--- alias: - Steven Jude Hoffenberg - Stephen Hoffenberg - Steven J. Hoffenberg born: 1945-01-12 category: Organized Crime created: 2026-06-20 died: 2022-08 location: Derby, Connecticut relations: - fn: 5 reverse: true start: 1993-02 type: investigated with: '[[Securities and Exchange Commission]]' - end: 1997-03-07 fn: 2 reverse: true start: 1994-04-20 type: prosecuted with: '[[U.S. Attorney''s Office for the Southern District of New York]]' summary: Founder of Towers Financial Corporation who pleaded guilty in 1995 to a roughly 475 million dollar Ponzi scheme and later claimed Jeffrey Epstein helped architect the fraud, a claim for which Epstein was never charged. tags: - Person - StevenHoffenberg - TowersFinancial - JeffreyEpstein - PonziScheme - Finance - Fraud - SEC updated: 2026-09-25 --- Steven Jude Hoffenberg founded and ran [Towers Financial Corporation](/organizations/towers-financial-corporation/), a Manhattan debt-collection and securities firm that collapsed in 1993 and was later found to be one of the largest Ponzi schemes in American history before that of Bernard Madoff. He pleaded guilty in 1995, was ordered to pay 475,157,340 dollars in restitution, and served roughly 18 years in federal prison. He hired [Jeffrey Epstein](/people/jeffrey-epstein/) as a consultant in 1987, declined an offer of a reduced sentence in exchange for information about Epstein, and after his release claimed in court filings that Epstein had been a co-architect of the Towers fraud; the suits he brought and inspired ended within weeks.[^1][^2] He was found dead in his Connecticut apartment in August 2022.[^3] ### Early Career Hoffenberg was born in Brooklyn in 1945 and entered the debt-collection business in New York in the 1970s, reportedly starting with a small initial investment after dropping out of college.[^4] He built Towers Financial Corporation around the practice of buying delinquent debts, including unpaid hospital bills, bank loans and telephone charges, at steep discounts and pursuing the full balances through aggressive collection.[^4] He served as chief executive of Towers from 1975 to April 1993.[^2] He briefly held a controlling interest in the New York Post in the early 1990s during the paper's ownership turmoil: he took over the Post in 1993 while bidding to own it and funded it for three months, and his bid was derailed by the civil fraud charges the [Securities and Exchange Commission](/organizations/securities-and-exchange-commission/) brought against Towers.[^3][^4] ### Towers Financial and the Ponzi Scheme Towers Financial Corporation operated as a debt-collection business that bought portfolios of distressed receivables, including debts owed to hospitals and telephone companies, for fractions of their face value, while raising money from thousands of investors through unsecured promissory notes and bonds.[^5][^6] Prosecutors and the Securities and Exchange Commission determined that the company functioned as a Ponzi scheme, using money from new investors to pay returns to earlier ones while Hoffenberg diverted proceeds to, among other things, a mansion on Long Island, homes on Sutton Place and in Florida, and a fleet of cars and planes.[^5][^6] To finance attempted corporate takeovers, Hoffenberg directed Towers to acquire, through a controlling interest in United Diversified Corporation, two Illinois insurance companies, United Fire Insurance Co. and Associated Life Insurance Co., in 1987, and prosecutors later found their reserves were looted in the broader fraud.[^1][^2] The Illinois Department of Insurance, then directed by James Schacht, placed the insurers into liquidation and brought a 1991 civil suit that named Jeffrey Epstein in connection with checks drawn on the companies' accounts.[^1] The scheme operated between roughly 1988 and 1993; Hoffenberg later described it to CBS News as "a billion dollars in raising money. And it was criminal."[^1] The SEC charged Towers, Hoffenberg, Mitchell Brater and Arthur J. Ferro in February 1993 (93 Civ. 0744 (WK), S.D.N.Y.), later obtaining a consent judgment against Hoffenberg, and the company filed for Chapter 11 bankruptcy protection in March 1993.