Leon Black’s Slow Burn

And that led to, you know, Jeffrey Epstein trying to worm his way into everything that Leon was doing his family office, his buying and selling of art, his buying and selling of jets and boats, etc. Welcome to the Powers The Bee Daily, Pucks Podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood, and the players who run it all. I'm Peter Hamby. It's Tuesday, September 15th. Today, I'm joined by Bill Cohan, who takes us inside his new book about private equity billionaire Leon Black. It's called Money to Burn, the Unvarnous Truth about Leon Black Apollo and the rise of the new Wall Street. Black, of course, built the financial powerhouse Apollo alongside Josh Harris and Mark Rowan, but was undone by bad decisions, including an affair, and infamously his murky relationship with Jeffrey Epstein. Bill tells me what he learned from his interviews with Black and his associates, and he responds to some criticism of his book from reporters at the New York Times. We'll discuss all that in much more on today's episode of The Powers The Bee. Small businesses are the backbone of the economy. That's why Wells Fargo supports more than 3 million small business customers with the full suite of products and services, from loans and funding to initiatives and grant programs, helping provide them with the resources they need, because when small businesses thrive, communities thrive too. Wells Fargo, the bank of doing. Learn more at Wells Fargo.com/impact. Wells Fargo Bank, any member FDIC. Happy Tuesday, everybody, and welcome to The Powers The Bee. I'm joined by my handsomeest colleague today, Bill Cohan, to talk about his new book, Money to Burn. It's about Leon Black. It's about Apollo. It's about Leon Black's controversial relationship with Jeffrey Epstein. It's about his controversial relationship with his own colleagues, including Josh Harris and Mark Rowan. Bill, it's good to see you. Congrats on the new book. Thank you, Peter. I want to talk about Leon Black and Jeffrey Epstein. I want to talk about some cranky New York Times journalists who have criticized your new book or some of the reporting. We'll get into that. But to start, first of all, congrats on your new book. I have several of your books. You are a brilliant writer, diligent. I look up to you in some ways, so this is a big deal. You are a prolific author, and I'm so impressed by it. To start, why Leon Black? Why did you want to write a book about the founder, co-founder of Apollo? What drew you to him in the first place? First, thank you for the kind words, Peter. I look up to you as well. I can't wait to clue in on a regular basis to your new podcast, which I find to be a brilliant idea, and I am riveted by what will surely be a historic presidential race. I can't get enough of it. I just saw John Ossoff up here in Nantucket, and that was interesting. Here, by the way, is the new book in all its brilliant redness and blackness for our YouTube fans? We got to show the cover. Exactly. So, look, Peter, when you write a book of this kind of tone-like quality, it's very important to have a story and a narrative that you are, I am myself interested in. I have been aware of Apollo since its founding in 1990. When I was a banker at Lazar, I used to cover the firm. I used to traipse over there to see Mark Rowan and bring him what I thought was actionable. It was an immensely thankless task, of course, because the last thing that Mark Rowan wanted to hear from was, well, I think he wanted to hear from M&A ideas. He certainly didn't want to hire and pay for a fee to an M&A banker since he himself was a former M&A banker. I did that for any number of years. It was utterly thankless, but I did get to know Mark, and I had never met Leon once or twice, bumped into on Fifth Avenue, but I just thought that the whole story, starting with Leon's father's suicide and going to Drexel and Drexel's implosion and Apollo being born out of the ashes of Drexel. To say nothing of all the number of good deals they've done and bad deals they've done, I don't dwell on that too much, but then the succession process, Jeffrey Epstein, as you mentioned, affairs with people who are not their wives, you know that kind of thing. You mentioned Drexel, so that was Drexel collapsed and had a bad rep that was Michael Millkin and the junk bond era, and then these guys, the whole company basically comes out of Drexel and at the time had a stink on them. So what was their big idea when they started Apollo that would separate them from the pack or people who were trying to do what they were trying to do? At the time that Drexel imploded, which was February 1990, and they started the firm, which was around June of 1990, they weren't that many private equity firms, so it wasn't that they needed to necessarily distinguish themselves from the pack to try to raise money. It started in kind of an interesting way, so you have these guys, as you say, with the stink on them from the collapse of Drexel, and then Leon got a call from a French banker in New York, from Credit Leon A, who called him like six times before Leon decided to return the call. And the guy basically wanted Leon and his crew to set up an US domestic M&A business for Credit Leon A, and when Leon finally spoke to the guy, he said, "Hey, guess what? It's 1990, there's a big credit freeze on in this country." And there's very little M&A business, but there is a big opportunity in buying distressed debt, and seeing when the economy improves whether that debt trades up, or if it doesn't, can be converted