Apollo CEO sets record straight on Epstein relationship

Global alternative investment management firm Apollo Global Management Inc (NYSE: APO) reported Thursday morning third quarter results and CEO Leon Black publicly set the record straight on his relationship with the late financier Jeffrey Epstein.

Q3 results

Apollo, a publicly-traded entity, said that its total assets under management rose $102 billion from the end of 2019 to $433 billion. The growth is attributed to a combination of organic growth from insurance clients, new capital raises for existing strategies, meaningful transactions, and the launch of new initiatives.

Dry powder, that is committed but unallocated capital, stood at $45.8 billion at the end of the quarter. Among that, $21.9 billion was dry powder that has future management fee potential.

“In a year that has been clouded with market turbulence, our deep bench of talent has enabled stability and strength across our globally integrated platform,” Apollo Co-Founder Josh Harris said in the earnings report.

Black: No ‘wrongdoing’

Epstein, the mysterious financier that was indicted in 2019 on federal sex-trafficking charges involving underage girls, had a prior working relationship with Apollo’s Black. The New York Times reported the two knew each other for decades and Black’s claims of a “limited relationship” were “deeper than Mr. Black let on,” the Times reported.

On Thursday the CEO spoke publicly about his past relationship with Epstein during its scheduled earnings conference call. He acknowledged that he wasn’t eager to talk publicly about personal matters but the relationship is “now affecting Apollo” and “causing deep pain for my family,” The Wall Street Journal reported.

Black reiterated that he wired Epstein millions of dollars annually for “estate planning, tax, structuring of art entities and philanthropic advice” from 2012 through 2017. But throughout their decades-long relationship, there has “never been an allegation by anyone of any wrongdoing”, WSJ quoted the CEO as saying.

Any suggestion otherwise or allegations of blackmail or any other connection to Epstein’s “reprehensible conduct is categorically untrue.” The Times report failed to detail any evidence to suggest otherwise. Nevertheless, the media attention is enough for Apollo’s public pension fund investors and others to express concern, according to WSJ.

‘Terrible mistake’

Black acknowledged he made a “terrible mistake” in doing business with Epstein despite pleading guilty in 2007 to a federal nonprosecution agreement, according to WSJ. Black, like other people he respected, felt it prudent to give Epstein a “second chance.”

“I wish I could go back in time and change that decision, but I cannot,” he also said.

Moving forward, Apollo hired law firm Dechert LLP to conduct its own independent review of Black’s relationship with Epstein at the request of Black himself, according to WSJ. Some of the firm’s investors may be awaiting a report before committing new capital but the firm already raised $18.4 billion from third parties in 2020 which are already within its typical annual range of $15 billion to $20 billion.