A Very Important Postscript to the Maxwell Trial

The Death of James Cayne

So, Ghislaine Maxwell has been found guilty of aiding Jeffrey Epstein’s crimes on counts of sex-trafficking a minor, transporting a minor with the intent to engage in criminal sexual activity, and three conspiracy counts.

But the question marks around both her and Epstein live on—not least being: Where did all of their wealth suddenly come from?

The money was the key to everything. No source I’ve spoken to saw any evidence of pedophilia before Epstein had money. But once he had his Shangri-las, his island, his dens of iniquity, all that changed.

The source of that wealth was not explored in Ghislaine Maxwell’s trial. Nor was there any concrete explanation given for the exorbitant $30 million Epstein allegedly transferred to accounts bearing Maxwell’s name.

But last week, in addition to the verdict in the Maxwell trial, something critical happened that may yet open avenues that lead to the truth about Epstein’s finances.

I’m referring to the death last week of James Cayne, the former CEO of Bear Stearns, the investment bank that was acquired under duress by J.P. Morgan in March 2008, the year of the financial crisis.

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James Cayne, former chairman and CEO of Bear Stearns, as he waited to testify before the Financial Crisis Inquiry Commission on Capitol Hill May 5, 2010 in Washington, DC. || Win McNamee/Getty

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James “Jimmy” Cayne was Epstein’s direct boss at his first (and only) Wall Street job. Epstein worked at Bear Stearns from the mid 1970s until 1981, arriving at the bank with no previous financial experience. Instead, he was handpicked out of the Dalton School, where he had been a math teacher, by Bear Stearn’s late Chairman Ace Greenberg, whose children attended Dalton. Cayne was Greenberg’s Number Two.

When I was reporting on Epstein in 2002, Cayne called me—unusual in itself, as I generally reached out to schedule interviews, rather than the other way around—and summoned me to the Bear Stearns offices to talk about Epstein. Sources had suggested to me that Epstein had been forced out of the bank in 1981—after a pretty brief period—for some sort of insider-trading. But Cayne insisted this was not so.

I spent a whole afternoon with Cayne. He talked for so long that I remember my pregnant body felt really uncomfortable at having to sit still for so long. It was clear that Cayne was on a major charm offensive. He talked on and on about a wide range of subjects: about how much he hated lawyers, about his love of bridge. He took me on a tour of the bank’s new headquarters.

Wait... Didn’t he have a bank to run?

Cayne praised Epstein up and down, saying he’d been really sorry to see him leave the bank. He added that Epstein was a major client.

It was obvious that Epstein had set up the meeting. Before Cayne had called me, Epstein had said to me, “I think you might want to talk to Jimmy.  My sense of my remembering is Jimmy really wanted me to stay.”

Ace Greenberg, the bank’s chairman, also phoned me and piled on: “Jeffrey’s a dear friend of many of us here. He's a business associate of ours, and, in many respects, his word is his bond.  And he's just, in my opinion, a first-class guy, and I'm going to go on record with that.”

But what I discovered in 2002 after that first meeting with Cayne was that in 1981, Bear Stearns’ senior executives were being investigated by the SEC for illegal trading. In the midst of that investigation, Epstein—then the most junior partner—abruptly left the firm, after copping to wrong-doing, according to his own deposition.

Epstein’s future business partner—and convicted fraudster—Steve Hoffenberg told me that there was much more to Epstein’s exit from Bear Stearns that what was in his deposition. Hoffenberg said that something about it subsequently gave Epstein leverage over the leadership at Bear Stearns.

Here’s Hoffenberg talking to me this year for “Chasing Ghislaine,” my Audible podcast and discovery+ docuseries:

HOFFENBERG: Jeffrey Epstein could have—

WARD: Yes.

HOFFENBERG: —substantially damaged Bear Stearns. He had that information.

WARD: But did he feel that he was asked to take the fall for other people?

HOFFENBERG: He was asked to explain what they wanted explained by him.

WARD: I see.

HOFFENBERG: He followed the party line. He was given the party line and he did exactly what they told him.

Eventually, I found a second deposition that Epstein gave, in a civil suit, in which he talked about his exit and also about losing his broker’s license. From both, you can glean that Epstein claimed under oath that he had loaned his “closest friend” a significant sum of money to buy newly issued stock. He said the Bear Stearns executives told him this was a potentially serious offense and that he was annoyed and decided to leave.

The SEC asked Epstein to say what he knew about the trading activity of other senior executives, especially that of Jimmy Cayne.

Epstein said he knew nothing.

At the time Epstein gave this deposition, the bank’s lawyers were still representing him—and he’d been given a bonus for the year.