into equity. So why don't you stake me and us with hundreds of millions of dollars, like $400 million, and we'll buy distressed debt. I think what distinguished them was somehow their ability to get Credit Leon A, which was like the Royal Bank of France at the time, since merged into Credit Agricole, because of its own blunders. To back these guys who had just come out of Drexel, who had the stink on them. It seemed very unlikely, but it happened. They got the $400 million, and they got another $400 million, and they convinced the French, who are not necessarily the most creative thinkers when it comes to finance, to back Leon and his partners in buying distressed debt at a discount, and they all made a fortune. And then for an encore, they bought the portfolio of executive life, a few years later, with French backing, they paid $0.50 on the dollar for $6 billion worth of junk bonds, that Mike Milken had sold the executive life executives. Now, Paolo and Leon, who had worked at Drexel with Michael Milken, were buying him for $0.50 on the dollar, and they made another fortune doing that. And then over the years, what separated them from the pack? I mean, my first introduction to Leon Black, not coming from your world, was talking to our colleague, go on time ago, Marion Manaker, about his art collection. And all these guys, in the contemporary imagination, are almost famous outside of Wall Street for other things. Josh Harris, I mean, obviously we'll talk about Leon Black and Epstein after this question. But Josh Harris owns my Washington Commanders, owns a Philadelphia 76ers. I mean, how did they become such a thing? Well, I think Peter, as you will, no doubt, find out soon, when you make billions, when you have a net worth in the billions, and Leon has now got a net worth of $18 billion, and he also gave a gift, basically, of Apollo stock to Mark and Josh, that was now worth like 10 billion each. So they had all this money, you know, they bought their planes, they bought their mansions in New York, they bought their houses in the Hamptons, Leon bought Tom Cruise's house in LA, and a since sold it, he's got a house in London. I mean, they got, they got all the homes and the planes and the yachts that they can handle. So now it becomes different things. For Leon, it became this art collection, which is a, you know, world-class art collection, which he showed me many times, that it's probably the best, the most significant art collection in private hands, certainly in the US, maybe the world. Josh, as you said, owns the Washington commanders, the Sixers, the New Jersey Devils, the owns a piece of a UK football club, Mark Rowan decided to, you know, buy a bunch of, and. build or create a bunch of restaurants in Montauk and in Eastern Long Island. He has boats and planes as well, duplex on Fifth Avenue, Greenwich, On and On and On. So I think, you know, what happens is when you get really, really, really, really rich, you start buying all sorts of expensive toys. Bill, you also write about the falling out between Leon Black and Josh Harris who had long wanted to be CEO Leon resigned in 2021. Obviously, this was under a cloud of scandal, his relationship with Jeffrey Epstein. He paid him $158 million over the years for financial advice and I want to ask you about that when we come back. Wells Fargo provides billions to advance housing access and affordability. Their housing programs and initiatives are tailored to help individuals and families alike. An aim to create thriving neighborhoods where everyone can find a place to call home. Learn more at Wells Fargo.com/impact, equal housing lender. I'm Jennifer Fisher and I'm Angela Kinsey and we're the office ladies. We're still talking about all the hilarious behind-the-scenes details from the office with icons from the show like Rain Wilson, Greg Daniels, Melora Harden and so many more. And we can't forget our two conversations with office ladies' superfan, Billy Eilish. Hello. So join us for brand new episodes every Wednesday. And revisit the office rewatch every Monday. Follow and listen to office ladies wherever you get your podcasts. Welcome back to the Powers of Be Everybody. I'm talking to my colleague Bill Cohan, author of the new book Money to Burn, The Unvarnished Truth about Leon Black Apollo and the rise of a new Wall Street. Bill has written books about Goldman, Lazard, GE, my favorite book about the Duke Lacrosse scandal, his alma mater. Untarnished of course now. Bill speaking of Tarnished, Josh Harris and Leon Black, you can tell me if they're still pals, but Leon paid Jeffrey Epstein a lot of money over the years, was not accused of any wrongdoing, nothing to do with Jeffrey Epstein's charges. But like a lot of rich people involved with Jeffrey Epstein, you have to question why they were pals, why he was paying him money. How much did that actually contribute to him stepping down? He denies it was related, but of course it was. It happened literally like in the same time frame that that got reported. Yes. So there was a sequence here of events, Jeffrey Epstein dies by suicide. I gather we're told, we're led to believe. And that was in what 2019, 2019, right? In 2020, the New York Times reported that Leon had paid Epstein between $15 and $75 million for financial advice. That number really got tongues wagging across Wall Street. Why would he pay Jeffrey Epstein that much money for financial advice? If you built this giant company that you wrote about, it seems like he's pretty good with the financial advice. Exactly. What was Jeffrey