A Senate committee is investigating whether or not $158 million that the billionaire investor Leon Black paid the disgraced financier Jeffrey Epstein for tax and property planning companies ought to have been labeled as a present, as a part of a broader inquiry into tax-avoidance schemes by ultrawealthy people, in keeping with a letter reviewed by The New York Times.

In addition to the charges that Mr. Black said he had paid Mr. Epstein, the Senate Finance Committee is trying into a number of trusts that Mr. Black used to save lots of on taxes and recommendation that Mr. Epstein gave on artwork purchases, in keeping with the letter, which the committee’s chairman, Senator Ron Wyden, despatched to the non-public fairness mogul on Monday.

Mr. Wyden, Democrat of Oregon, wrote that the committee was dissatisfied with the knowledge that Mr. Black, a co-founder of Apollo Global Management, had supplied it thus far and requested his cooperation.

“A significant number of open questions remain regarding the tax-avoidance scheme you implemented with Epstein’s assistance, including whether the exorbitant amounts paid to Epstein should have been classified as a gift for federal tax purposes,” the senator wrote. Gifts exceeding an annual threshold in worth are topic to federal taxes starting from 18 to 40 %.

A spokesman for Mr. Black, 71, stated he had “cooperated extensively with the committee.” Whit Clay, the spokesman, added: “The transactions referenced in the committee’s letter were lawful in all respects; were conceived of, vetted and implemented by reputable law firms and tax and other advisers; and Mr. Black has fully paid all taxes owed to the government.”

In 2020, a regulation agency discovered that Mr. Epstein’s work had saved Mr. Black and his 4 kids $2 billion in property and reward taxes. The agency, Dechert, which Apollo’s board had retained to assessment Mr. Black’s dealings with Mr. Epstein, discovered that he had not achieved something fallacious. Mr. Black stepped down as chairman and chief govt of the non-public fairness behemoth in 2021.

The investigation by the Senate Finance Committee is a part of an inquiry into tax shelters that the superrich use to “avoid or evade paying federal taxes, including gift and estate taxes,” in keeping with the 16-page letter. In April, the committee requested information from Harlan Crow, a billionaire actual property developer, about his tax treatment of presents to Justice Clarence Thomas of the Supreme Court.

Mr. Wyden despatched the letter simply days after The Times reported that Mr. Black, who’s price an estimated $9 billion, had staved off a attainable lawsuit by the U.S. Virgin Islands with a $62.5 million settlement.

The settlement, reached in January however not disclosed on the time, arose from potential claims that the Virgin Islands had developed in opposition to Mr. Black throughout its three-year investigation into Mr. Epstein’s sex-trafficking operation run partly from his non-public island residence off St. Thomas.

“Jeffrey Epstein used the money Black paid him to partially fund his operations in the Virgin Islands,” in keeping with the settlement.

Mr. Black was a longtime social and business acquaintance of Mr. Epstein, who killed himself in 2019 after his arrest on federal sex-trafficking expenses. Lawyers for his victims have estimated that Mr. Epstein, a school dropout with little coaching in tax and property work, sexually abused 200 younger ladies, a lot of them youngsters.

The Senate committee started investigating Mr. Black in June 2022 with a letter to Apollo, after which sought data from two main regulation corporations that had labored for Mr. Black. The attorneys advised the committee that he was unwilling to reply questions in regards to the funds to Mr. Epstein.

Mr. Black’s attorneys did present some details about a number of grantor retained annuity trusts, or GRATs, that have been arrange in 2006 to allow him to cross on shares in Apollo to his kids in a tax-advantaged method — whereas letting him proceed to earn earnings from the funding. But Mr. Wyden stated Mr. Black had not supplied sufficient data for the committee to find out if the work carried out by Mr. Epstein was a professional tax technique.

Beginning in 2014, Mr. Epstein supposedly helped restructure the trusts to keep away from a $1 billion reward and property tax hit to Mr. Black and his household, in keeping with the Dechert report.

A GRAT is a classy funding car that allows an individual to maintain amassing earnings from property of all types — together with shares, actual property and artwork — after which hand them off to relations with out paying the massive reward or property taxes usually related to such transfers.

Mr. Epstein had often boasted that he was an knowledgeable in such trusts and picked up hefty charges for serving to a small variety of rich folks lower your expenses in taxes.