I pushed Epstein about this in 2002, and he pushed back:

EPSTEIN: I didn’t want to stay because I couldn’t... this is off-the-record—I don’t deal well with people who have narrow-mindedness. … So Jimmy had made an effort to have me stay or tr[ied] to encourage me to stay, different types of encouragements.  I am not sure if he had somebody who was saying, ‘We prefer him not to stay because he’s a little crazy,’ but nothing to do with me.  I never had a run-in with anybody except people trying to say, ‘You are a partner here’—I think I was the youngest partner ever there—and I said, ‘I can’t do it.’

I told him I’d heard other people on the executive committee demanded he be fired.

EPSTEIN:  Right. 

WARD:  And that you had continued to do it, and the Executive Committee met and voted you five to two that you had to go.  

EPSTEIN:  Not true. 

WARD:  Not true. None of it? 

EPSTEIN:  No. ... so you understand sort of obviously some of my concerns on some of these things? … The two people who were on the Executive Committee at that time were Jimmy and Ace.

WARD:  I'm aware of that. 

EPSTEIN:  And I'm sure that they would tell you that that's not what happened.  

WARD:  Well I will have to call them. 

EPSTEIN:  You should.  

WARD:  But I called you first. 

EPSTEIN:  You already spoke to Jimmy about this. 

WARD:  I did.  But I didn't ... at the time I hadn't ... I was beginning the piece, so I hadn't—

EPSTEIN:  Okay. 

WARD:  —had these things to put to him.  So obviously of course we will be putting them to him.  But I just ... as a matter of courtesy come to you first. 

I did go back to Cayne and Greenberg, and they backed Epstein’s version of events in 2002. 

Greenberg said, “I have no recollection of any of that whatsoever.”

Cayne said any allegation that Epstein had been forced out was “bullshit.”

Earlier this year, Cayne did not return further calls for comment. Greenberg passed away in 2014.

Here’s what I was told really happened by a source (not Hoffenberg) who knew all three men—Epstein, Cayne and Greenberg—and who was closely involved with them regarding the SEC investigation but who did not want to confront Cayne about this while he was alive.

According to my source, Epstein was allegedly loaning money and selling hot issues to his then-girlfriend (who I spoke with and who denied this and has not been accused of any wrongdoing). But Epstein was not alone. So, too, according to the source with direct knowledge, were Cayne and Greenberg. They were selling hot issues not to their wives but to their mistresses—because, that way, the SEC was less likely to uncover the trades. The mistresses were supposed then pay back both the profit the stock had earned, plus the original loan.

The source told me that the SEC investigation became a nuisance, and Cayne and Greenberg went to Epstein and told him that, because the SEC investigation would not go away, he—as the most junior limited partner there—needed to fall on his sword for the bank and admit to some sort of wrong-doing. If he did so, they would be forever in his debt. According to my source, Epstein was so upset about being asked to leave that he cried.

Here’s why all this matters now:

One of the accounts belonging to Ghislaine Maxwell—or an entity affiliated with her—that received Epstein’s millions was held at Bear Stearns, as we learned in court  in the last few weeks.

Coincidence?

Maxwell, who was supposed to be pretty much penniless after her father’s death, was banking at Bear Stearns, while Epstein banked at J.P. Morgan, among others. Bear Stearns was famously a bank “for cowboys.” It was not considered to be in the same class as Goldman Sachs, J.P. Morgan or Deutsche Bank—one of the reasons it was the first bank to collapse in the financial crisis.

Maxwell’s defense attorney Laura Menninger hinted ever so faintly in her closing that perhaps Epstein had been moving money around to suit his own purposes:

“[T]he government makes a big show of these big dollar transfers. And they claim it's the finances; that Ghislaine Maxwell was basically being purchased to facilitate sexual abuse because she got big dollar transfers of money that you can see from bank statements.

That is some thin testimony.

What they are asking you to do is to speculate. And speculation is not evidence. Putting up a bank statement that shows transfers tells you nothing about what was going on and, in fact, it's not even clear that Ghislaine Maxwell knew that these transfers were being made in her name.”

Given what I know from my reporting, as far as what really went down at Bear Stearns—both when Epstein was there and after—anything is possible.

Steve Hoffenberg has always maintained Epstein used Bear Stearns brokers and accounts to siphon money out of Towers Financial, the company Hoffenberg had formed, behind Hoffenberg’s back—and that that money became a considerable part of Epstein’s wealth. Here’s a snippet of a conversation I had with Hoffenberg this year:

WARD: How important was Bear Stearns to the work he was doing at Towers?

HOFFENBERG: His training at Bear Stearns was one of the important parts of his career. And helped him after he left Bear Stearns and took on much more work out at, on Wall Street for Douglas Leese, Leslie Wexner, Towers Financial. It was very important.

WARD: So, he could ask someone at Bear Stearns to trade [after he lost his license].

HOFFENBERG: He was trading at Bear Stearns, where he lost his license.

So, how important is/was Bear Stearns in both Epstein’s—and Maxwell’s—wealth accumulation, and why?

While James Cayne lived, I never thought we’d find any answers. Now that he’s dead, I am not so sure.