Epstein going to say? Exactly. Why would somebody with Leon Black's reputation for financial shrewdness be paying Jeffrey Epstein, guy who didn't even barely graduated high school and auto-diedact for financial advice? It just blew everybody's mind. And of course 50 to 75 million was low. It turned out to be 158 million, which blew people's mind. So on quarterly analyst calls, Leon started getting questions from research analysts about his relationship with Epstein. I think some sort of institutional investors were getting nervous about that relationship and wanted to know the extent of it. So Leon essentially asked the special committee of the board of directors of Apollo to hire a law firm and do a report and investigate his relationship with Jeffrey Epstein. Now he told me he did that because he didn't think he did anything wrong. The report was published in January 2021 and did reveal that he paid 158 million to Epstein, which further blew everybody's mind on Wall Street. Although it did talk about how he received financial and tax and estate advice from Jeffrey Epstein and that Jeffrey Epstein had in effect saved Leon $2 billion in what might have been a tax bill for his kids' grats, their trusts, that he had set up where there's apparently some flaw in them, which seems hard to believe. But apparently there was and Jeffrey Epstein, again, seems hard to believe, uniquely was able to come up with a solution that passed muster with Leon's traditional Wall Street law firms and the documents were redrafted and the IRS has never questioned it and so Leon didn't have to pay that $2 billion that he otherwise might have had to pay if Jeffrey Epstein didn't come up with this thing. And that led to, you know, Jeffrey Epstein trying to worm his way into everything that Leon was doing, his family office, his buying and selling of art, his buying and selling of jets and boats, et cetera, any asset that could be bought in a tax-efficient manner, Jeffrey Epstein was all over it and that's why Leon ended up, he says, paying him $158 million, which seems, you know, exorbitant and a lot of people, I think, still to this day, find it all hard to believe. Certainly when I first heard and read that Decorate report in January of 2021, I wrote a piece in Vanity Fair where I said I thought it was really hard to believe and I can't believe Leon expects us to believe it. But, you know, during all the interviews with me, he stuck to that and there's basically been nothing really emerging to question that, although clearly Jeffrey Epstein is dead, so the other side of the equation is not able to discuss it or ratify it, but the plan was when the Decorate report came out that Leon would, he was still CEO, he was still chairman of the board, but that he would resign as CEO six months later in June of 2021 on his 70th birthday and turn the company over to Mark, Rowan, and he would remain executive chairman. That was the plan. The plan got blown up, however, two months later on March 17th, when this woman that he'd been having a consensual affair with and that had ended basically and with whom, with whom he had signed an NDA and had agreed to pay $21 million in exchange for signing the NDA after he paid her $9 million of the 21. She blew it up by tweeting about their affair, which was an violation of the NDA, and making all these crazy claims. That's a little bit, yeah. And making all these crazy claims about Leon's behavior in the way, he treated her and he decided to resign immediately at that point as CEO and resigned from the board. So it was related to Epstein, you know, and it was related to his poor personal choices and his lack of judgment in that area, yes. So look, clearly anyone who hung out with Jeffrey Epstein after his first conviction, you're right. There's some lack of judgment there, but let me ask you a question. I mentioned all the books you've written and you have this whole career where you spend time around Wall Street Titans, Titans of Finance, just rich people in New York. So if Leon Black wasn't doing anything on savory with Epstein, my question is, because like there are some people hung out Jeffrey Epstein who didn't do anything wrong, but they were pals with them and they went to the same nice restaurants and clubs and vacations. But why would he be friends with Jeffrey Epstein? Well, would anyone be friends with Jeffrey Epstein if they weren't dabbling in the terrible dark arts, whatever you want to call Jeffrey Epstein's behavior at that point? Again, I think it evolved over time. I think at first he was, I mean, let's stipulate that he was not involved with the dark arts. I think he was just sort of like many people were, you know, he was a bit of a spengali and he introduced Leon, all sorts of people that he would not have otherwise met. I mean, he explained to me that Epstein knew Bill Gates and introduced him to Bill Gates. And he said, no one else introduced me to Bill Gates. So I think there's that. I mean, it feels like Leon Black could have met Bill Gates on his own. I think if he worked hard at it, he could probably, you know, some people are even beyond the reach of other rich people, likely on black, you know, maybe, you know, he figured You know, Leon would want to buy a part of Microsoft. I don't know, whatever it was. He didn't want to deal with that, who knows? But Epstein said, you know, do you want to meet Bill Gates? So I'll bring him over to your office and that's what happened. Now we know that Bill Gates had his own sorted history with Jeffrey Epstein. So it was all in