[^3][^5] He was indicted in the Northern District of Illinois on April 19, 1994 and in the [Southern District of New York](/organizations/us-attorneys-office-for-the-southern-district-of-new-york/) on April 20, 1994, and on April 20, 1995 he pleaded guilty to conspiracy to commit securities fraud, mail fraud, conspiracy to obstruct justice and tax evasion (94 Cr. 213 (RWS), 95 Cr. 321 (RWS)). Judge [Robert W. Sweet](/people/robert-w-sweet/) issued his sentencing opinion on March 4, 1997 and entered judgment on March 7, 1997: 20 years in prison, three years of supervised release, a one million dollar fine and restitution of 475,157,340 dollars, the total of noteholder and bondholder claims the Bankruptcy Court had validated in April 1996.[^2][^7] The prosecution was led by Daniel Nardello, who went into private practice soon afterward.[^1] He served about 18 years and was released from federal custody on October 11, 2013.[^3][^7] Hoffenberg swore in 2018 that "during the course of my criminal trial, Prosecutors offered me a reduced sentence in exchange for information about Epstein's role. However, I did not disclose any details about Epstein's involvement." His lawyer Gary Baise said Sweet asked him, "Why did he not give up Epstein?", and told the [Philadelphia Inquirer](/organizations/the-philadelphia-inquirer/), "The judge asked me the same question. I couldn't answer that." Epstein's lawyers wrote in 2016 that at a December 2013 conference in the criminal case "Judge Sweet stated he was unaware of Epstein." Hoffenberg told CBS News in 2019: "I didn't take that opportunity and I was wrong," saying he had not wanted to fight Epstein because of his powerful relationships and political connections.[^1][^2][^8][^9] ### Relationship With Jeffrey Epstein Hoffenberg met Epstein in London in the 1980s. He said they were introduced by the defense contractor [Douglas Leese](/people/douglas-leese/); Epstein said the introduction came from the former attorney general John Mitchell.[^6] Hoffenberg said he hired Jeffrey Epstein around 1987 as a paid consultant, with reporting citing a salary of about 25,000 dollars per month and, in 1988, a two million dollar non-repayable loan, and he set Epstein up in offices at the Villard Houses in Manhattan.[^3] At the time Epstein was running his own consulting firm, [International Assets Group](/organizations/international-assets-group/), from his New York apartment after leaving [Bear Stearns](/organizations/bear-stearns/).[^1] A Towers attorney confirmed Epstein worked at the firm and recalled drafting a consulting agreement, and Terrence Corrigan, a lawyer for an investor-recovery committee, said Epstein appeared on organizational charts as potentially "the number two or number three person at the firm," though the characterization was disputed.[^1] Court records and the 1991 Illinois Department of Insurance lawsuit referenced a series of checks payable to "Jeff Epstein" or "[Jeff Epstein & Co.](/organizations/j-epstein-co/)" drawn on the United Fire and United Diversified accounts and totaling about 215,000 dollars.[^1] Hoffenberg and Epstein partnered on attempted corporate takeovers in 1988, using Towers and the captive Illinois insurers as the financing vehicles, including an unsuccessful bid involving Pan Am and an attempt targeting Emery Air Freight.[^3] A Towers press release identified Epstein as "chairman of the board of directors of Intercontinental Asset Group" and a financial adviser to Towers management in connection with the Pan Am financing.[^1] The Illinois suit alleged Epstein manipulated the price of Emery stock through multiple brokerage accounts he controlled and traded without a broker's license.[^1] Epstein and Hoffenberg traveled together on Hoffenberg's private jet during this period, and Epstein left Towers before its collapse and was never charged in connection with the fraud.[^1] Hoffenberg claimed that Epstein told him he had left Bear Stearns in 1981 after being discovered executing "illegal operations."[^6] Before an Illinois grand jury in 1993 Hoffenberg testified that Epstein proposed financing the bids through the insurers and that he, Brater and Epstein arranged to use 3 million dollars of the insurers' bonds as collateral for Pan Am and Emery stock; "Epstein was the person in charge of the transactions," he said. He also alleged that Epstein "created a great scheme to purchase a $500,000 treasury bond that would not be shown ... (as) margined or collateralized," and later claimed that he secretly funded part of Epstein's stakes in Riddell Sports and a position in the chemical company Pennwalt taken around the same time, and that the Simon & Schuster chief executive Dick Snyder, whom Epstein had brought into the Pennwalt deal, bought part of his investment through him; a source close to Hoffenberg said Hoffenberg later paid Snyder off. Former United Fire officers Daniel Payton and Richard Allen said they had dealt with Epstein about the missing bonds. Epstein denied any dealings with the insurers, and Vanity Fair noted that much of Hoffenberg's testimony in his criminal case "has proven to be false."