Leon Black used a loophole in tax law and the help of Jeffrey Epstein to avoid capital gains taxes on a major art deal in 2016, according to a new report from The New York Times.
The Times report says documents it reviewed show the art collector and asset management mogul sold the Alberto Giacometti sculpture Figure Moyenne II for $25 million on November 23, 2016 to a trust controlled by Epstein. A company linked to Black allegedly then used the proceeds of that sale to buy the Paul Cézanne watercolor painting Portrait de Vallier de Profil.
The co-founder of the private equity company Apollo Global Management was able to defer the payment of capital gains taxes on the sale of his major art asset through an incentive “intended mainly to encourage new construction by real estate developers” but used by private art collectors to buy new works of equal or greater value until a change in tax law in 2017.
The Times report notes that the sale happened after Epstein had become a registered sex offender and the documents it reviewed showed the kinds of tax and estate advisory work provided before his arrest on federal charges in July 2019. Black paid $158 million to Epstein for estate and advisory services, including this art deal involving the Giacometti statue and the Cézanne painting, between 2013 and 2017.
The same tax loophole was used by one of Black’s art companies to sell the Georges Braque oil painting Le Guéridon for $5 million to the trust controlled by Epstein. According to the Times, Black used the proceeds to buy a second Cézanne painting unnamed in the report.
The publication of the Times report on this art deal involving Black and Epstein comes several months into the Senate Finance Committee’s investigation into those services as well as “trusts and structures Black executed to avoid over $1 billion in future gift and estate taxes”. In July, Senator Ron Wyden of Oregon, the committee’s Democratic chair, noted that Epstein was paid $158 million in “inexplicably large” fees despite not being a licensed tax attorney or a certified public accountant. Wyden also noted the amounts were “well in excess of what Black paid any other financial advisors and far higher than the median compensation of Fortune 500 CEOs at the time.”
It is unclear what happened to Figure Moyenne II and Le Guéridon after they were purchased by the trust controlled by Epstein. However, online records show Christie’s sold Le Guéridon for $10.1 million on May 15, 2017, noting the painting was the “property of an important private collector” and came with a minimum price guarantee. Sotheby’s sold a version of Giacometti’s Figure Moyenne II on June 21, 2017 at auction in London for £17.9 million (about $21 million).