--- alias: - Towers Financial - TFC category: Private Organization created: 2026-06-20 location: New York, New York summary: Manhattan debt-collection and securities firm run by Steven Hoffenberg that collapsed in 1993 and was prosecuted as a roughly 475 million dollar Ponzi scheme, with Jeffrey Epstein documented as a consultant. tags: - Organization - TowersFinancial - StevenHoffenberg - JeffreyEpstein - PonziScheme - SEC - Fraud - Finance updated: 2026-06-20 --- Towers Financial Corporation was a debt-collection and securities firm based in Manhattan and controlled by [Steven Hoffenberg](/people/steven-hoffenberg/). Between roughly 1988 and 1993 it sold promissory notes and bonds to thousands of investors while operating as a Ponzi scheme, and it collapsed in 1993 following action by the [Securities and Exchange Commission](/organizations/securities-and-exchange-commission/). [Jeffrey Epstein](/people/jeffrey-epstein/) worked at the firm as a consultant during this period. ### Business Model Towers Financial grew out of a debt-collection enterprise Steven Hoffenberg started in New York in the 1970s, reportedly from a small initial investment, that bought delinquent accounts at steep discounts and pursued the full balances.[^4] The firm presented itself as a debt-collection company that purchased portfolios of distressed receivables, paying a small fraction of face value for debts that sellers regarded as largely uncollectible.[^1] The receivables included money owed to hospitals, banks and telephone companies, and the company described an expanding base of healthcare and commercial debt that, it claimed, drove annual revenues toward one billion dollars by 1993.[^1] To finance these operations the company raised capital from investors by issuing unsecured promissory notes and other securities, marketing them as backed by the receivables portfolios.[^2] In practice, prosecutors and regulators later found, the represented collateral and returns were not supported by the firm's actual collections.[^2] Towers also acquired two Illinois insurance companies, United Fire Insurance Co. and Associated Life Insurance Co., in 1987, which served as additional funding sources for the firm and for attempted corporate takeovers.[^3] The Illinois Department of Insurance, then directed by James Schacht, later moved the insurers into liquidation and brought a 1991 civil suit alleging their accounts had been drained, naming Jeffrey Epstein in connection with checks drawn on the United Fire and United Diversified accounts.[^3] ### The Ponzi Scheme Money raised from new investors was used to pay returns and redemptions to earlier investors rather than generated by legitimate debt collection, the defining structure of a Ponzi scheme.[^1] Steven Hoffenberg diverted proceeds to personal expenditures and to attempted corporate acquisitions, and the firm's reported revenues and asset values were inflated.[^2] The fraud drew in thousands of noteholders and bondholders, who later pursued recovery through litigation that named the firm's accountants and other professionals as defendants.[^1] The Securities and Exchange Commission charged Towers Financial in February 1993, and in March 1993 the company filed for protection under Chapter 11 of the Bankruptcy Code.[^2] A receivership was established to recover assets for defrauded investors, and the matter became one of the largest financial frauds in the United States before that of Bernard Madoff.[^1] Hoffenberg pleaded guilty in April 1995 to five criminal charges of defrauding investors of roughly 462 to 475 million dollars and was sentenced in 1997 by Judge Robert W. Sweet to 20 years in prison, a one million dollar fine and roughly 463 million dollars in restitution; he settled a related SEC civil suit for 60 million dollars and was released in 2013 after about 18 years.[^2] The attempted corporate takeovers drove much of the cash drain. In 1988 Hoffenberg used Towers and the captive Illinois insurers to mount unsuccessful bids for Pan Am and Emery Air Freight, deploying Jeffrey Epstein as a financial adviser on the financing.[^3] The Pan Am effort collapsed amid the airline's broader decline following the 1988 bombing of Pan Am Flight 103 over Lockerbie, and the failed raids left the insurers depleted and accelerated regulatory scrutiny of Towers.[^3] ### Epstein's Role Jeffrey Epstein was hired as a consultant around 1987, with reporting citing compensation of about 25,000 dollars per month and a 1988 two million dollar non-repayable loan, and the firm gave him offices at the Villard Houses in Manhattan.[^3] At the time Epstein operated his own consulting firm, International Assets Group, from his New York apartment after leaving Bear Stearns, and a Towers attorney confirmed his work at the firm and recalled drafting a consulting agreement.[^3] A company press release listed Epstein as "chairman of the board of directors of Intercontinental Asset Group" in the Pan Am financing, and court filings referenced checks payable to "Jeff Epstein" or "Jeff Epstein & Co." totaling about 215,000 dollars drawn on the insurance-company accounts.[^3] The extent of Epstein's involvement in the fraud is disputed. Steven Hoffenberg later claimed Epstein was a co-architect of the scheme and his "partner in what we did raising the billion dollars," and Terrence Corrigan, a lawyer for an investor-recovery committee, said Epstein appeared on organizational charts as potentially the second or third most senior figure at the firm.[^3] The 1991 Illinois Department of Insurance suit alleged Epstein manipulated Emery stock through multiple brokerage accounts he controlled and traded without a broker's license.[^3] Epstein left Towers before its collapse, was never charged in connection with the fraud, and investigators said no concrete evidence directly tied him to the criminal conspiracy.[^3] [^1]: "Litigation Release: SEC v. Towers Financial Corporation, et al.," *U.S. Securities and Exchange Commission,* summarizing the scheme and receivership. https://www.sec.gov/files/litigation/litreleases/lr15053.txt [^2]: "Jeffrey Epstein's mentor, who once ran a Ponzi scheme, was found dead," *NPR,* 2022, summarizing the Towers collapse, SEC action and sentencing. https://www.npr.org/2022/08/26/1119746511/jeffrey-epstein-mentor-steven-hoffenberg-dead [^3]: "Jeffrey Epstein worked at Towers Financial with Steven Hoffenberg, who committed Ponzi scheme crimes," *CBS News,* 2019. https://www.cbsnews.com/news/jeffrey-epstein-worked-at-towers-financial-with-stephen-hoffenberg-who-committed-ponzi-scheme-crimes/ [^4]: "Steven Hoffenberg: Who is the former Epstein associate and New York Post owner?," *Yahoo News,* 2019, on the 1970s debt-collection origins and the firm's early model. https://www.yahoo.com/news/steven-hoffenberg-former-epstein-associate-230443969.html