[^6] ### Later Claims and Death After his release, Hoffenberg publicly asserted that Jeffrey Epstein had been central to the Towers fraud, telling CBS News that Epstein was "my partner in what we did raising the billion dollars" and describing him as his "wingman."[^1] He claimed in interviews that Epstein had devised the failed Pan Am and Emery takeover schemes and had misappropriated proceeds from the insurance companies for personal use.[^1] Court documents filed by Hoffenberg alleged Epstein was an "architect" of the scheme, but no charges were ever brought against Epstein over Towers, and investigators said no concrete evidence directly tied him to the criminal conspiracy.[^1] ### Litigation Against Epstein Hoffenberg's litigation from prison had drawn warnings before he turned to Epstein. In Hoffenberg v. Hoffman & Pollok (2003), Sweet warned that he would be enjoined from further litigation without prior approval, and in 2013 Judge P. Kevin Castel ordered Hoffenberg and his lawyer Alan Fraade to show cause why a petition on behalf of "200,000 Towers Investors" (No. 1:13-cv-08563) should not be dismissed as frivolous and sanctioned; Fraade withdrew it.[^9] A June 11, 2015 verified petition in his criminal case named Epstein as the unnamed co-conspirator.[^8][^10] On May 27, 2016 Hoffenberg, represented by Fraade's firm Mintz & Fraade, sued Epstein and [Financial Trust Company](/organizations/financial-trust-company/) (No. 1:16-cv-03989) "individually, and as constructive trustee of the Noteholders and Bondholders of Towers Financial Corporation." Epstein's lawyer, Bennet J. Moskowitz of [Troutman Sanders](/organizations/troutman-sanders/), wrote to Judge Richard J. Sullivan on June 28, 2016 that Hoffenberg lacked standing, that his claims "expired at least 15 years ago," that he was barred by in pari delicto, and that he failed to state a claim. Hoffenberg withdrew the complaint with prejudice by letter of July 1, and Sullivan dismissed the case on July 5, 2016, five weeks after filing.[^9][^11] On August 17, 2018 Hoffenberg swore an affidavit that "Epstein and the corporations he formed were my co-conspirators" and that the 2016 suit "was eventually withdrawn with prejudice and the full extent of Epstein's involvement in my crimes and the related frauds was never exposed." It was filed with a class action by two Towers noteholders against Epstein and Financial Trust, which was terminated on October 5, 2018 after Epstein's lawyers moved to dismiss and called it "Hoffenberg's rehashing of several of his prior lawsuits."[^2][^8][^10] Hoffenberg told CBS News in 2019 that the limitations period had barred the suits and that he was waiting to refile if a government agency acted against Epstein's estate.[^1] Hoffenberg involved himself in politics in his later years, including reported backing of a super PAC associated with the 2016 presidential campaign of Bernie Sanders.[^12] He gave numerous media interviews after Epstein's 2019 arrest and death, presenting himself as a witness to Epstein's origins while acknowledging his own criminal history.[^1] On August 23, 2022 his body was found in advanced decomposition at his apartment in a multifamily house in Derby, Connecticut after a welfare check; he was 77. Derby police said the check was requested by a private investigator acting for a woman who identified herself as close to Hoffenberg and as a sexual abuse victim of Epstein, and who had not heard from him for five days. He was identified through dental records and was believed to have died at least seven days earlier. The autopsy showed no signs of trauma, there were no indications of a struggle or forced entry, and the cause of death was left pending toxicology results. Baise said he was not surprised because Hoffenberg did not appear to be taking care of himself.