According to a database created by The International Consortium of Investigative Journalists containing files leaked from the law firm Appleby, Jeffrey Epstein, who is under indictment as a sex trafficker and assaulter of underage girls, was the Chairman of Liquid Funding Ltd. from November 9, 2001 to at least March 19, 2007. The offshore business had been incorporated in Bermuda on October 19, 2000 and according to the Fitch ratings firm, it had $6.7 billion in outstanding liabilities in 2006.
In a regulatory filing with the Securities and Exchange Commission in February 2003, Bear Stearns, the Wall Street investment bank that Epstein had resigned from under murky circumstances in 1981, confirmed that it was a 40 percent owner of Liquid Funding Ltd., writing as follows:
“At November 30, 2002, the Company had an approximate 40% equity interest in Liquid Funding, Ltd. (‘LFL’), a AAA-rated special purpose vehicle established to participate in the repurchase agreement and total return swap markets. A subsidiary of the Company acts as investment manager…”
The subsidiary that acted as investment manager for Liquid Funding Ltd. was Bear Stearns Bank Plc in Dublin, Ireland, which functioned outside of U.S. regulatory authority and was a wholly owned subsidiary of Bear Stearns Ireland Limited, which was wholly owned by the U.S.-regulated Bear Stearns Companies Inc.. The U.S.-based Bear Stearns was one of the myriad Wall Street banks that imploded during the financial crisis of 2008 and received both publicly-announced and secret bailouts from the Federal Reserve, the central bank of the United States, via its Wall Street compromised regional bank, the Federal Reserve Bank of New York.
Just who it was that owned the remaining 60 percent of Liquid Funding Ltd. is unknown at this time, but if the off-balance sheet structure follows the typical pattern, a number of those listed in the leaked documents as serving as a director or officer, including Epstein, are likely to have invested funds.
According to an October 24, 2006 announcement from the ratings agency, Fitch, Liquid Funding Ltd. was a Structured Investment Vehicle (SIV) — the same structure that played a major role in blowing up another major Wall Street bank, Citigroup, during the financial tsunami that cratered Wall Street in 2008. (See Law Firm that Silenced Harvey Weinstein Accusers also Involved in SIVs that Tanked Citigroup.)
According to Fitch, Liquid Funding Ltd. could issue liabilities up to $20 billion, made up of commercial paper, guaranteed investment contracts, medium term notes, and repurchase agreements. Both Fitch and Moody’s gave the medium-term notes to be issued by Liquid Funding a AAA-rating as well as gave it a AAA-rating as a counterparty. And, notably, both ratings agencies gave its commercial paper a Tier 1 rating, meaning that it could now end up in money market funds purchased by average Americans seeking a low-risk, liquid investment. (Until 2008, it was rare for money market funds to “break a buck,” meaning give back less than the original principal invested.)…
