorporated in November 2011, followed after Epstein registered as a sex offender in the Virgin Islands; the territory alleged that most of his Virgin Islands companies were created in 2011 and 2012.¹⁴ The company applied to the Virgin Islands Economic Development Authority in October 2012 and received a package running from February 1, 2013 through January 31, 2023 that included a 90 percent exemption from income taxes and 100 percent exemptions from gross-receipts, excise, and withholding taxes.²⁵ At a public hearing of the Economic Development Commission on November 15, 2012, Epstein and his lawyer Erika Kellerhals testified under oath that the company would provide "cutting edge consulting services" in "biomedical and financial informatics."¹ The certificate itself is dated January 24, 2014 and signed by the commission's chairman, Albert Bryan, then also Governor John de Jongh's Commissioner of Labor, and by Epstein as president. That day Cecile de Jongh asked Epstein to match 15,000 dollars she had raised for the governor's State of the Territory reception, and an hour later emailed Epstein's accountant Richard Kahn: "Hi Rich, Can you please prepare a check for $15,000 made payable to Governor's Special Events Fund." Bryan had also signed the 2012 amendment to Financial Trust Company's certificate, and was elected governor in 2018.⁴⁶

To qualify, Southern Trust represented that it would operate a consulting service mining DNA and financial data for a global clientele, a database that, according to the application, would let pharmaceutical companies and physicians use Epstein's mathematical models to test drug protocols. The Economic Development Commission program conditions large tax reductions on a beneficiary maintaining a qualifying business and meeting employment and investment requirements in the territory. The Virgin Islands later alleged that the company never built or operated the represented informatics business.²⁵

The complaint and JPMorgan's later filings alleged that Southern Trust instead functioned as a conduit, processing payments to foreign women, covering credit cards, aircraft, and other instrumentalities, and compensating personnel within Epstein's network of entities. The same filings alleged that Epstein associates, including the office manager Cecile de Jongh, wife of then-governor John de Jongh, were employed by the company and worked to keep it in compliance so the benefits continued.²⁷

The Application Fee

The application fee was paid from JPMorgan Chase. On September 21, 2012 Epstein's bookkeeper Harry Beller faxed the bank a memorandum directing it to wire 5,000 dollars from Epstein's account through Pacific Coast Banker's Bank to Merchants Commercial Bank in St. Thomas, for further credit to Kellerhals Ferguson LLP, the firm of Erika Kellerhals; Epstein's September 2012 JPMorgan statement records the debit to "Kellerhals Ferguson Llp" with the reference "Southern Trust Company Application Fee."⁸

The Carbyne Warrants

In 2019 Southern Trust was a limited partner in SUM (E.B.) Limited Partnership, an Israeli partnership that had invested in Carbyne Ltd., formerly Reporty Ltd., the emergency-response company known as Carbyne, whose chairman was the former Israeli prime minister Ehud Barak. On February 28, 2019 the partnership's Tel Aviv lawyer, Tomer Toor, wrote to Darren Indyke and to NJF Capital, the renamed Montilla International Corporation of Nicole Junkermann, that SUM held warrants to buy 61,251 Preferred A shares of Carbyne for 3.5 million dollars, which would raise its stake "from about 13% to about 26.33%, on a fully diluted basis." The limited partners' shares of the exercise price were set at 66.67 percent, or 2.4 million dollars, for "Southern Trust Inc." and 33.33 percent, or 1.2 million dollars, for Montilla, to be wired to the general partner, Ergo (E.B. 2014) Ltd., at Bank Leumi. On March 7, 2019 Toor confirmed that Southern Trust Company, Inc. had signed the Additional Investment Agreement and transferred its 2.4 million dollar share.⁹

On March 11, 2019 Toor wrote that the bank was making "requests ... to provide further information and explanation for its own anti money laundry regulations," including a "List of the controlling person(s) of each limited partner, name and his/her citizenship" and a recommendation letter from each partner's transferring bank. Epstein forwarded the request to Barak, who answered the same day: "That's the Israeli banks paranoia after they paid the penalties they've paid to the US authorities for past mistakes. According to our experience it was never leaked out of the banks. Just kept with them as an insurance policy. We have to follow on it. On a minimal but satisfying base."¹⁰ On March 12 Indyke asked Epstein, "Not sure how to respond. I thought we did not want your name associated with this Investment?" and noted that the transferring bank was "DB," Deutsche Bank. After Epstein answered "ok," Indyke wrote on March 14: "Am I correct that by your 'ok' you mean that I may confirm that you are the controlling person of the STC?" Epstein replied: "Yes."⁹ The next day Richard Kahn forwarded Epstein Carbyne's 2017 audited statements, its 2018 draft statements and a three-year projection, which Toor had sent "subject to the Partnership's and your consent not to further disclose it to any third party."¹¹

