Steven Hoffenberg

Steven Jude Hoffenberg founded and ran Towers Financial Corporation, a Manhattan debt-collection and securities firm that collapsed in 1993 and was later found to be one of the largest Ponzi schemes in American history before that of Bernard Madoff. He pleaded guilty in 1995 to defrauding investors of about 475 million dollars and served roughly 18 years in federal prison. He hired Jeffrey Epstein as a consultant in the late 1980s and later publicly claimed Epstein had been a co-architect of the Towers fraud.

Early Career

Hoffenberg was born in Brooklyn in 1945 and entered the debt-collection business in New York in the 1970s, reportedly starting with a small initial investment after dropping out of college.⁶ He built Towers Financial Corporation around the practice of buying delinquent debts, including unpaid hospital bills, bank loans and telephone charges, at steep discounts and pursuing the full balances through aggressive collection.⁶ He briefly held a controlling interest in the New York Post in the early 1990s during the paper's ownership turmoil.⁶

Towers Financial and the Ponzi Scheme

Towers Financial Corporation operated as a debt-collection business that bought portfolios of distressed receivables, including debts owed to hospitals and telephone companies, for fractions of their face value, while raising money from thousands of investors through unsecured promissory notes and bonds.¹ Prosecutors and the Securities and Exchange Commission determined that the company functioned as a Ponzi scheme, using money from new investors to pay returns to earlier ones while Hoffenberg diverted proceeds.¹

To finance attempted corporate takeovers, Hoffenberg directed Towers to acquire two Illinois insurance companies, United Fire Insurance Co. and Associated Life Insurance Co., in 1987, and prosecutors later found their reserves were looted in the broader fraud.³ The Illinois Department of Insurance, then directed by James Schacht, placed the insurers into liquidation and brought a 1991 civil suit that named Jeffrey Epstein in connection with checks drawn on the companies' accounts.³

The scheme operated between roughly 1988 and 1993, with claimed annual revenues approaching one billion dollars by the time of its collapse.¹ The SEC charged Towers in February 1993, and the company filed for Chapter 11 bankruptcy protection in March 1993.² Hoffenberg pleaded guilty in April 1995 to five criminal charges of defrauding investors of roughly 462 to 475 million dollars; in 1997 Judge Robert W. Sweet sentenced him to 20 years in prison, a one million dollar fine and roughly 463 million dollars in restitution, and he settled a related SEC civil suit for 60 million dollars.² He served about 18 years and was released from federal custody in 2013.²

Relationship With Jeffrey Epstein

Hoffenberg said he hired Jeffrey Epstein around 1987 as a paid consultant, with reporting citing a salary of about 25,000 dollars per month and, in 1988, a two million dollar non-repayable loan, and he set Epstein up in offices at the Villard Houses in Manhattan.² At the time Epstein was running his own consulting firm, International Assets Group, from his New York apartment after leaving Bear Stearns.³ A Towers attorney confirmed Epstein worked at the firm and recalled drafting a consulting agreement, and Terrence Corrigan, a lawyer for an investor-recovery committee, said Epstein appeared on organizational charts as potentially "the number two or number three person at the firm," though the characterization was disputed.³ Court records and the 1991 Illinois Department of Insurance lawsuit referenced a series of checks payable to "Jeff Epstein" or "Jeff Epstein & Co." drawn on the United Fire and United Diversified accounts and totaling about 215,000 dollars.³

Hoffenberg and Epstein partnered on attempted corporate takeovers in 1988, using Towers and the captive Illinois insurers as the financing vehicles, including an unsuccessful bid involving Pan Am and an attempt targeting Emery Air Freight.² A Towers press release identified Epstein as "chairman of the board of directors of Intercontinental Asset Group" and a financial adviser to Towers management in connection with the Pan Am financing.³ The Illinois suit alleged Epstein manipulated the price of Emery stock through multiple brokerage accounts he controlled and traded without a broker's license.³ Epstein and Hoffenberg traveled together on Hoffenberg's private jet during this period, and Epstein left Towers before its collapse and was never charged in connection with the fraud.³

Later Claims and Death

After his release, Hoffenberg publicly asserted that Jeffrey Epstein had been central to the Towers fraud, telling CBS News that Epstein was "my partner in what we did raising the billion dollars" and describing him as his "wingman."³ He claimed in interviews that Epstein had devised the failed Pan Am and Emery takeover schemes and had misappropriated proceeds from the insurance companies for personal use.³ Court documents filed by Hoffenberg alleged Epstein was an "architect" of the scheme, but no charges were ever brought against Epstein over Towers, and investigators said no concrete evidence directly tied him to the criminal conspiracy.¹ Hoffenberg sued Epstein over the fraud's proceeds in 2019.⁴

Hoffenberg involved himself in politics in his later years, including reported backing of a super PAC associated with the 2016 presidential campaign of Bernie Sanders.⁵ He gave numerous media interviews after Epstein's 2019 arrest and death, presenting himself as a witness to Epstein's origins while acknowledging his own criminal history.³

On August 23, 2022 his body was found in advanced decomposition at his apartment in Derby, Connecticut after a welfare check, prompted when Jeffrey Epstein accuser Maria Farmer was unable to reach him and contacted police; he was 77.² Farmer told authorities Hoffenberg had recently contracted COVID-19 and had been unable to recover, and investigators estimated he had been dead for at least a week.⁷ An initial autopsy by the Connecticut Office of the Chief Medical Examiner found no signs of trauma or foul play, and police said they believed he died of natural causes pending toxicology results.⁷