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Wednesday, September 28, 2022
HomeNewsLocal newsAG Says Epstein Estate Stonewalling Government in Civil Suit

AG Says Epstein Estate Stonewalling Government in Civil Suit

The Justice Department responded Thursday to claims by Jeffrey Epstein’s estate that the government’s emergency motion to lift a stay of proceedings in its civil suit against the estate is “legally meritless” and worthy of court sanction.

Denying a lift in the stay of proceedings would be “tragic” in a case where the government has been stonewalled at every turn in its bid for discovery, Attorney General Denise George wrote in response to the defense’s opposition to the emergency motion.

The 60-day stay was ordered July 7 to allow for mediation, but the mediator reported on July 21 that the talks were at an impasse. The following day, George filed the emergency motion in V.I. Superior Court, requesting that the stay be lifted to allow the discovery of estate co-executors Darren K. Indyke and Richard D. Kahn.

At issue is the defense’s motion of March 2020, asking the court to vacate criminal activity liens the government placed on Epstein’s estate so it can access funds to administer the estate.

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George argued in her emergency motion of July 22 that the depositions of Indyke and Kahn and other discovery documents and information are needed first for the government “to have a fair opportunity to make a full record on the Defendants’ pending motion.”

The U.S. Virgin Islands sued the estate in January 2020, alleging that Epstein engaged in a civil conspiracy involving human trafficking, forced labor, and sexual servitude in the USVI. At the time, George said the government would seek punitive damages worth $577 million.

Indyke was the personal lawyer, and Kahn an in-house accountant to Epstein, the wealthy convicted sex offender who was found dead by apparent suicide on Aug. 10, 2019, in a New York jail cell as he awaited trial on sex trafficking charges. His primary residence at the time of his death was his estate on Little St. James Island off St. Thomas.

At the center of George’s emergency motion is the Epstein-created “2013 Butterfly Trust,” through which she alleges Indyke and Kahn transferred $13 million to three newly created trusts from which they stood to benefit and, by doing so, diverted money from the estate.

George’s emergency motion also alleges that Indyke and Kahn were involved in defrauding the V.I. government of $80.5 million in unearned tax benefits through Epstein’s Southern Trust Company, an EDC beneficiary, and that they “approved, enabled, and justified millions of dollars in payments that fueled the Epstein Enterprise’s sex trafficking.”

In their response Aug. 3, attorneys for Indyke and Kahn said the emergency motion should be vacated, saying the government “concocted a faux emergency, disregarded its procedural obligations, and filed a legally meritless, factually misleading, and inflammatory motion to take discovery” of the co-executors.

Further, they said the 2013 Butterfly Trust was never kept secret and that the government raised the issue with, and received explanations from, defense counsel more than a year ago and at various times since. Moreover, the government issued a criminal activity lien on the trust on July 30, 2021, they said.

Rather, the emergency motion was filed to avoid or delay the court’s potential decision to vacate the criminal activity liens and to punish Indyke and Kahn for not agreeing to all the government’s demands in settlement discussions by making false allegations about them, their response stated.

They said the emergency motion should be stricken from the record and the government-sanctioned for misconduct if it does not withdraw the motion voluntarily.

In her response Thursday, George said the government’s emergency motion to lift the stay of proceedings and take discovery of Indyke and Kahn should be granted, and their request to strike the motion should be denied.

“Defendants base their arguments for striking and threat of sanctions on the pretense that this has been ordinary litigation where the Government could take discovery and engage in meaningful dialogue with Defendants over its scope,” the response states.

“This has not been the case, which Defendants well know because they have obstructed discovery at every turn of this case, which is no ordinary litigation, but a civil law enforcement action by the Government. Defendants’ contention that the Government’s argument could have been made months or years ago is disingenuous,” it says.

The defendants have stonewalled the government since it filed suit in January 2020, said George, taking advantage of the fact that a judge was not assigned to the case for almost two years and then refusing to provide any discovery whatsoever, “standing the Court’s Rules on their head,” she said.

Written requests for discovery have been met with a blanket refusal that refers to the estate’s motion to dismiss the case, filed in March 2020, and a motion to stay discovery, filed in April 2020, the response states.

For example, in response to the government’s request to “[a]dmit that, on at least one occasion, Darren Indyke arranged or facilitated marriages among females associated with Epstein and/or at the request of Epstein,” the defendants responded that “[t]he Estate objects to this Request because: (i) all discovery in this action should be stayed for the reasons provided in the Estate’s Motion to Stay[,]” and refused to provide any response, George states.

“It is deeply unfortunate that Defendants could exploit the absence of judicial oversight to conceal evidence of Epstein’s criminal sex-trafficking and their own involvement in the financial transactions that facilitated it, all in violation of Virgin Islands Court Rules,” the government’s response states.

“It would be tragic if they are now allowed to continue doing so when there is an appointed Judge. The request to strike should be denied, and the Government’s motion to take discovery should be granted,” it concludes.

Judge Harold Willocks had not ruled on the emergency motion as of Friday.

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