AdFin Solutions

Southern Trust Company, Inc. was a Series A preferred holder of AdFin Solutions, Inc., a Delaware advertising-analytics company. The Schedule of Purchasers to the Series A Preferred Stock Purchase Agreement dated December 28, 2012 lists Southern Trust Company, Inc. for 1,142,857 shares at $499,999.94 in a closing of April 10, 2013, alongside Tom Glocer and other individuals, and for a further 285,714 shares at $124,999.87 in a closing of July 23, 2013, the date on which "CVAFH I LLC" bought 800,000 shares for $350,000. The counterpart signature pages for the purchase agreement, the Investors' Rights Agreement, the Right of Refusal and Co-Sale Agreement and the Voting Agreement read "Southern Trust Company, Inc.," "Name: Jeffrey Epstein," "Title: President," and the Voting Agreement's Schedule of Investors lists Southern Trust Company, Inc. with 1,428,571 shares. A July 2013 letter agreement on Cantor Ventures, L.P. letterhead states that CVAFH I LLC "has been formed for the specific purpose of acquiring the Shares and the ultimate holding company of Cantor is Cantor Fitzgerald, L.P."¹²

Southern Trust Company is named as a signing stockholder on the December 26, 2013 consent approving a $2,000,000 unsecured convertible note sold to CVAFH I, LLC. On January 13, 2014 Darren Indyke sent Lesley Groff the executed bridge-loan documents with the instruction to file them "in AdFin redweld in a folder called $2MM Bridge Note Financing December 2013."¹³ On March 21, 2013 the shareholder David Mitchell proposed to Jeffrey Epstein that the two of them split the 90 percent voting right on certain major decisions that Mitchell said he had negotiated; Epstein answered "Ok." On September 12, 2014 Mitchell asked Groff to arrange a meeting between Epstein and the company's new chief executive Andrew Altersohn, writing "Andrew Jeffery is the principal behind AdFin's investor Southern Trust."¹⁴

A cap table "as of 1.4.18" in a company presentation lists "Southern" with 6,409,679 shares, including 110,619 options, 4.50 percent of the company and $889,000 invested; "Cantor" is listed with 60.32 percent.¹⁵ In an email thread of February 2018 the company's chief executive wrote that "Southern is already a party" to the shareholders agreement and that, to maintain its pro rata share in a new round, "Southern would have to invest in $85,695." Epstein told Richard Kahn on February 26, 2018: "you can tell them we are a seller at cost. 875 and we are out." Kahn then wrote to the company that "we would be interested in selling for our cost of $875,000 which is approx 68% of FMV." On April 13, 2018 the chief executive replied: "We were trying to get a response from Howard and Jonathan on your ask, but there is apparently no interest at this time on the sale of your interest." On September 18, 2018 Mitchell wrote to Epstein, "Jonathan seeing him this week and trying to get to buy Adfin position," and on October 18, 2018, "in the fall next year, a capital event could happen which would return money." The company ceased operations in October 2019.¹⁶

Staff, Clients and Income

According to the territory's Second Amended Complaint, Southern Trust employed 13 people other than Epstein between 2013 and 2019: 11 in administrative or support roles (six personal, administrative or executive assistants, receptionists or a driver, one office manager, one clerk, and three in accounting or payroll, only one of them a certified public accountant) and a single network administrator, with a second added in 2019. The network administrator, reported as a Virgin Islands resident, held a Florida driver's license with a Miami address and "appears, in fact, to have served as Epstein's driver and picked up luggage and cargo from Epstein's private planes." An executive assistant lived in a building at 301 East 66th Street in Manhattan whose units Epstein's address book listed as "Apt. for models." A person Kahn had described to a bank as an interior designer and as a dentist was on the payroll in 2019. The company told the commission it employed only Virgin Islands residents.¹

"Southern Trust company does not appear to have had any clients and performed no visible informatics services. According to financial records, it held no investments for others," the territory alleged. It nonetheless reported net income of 50.3 million dollars in 2013, 67.5 million dollars in 2014, 52.8 million dollars in 2015, 4.8 million dollars in 2016 and 17.1 million dollars in 2017, and revenues of about 184 million dollars over those five years, and "the main source of funds for the Epstein Enterprise came from Southern Trust." Kahn, as treasurer, ran its accounting and tax reporting; Darren Indyke was signatory on its primary account and authorized most of the wires out of it to Epstein's other entities and personal accounts. For 2013 through 2017 the company received tax exemptions of 73.6 million dollars and, after electing S-corporation status that passed its income to Epstein as sole shareholder, Epstein's own income-tax exemption came to 71.3 million dollars; including gross-receipts taxes, the territory estimated he avoided 80,576,236 dollars. The complaint concluded that the company "existed to secure tax benefits for Epstein, to employ individuals associated with the Epstein Enterprise, and to provide a source of income to support his criminal activities and properties in the Virgin Islands."¹

