Authors: Naomi Rovnik, Brad Heath and Nivedita Ballu
LONDON/WASHINGTON/TORONTO (Reuters) – Charles Schwab wired about $27.7 million on behalf of Jeffrey Epstein to a real estate agent in Morocco 10 days before the disgraced financier was trying to buy a palace 10 days before his arrest in 2019, documents released by the U.S. Justice Department show. One transfer came from an account that lacked sufficient funds.
Details of the transactions, first reported by Reuters, show how the U.S. brokerage handled Epstein’s funds in the months after he came under intense public scrutiny following a 2018 Miami Herald report.
Documents show that Schwab flagged the payments in a suspicious activity report (SAR) filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) on July 13, seven days after Epstein’s arrest.
An examination of more than a hundred documents showed that Schwab opened three accounts for Epstein’s companies in April 2019, including one for Southern Trust, which was trying to buy the luxurious Ben Ennahir Palace in Marrakech, Morocco.
Schwab’s corporate accounts list Epstein’s accountant Richard Kahn as an authorized individual, and Epstein as Southern Trust’s president and sole beneficial owner.
Between June 26 and July 9, 2019, Southern Trust instructed Charles Schwab to wire approximately $12.7 million in euros for the purchase, but later rescinded the order. Schwab then received another wire request signed by Epstein and sent $14.95 million to purchase the same property, even though there were insufficient funds in the account to await the return of the original payment.
Schwab declined to comment on the account details, saying federal regulations, privacy laws and its policies and procedures required it to remain confidential.
“An associate of Epstein’s opened accounts in April 2019. Shortly after, our risk team began investigating the accounts and, within 60 days of initiating the review, notified clients of our decision to close and terminate the relationship. We also referred the matter to federal law enforcement,” the company said in an emailed response to Reuters.
Schwab declined to provide details on when its risk team would begin its investigation.
Under the U.S. Bank Secrecy Act, financial firms must file suspicious activity reports within 30 days of initial discovery of the facts, in addition to reporting cash transactions exceeding $10,000 per day, to assist in the detection and prevention of money laundering.
FinCEN declined to comment. Kahn’s lawyer did not respond to questions from Reuters.
Marc Leon, a real estate agent in Marrakech, told Reuters by email that Epstein first tried to acquire Bin Ennakhil in 2011 and that negotiations over terms and price had continued for years.
A property listing in the U.S. Department of Justice archives shows Bin Ennakhil covers 4.6 hectares and features golden walls, a hammam steam spa, 60 marble fountains, an outdoor swimming pool and a jacuzzi. It has multiple gardens, hundreds of olive trees and more than 2,000 palm trees, and is larger than New York’s Washington Square Park or about six full-size football fields, the listing said.
Leon also defended his role in facilitating Epstein’s bid for the property.
“Epstein was convicted of sex crimes (in 2008) and served his sentence. Therefore, there was nothing to stop him from trying to buy property in Morocco. We have no way of knowing whether he continued to commit horrific crimes,” he said.
Epstein died in prison in August 2019 while facing federal sex trafficking charges in the United States.
Epstein directed transfer of funds
Epstein sought help from Schwab in 2019 as Deutsche Bank was liquidating accounts held by the convicted sex offender, who pleaded guilty in 2008 to soliciting underage girls for prostitution and was jailed.
In 2020, the U.S. Virgin Islands issued subpoenas to at least seven financial firms seeking documents related to the co-executors of Epstein’s estate, including Charles Schwab. The subpoena does not name Schwab as a defendant and does not accuse the brokerage of wrongdoing.
Emails and wire transfer requests included in DOJ documents, which may not be comprehensive, show that Epstein discussed the purchase of a luxury property in Marrakech with his associates in the spring of 2019.
Southern Trust, owned by Epstein, agreed to purchase the property through Leon in March of that year.
After considering various financial arrangements, Epstein directed associates to transfer funds to Leon, documents show.
Schwab then received an order from Southern Trust to wire 11.15 million euros (approximately equivalent to US$12.7 million at the time) to Leon on June 26, 2019, Schwab said in the Hong Kong Special Administrative Region.
The SAR was included in the batch released publicly by the Justice Department but was later withdrawn for reasons Reuters could not determine. The U.S. Justice Department declined to comment on the document.
The funds were wired into a Julius Baer account in Switzerland owned by Leon, who was living in Marrakech at the time, the SAR showed.
The request also appears in a document on the U.S. Department of Justice website.
The next day, Schwab received a call from someone whose identity had been removed from the District, demanding that the transfer be terminated. When asked why, they told Schwab that the terms of the real estate deal were not “satisfactory.”
The person also said a larger amount would be paid to another account, the SAR government said.
Schwab successfully canceled the order, which will be returned on July 10, SAR said.
In a July 4 wire request signed by Epstein and his co-signers, two days before Epstein’s arrest, Southern Trust directed Schwab to wire $14.95 million to Leon, the District shows.
Schwab said the funds were wired to Leon’s account at Julius Baer, the District shows.
However, the District said Epstein’s Southern Trust account did not have sufficient funds because Schwab had not returned previously transferred funds.
While Schwab could have reasonably expected the money to be transferred back to Epstein’s account, the bank would be at risk until the funds were returned.
Reuters was unable to determine when the $12.7 million would eventually return to Epstein’s account, but a July 13 SAR showed the funds would arrive on July 10.
Schwab declined to comment when asked by Reuters about his policy at the time for handling international wire transfers when there were insufficient funds in the account.
Reuters could not determine whether Julius Baer accepted the transfers. A spokesman for Julius Baer declined to comment.
“Existing anti-money laundering checks were conducted by banking institutions involved in future transactions that never occurred,” Leon said.
The District shows that it was not until July 9, three days after Epstein’s arrest, that Schwab canceled the second transfer at the request of an individual representing Epstein, whose name has been withheld.
An email included in other U.S. Justice Department documents shows that Kahn, Epstein’s accountant, asked on July 9 for the transfer to be canceled.
House Oversight Committee member Robert Garcia said in a media statement in January that Kahn has been ordered to testify before Congress next week to answer questions about whether he helped Epstein commit crimes by managing the late sex offender’s financial affairs.
Reuters has no evidence of wrongdoing by Strauss-Kahn.
In a follow-up exchange with Schwab after Epstein’s arrest, an unidentified Epstein associate asked whether future transfers from the Southern Trust account would still require two signatures because more funds would be sent soon, D.C. shows.
The U.S. Department of Justice said on July 8 that Epstein was charged with sex trafficking of minors and was still in prison.
Schwab told FinCEN on July 13 that it was “concerned about attempted wire transfers for real estate purposes given the negative media surrounding Jeffrey Epstein” and that he may be a flight risk ahead of his bail hearing.
“This investigation was the result of an internal referral,” Schwab said, according to the documents.
While Epstein’s deal fell through, the palace of Bin Ennakhil (meaning “among the palm trees”) in Marrakech is no longer vacant.
“The property was later sold to another buyer,” Leon told Reuters.
(Reporting by Naomi Rovnick in London, Brad Heath in Washington and Nivedita Balu in Toronto. Additional reporting by Ariane Luthi in Zurich and Tommy Reggiori Wilkes in London. Editing by Elisa Martinuzzi, Catherine Evans and Alexander Smith)