the same little club, I guess. So, but then over time, it developed into this relationship involving Epstein, Epstein put Epstein on the board of his family foundation, which I thought was an odd move, especially a particularly intimate move for somebody who, you know, didn't really know the family, but then it evolved into this situation where there was a problem in his kid's trust. He asked other traditional lawyers on Wall Street to solve it, they couldn't. And Epstein came up with this solution that apparently passed muster and worked, and the documents were redrafted, and Leon avoided paying a $2 million tax bill. So that then led to Epstein warming his way into all sorts of things that Leon was doing in his family office and his personal life. And again, I'm just stipulating here that because there's been no evidence really to the contrary that, I mean, Leon did have affairs outside of his marriage and that got him into trouble. And he may even have sought some of Epstein's advice on how to deal with some of these affairs or making payments to some of these people, these women, but as far as I can tell, there's no evidence yet to the contrary that he was with any underage women or up to any of the strange things that Jeffrey Epstein was up to. But of course, who admits to that? No one admits to that, and as I said, Epstein's dead. And but I have gone through the three million or as many as are out there of emails that Epstein wrote to Leon, which Leon never responded to, which was an interesting strategic move. But a lot of it, it's just Epstein ranting, trying to get more money out of Leon until Leon just like was fed up with it and cut him off in 2017. Last question for you, let's go, Bill Ben Smith at Semaphore reported a few weeks ago that David Enrich and Matt Goldstein at The New York Times who have broken a lot of Epstein's stories and written about Leon Black and his relationship with Epstein. They were cranky with your book. They called Leon's PR person, I guess, and complained about your coverage. What were they cranky about that you portray Leon in a different light that you couldn't find any evidence of wrongdoing as it relates to Epstein's bad behavior? Like, what's your response to that? Well, again, I'm getting it third hand because I did reach out to Enrich and Goldstein when I heard this and they didn't respond to me. So I think they're, what I'm told is they're cranky about a few things, I think they're probably cranky that they're writing a book about Epstein and Leon won't talk to them, understandably. They've fillate him on the front page of The New York Times so I can understand why they might not want to talk to him but he obviously talked to me. So then they suggested that I must have had some sort of deal with Leon to get him to talk to me, which is frankly insulting and not even remotely accurate just like they wouldn't have any deal with any of their sources. So I didn't have a deal with Leon. He talked to me on the record voluntarily without he never read the book until last week or even got the book till last week. So that's number one, number two, I think, again, I could be wrong, I heard they were cranky about the fact that I included Matt Goldstein's texts with Gagnéva, the woman that Leon hadn't affair with where he tried to get her to kind of meet to Leon so he could write a story about it. And I heard that they were, how could I possibly include those texts? Well, the texts were public and I got a hold of them and I included them because they show in a rare way how a reporter goes about trying to get a story that they think will be important and be troublesome for Leon Black. But what they failed to mention and Matt Goldstein knows as well is that I sought him out for comment about the texts and I went over and saw him at the New York Times and we had a meeting and we talked about his texts and I gave him an opportunity to respond on the record. He chose not to, except for one comment that he made about what initially, what were their initial interest in the story with Leon and Gagnéva and I included that comment in the book. So the idea that I didn't reach out to him is ridiculous. The texts were public in any event. So I'm sorry that he wrote them. I don't think he did anything wrong by writing them. I think it's sort of like standard process which you just don't see very often. So I thought, oh, listen, let's definitely include them or some of them because it's fascinating. And then he kind of got scooped on his own story with Gagnéva which I thought was interesting. So I think they're just like cranky, a little cranky that, you know, I had this access to Leon and they haven't been able to yet. So. - Turfors and journalism. - Yeah. - Sometimes they haven't. - Yeah. (laughing) - Well, that's why I saved it for the last question. - Yes. - Bill, thank you for joining me. Everyone, please go buy money to burn. Bill is an absolutely brilliant writer and reporter. So I'm excited to read it as well. Thanks for joining me, man. - Thank you. My pleasure, always. (upbeat music) Thanks so much for listening to The Powers That Be, the official podcast of Pock in partnership with Odyssey. I'm Peter Hamby and I'd like to thank our show's Executive Producers, Pock Co-Founder John Kelly, Executive Editor Ben Landy, and Director of Editorial Operations, Gaby Grossman. On the Odyssey side, thanks to Bob Tabitor and Chris Basel for their recording, editing, mixing and mastering, and to Executive Producers, Asha, Soluja, and Leah Reese Dennis. (upbeat music) [BLANK_AUDIO]