The Single Source

The complaint stated that "virtually all of Southern Trust Company's income came from a single source (including related entities)," which "paid $158 million to Defendant Southern Trust Company from 2013 to 2017, which constitutes 85% of the total revenues reported," and that the funds "appear to have not been used to pay for informatics or datamining services." The complaint does not name the source.¹

The review of Leon Black's dealings with Epstein that the law firm Dechert prepared for Apollo Global Management in January 2021 found that Black signed a written service agreement with "Southern Trust Company, Inc., an Epstein affiliate" on February 13, 2013, paying 15 million dollars on February 15, 2013 and 8.5 million dollars on October 15, 2013 into Southern Trust for work on a 2006 grantor retained annuity trust. Black's payments to Epstein then totaled 50 million dollars in 2013, 70 million dollars in 2014 and 30 million dollars in 2015, nothing in 2016, and a final 8 million dollars in April 2017, 158 million dollars in all; Epstein had told Black the payments would be tax deductible. Southern Trust's reported net income for the same years was 50.3, 67.5, 52.8, 4.8 and 17.1 million dollars. In early 2017 Black also lent Epstein 22.5 million dollars and 8 million dollars through BV70 LLC to Plan D LLC, an Epstein company later named as a defendant in the territory's suit; Epstein repaid part in 2018. Dechert reported no evidence that Black paid Epstein for anything other than "legitimate advice" and found that the value Epstein's advice conferred on Black was more than 1 billion dollars. The same review found that Financial Trust Company bought 263,257 Apollo shares in the firm's 2011 initial public offering, which appear to have been transferred in 2013 to Southern Financial LLC, an Epstein company registered in the Virgin Islands on February 25, 2013, and held through at least September 2019. Black paid the territory 62.5 million dollars in January 2023 to resolve potential Epstein-related claims, without any admission of liability, in a settlement countersigned by Acting Attorney General Carol Thomas-Jacobs, whom Bryan had appointed after removing George at the end of December 2022.^1171819

Disclosure and Nondisclosure

When the Attorney General amended her complaint in February 2020, the Virgin Islands Daily News reported that the estate could be ordered to repay more than 144 million dollars in tax exemptions; the settlement later fixed the Southern Trust figure at about 80 million dollars. The Economic Development Authority's assistant chief executive, Wayne Biggs Jr., said the commission evaluated Epstein's application "on its merits," that he could not speculate whether privacy or tax incentives drew Epstein to the territory, and that Epstein "was in the program before he was convicted of any sex crimes under Financial Trust. And he changed from Financial Trust to Southern Trust." Authority officials declined to disclose the annual tax breaks of any of the commission's 72 beneficiary companies. Epstein owned half of American Yacht Harbor in Red Hook, where Southern Trust kept its office, and the marina was still receiving commission benefits in 2020.⁴

The Fraud Allegation and the Settlement

The January 2020 complaint, brought in the Superior Court of the Virgin Islands as Government of the United States Virgin Islands v. Estate of Jeffrey E. Epstein under the territory's Criminally Influenced and Corrupt Organizations Act, alleged that Southern Trust fraudulently obtained its tax benefits by misrepresenting its business to the Economic Development Authority. The Attorney General amended the action to add the estate co-executors Darren Indyke and Richard Kahn, Southern Trust Company, and other Epstein-created entities as co-defendants. The territory alleged that the two men "were deeply involved in the financial activities of the Epstein-owned entities, including those of Defendant Southern Trust Company," and that they served on its board with Epstein; both have denied knowing of Epstein's crimes.¹³²⁰

On December 1, 2022 the territory announced a settlement with the Epstein estate for more than 105 million dollars in cash, plus half the proceeds of the sale of Little St. James and a payment of 450,000 dollars for environmental remediation at Great St. James. The settlement required the estate to return more than 80 million dollars in tax benefits that the territory said Southern Trust had obtained fraudulently to fund Epstein's criminal activity. The Attorney General Denise George stated that the settlement restored the faith of the people of the Virgin Islands that its laws would be enforced against those who break them.³²¹

The entity figured again in the territory's separate December 2022 suit against JPMorgan Chase, which alleged that the bank serviced the Epstein network of companies, including Southern Trust and Financial Trust, while ignoring evidence of trafficking. That case settled in September 2023 for 75 million dollars to the Virgin Islands, and the bank separately paid 290 million dollars to Epstein's victims. The tax benefits at issue were scheduled to expire on January 31, 2023, the same period in which the territory's enforcement actions concluded.⁷²¹