[^3] [^1]: Brian Pascus, "Jeffrey Epstein worked at Towers Financial with Steven Hoffenberg, who committed Ponzi scheme crimes," *CBS News,* August 13, 2019. https://www.cbsnews.com/news/jeffrey-epstein-worked-at-towers-financial-with-stephen-hoffenberg-who-committed-ponzi-scheme-crimes/ [^2]: Marvin Gerber and Kalma Koenig v. The Financial Trust Company, XYZ Corp., ABC, Inc., and Jeffrey E. Epstein, No. 1:18-cv-07580-JPO (S.D.N.Y.), Complaint, ECF No. 7 (filed August 21, 2018), paragraphs 15 to 58 (citing United States v. Hoffenberg, 94 Cr. 213 (RWS), 95 Cr. 321 (RWS), 1997 U.S. Dist. LEXIS 2394 (S.D.N.Y. Mar. 4, 1997)), with Exhibit B, Affidavit of Steven J. Hoffenberg sworn August 17, 2018, ECF No. 7-2, paragraphs 2, 36 to 45. https://truthinadvertising.org/wp-content/uploads/2019/01/Gerber-v-The-Financial-Trust-Co-complaint.pdf [^3]: Associated Press, "Jeffrey Epstein's mentor, who once ran a Ponzi scheme, was found dead. He was 77," *NPR,* August 26, 2022. https://www.npr.org/2022/08/26/1119746511/jeffrey-epstein-mentor-steven-hoffenberg-dead [^4]: "Steven Hoffenberg: Who is the former Epstein associate and New York Post owner?," *Yahoo News,* 2019, summarizing his Brooklyn origins, the 1970s debt-collection start and the New York Post stake. https://www.yahoo.com/news/steven-hoffenberg-former-epstein-associate-230443969.html [^5]: U.S. Securities and Exchange Commission, Litigation Release No. 15053, SEC v. Michael Rosoff, 96 Civ. 7064 (WK) (S.D.N.Y.), September 17, 1996, describing the Towers scheme and cross-referencing Litigation Release No. 13514 (SEC v. Towers Financial Corporation, Steven Hoffenberg, Mitchell Brater, and Arthur J. Ferro, 93 Civ. 0744 (WK) (S.D.N.Y.)), Litigation Release No. 13550 (amended complaint) and Litigation Release No. 14317 (consent judgment against Hoffenberg); releases 13514 and 13550 are not posted on the SEC website. https://www.sec.gov/files/litigation/litreleases/lr15053.txt [^6]: Vicky Ward, "The Talented Mr. Epstein," *Vanity Fair,* March 2003, as republished by the author, on Hoffenberg's lifestyle, the Leese and Mitchell accounts, the 1993 Illinois grand jury testimony, the Riddell, Pennwalt and Snyder claims, the Payton and Allen accounts, and Epstein's denials. https://vickyward.com/article/the-talented-mr-epstein/ [^7]: Transcript of conference, United States v. Steven Hoffenberg, 94 Cr. 213 (RWS) (S.D.N.Y.), December 5, 2013, before Judge Robert W. Sweet, filed as Exhibit L, ECF No. 16-12, in No. 1:18-cv-07580-JPO. https://storage.courtlistener.com/recap/gov.uscourts.nysd.499593/gov.uscourts.nysd.499593.16.12.pdf [^8]: Joseph N. DiStefano, "Accused sex trafficker Jeffrey Epstein's old boss says he knows where the mystery millions came from," *Philadelphia Inquirer,* July 11, 2019. https://www.inquirer.com/business/jeffrey-epstein-hoffenberg-trump-clinton-20190711.html [^9]: Letter of Bennet J. Moskowitz, Troutman Sanders LLP, counsel for Jeffrey E. Epstein and The Financial Trust Company, to Hon. Richard J. Sullivan, June 28, 2016, Hoffenberg v. Epstein, No. 1:16-cv-03989-RJS (S.D.N.Y.), citing 200,000 Towers Inv'rs v. U.S., 13-cv-8563, 2013 WL 6673612 (S.D.N.Y. Dec. 18, 2013), Hoffenberg v. Hoffman & Pollok, 288 F. Supp. 2d 527, 540 (S.D.N.Y. 2003), and 94-cr-213, ECF No. 150; filed as Exhibit G, ECF No. 16-7, in No. 1:18-cv-07580-JPO. https://storage.courtlistener.com/recap/gov.uscourts.nysd.499593/gov.uscourts.nysd.499593.16.7.pdf [^10]: Gerber v. The Financial Trust Company, No. 1:18-cv-07580 (S.D.N.Y.), docket (filed August 20, 2018; terminated October 5, 2018; Judge J. Paul Oetken), listing among the defendants' exhibits the Verified Petition to Perpetuate Testimony dated June 11, 2015 filed in United States v. Hoffenberg. https://www.courtlistener.com/docket/7698990/gerber-v-the-financial-trust-company/ [^11]: Hoffenberg v. Epstein, No. 1:16-cv-03989 (RJS) (S.D.N.Y.), docket (filed May 27, 2016; terminated July 5, 2016; counsel Mintz & Fraade, P.C. and Troutman Sanders LLP), and Order of Judge Richard J. Sullivan, July 5, 2016, filed as Exhibit I, ECF No. 16-9, in No. 1:18-cv-07580-JPO. https://www.courtlistener.com/docket/13248845/hoffenberg-v-epstein/ ; https://storage.courtlistener.com/recap/gov.uscourts.nysd.499593/gov.uscourts.nysd.499593.16.9.pdf [^12]: "Bernie Sanders Attracts Big Campaign Money Despite Rhetoric," *Time,* 2016. https://time.com/4141201/bernie-sanders-superpac-money/