(Bloomberg) -- Jeffrey Epstein’s death ended the criminal case against him, but prosecutors can still employ a powerful tool to try to compensate women claiming he sexually abused them: civil forfeiture.
The government’s power to take property without payment has been used to compensate victims of large financial frauds like the Enron Corp. accounting scandal and the Ponzi scheme of Bernard Madoff. A court-appointed trustee spent years recovering billions of dollars of Madoff assets and then paying them out to claimants.
In Epstein’s case, the opaqueness of his finances and, in many cases, the minimal documentary evidence tying Epstein’s accusers to him will complicate matters. There’s also no guarantee that money will be left over for the accusers after Epstein’s creditors are paid.
Under the forfeiture statutes, prosecutors could sue Epstein’s estate to try to seize his property, including a mansion on Manhattan’s Upper East Side that he valued at $56 million. The government sought to seize that home last month as it indicted Epstein on charges of conspiracy and trafficking, saying he sexually abused dozens of girls. They said Epstein’s mansion was one place where he committed his crimes.
With Epstein’s apparent suicide, prosecutors can move to seize his assets, which he said last month were worth $559 million, even as they build criminal cases against his suspected accomplices.
“The obvious next step for criminal prosecutors is to bring civil asset forfeiture cases to recover any property that is connected to his crimes, whether it’s real estate or any vehicles used or any assets that were purchased,” said Matthew Schwartz, an attorney at Boies Schiller & Flexner, which represents several Epstein accusers.
In financial frauds, victim losses can often be determined based on written records. In sex-abuse cases like Epstein’s, by contrast, women must present records or testimony to document physical, psychological or financial harm.
“I’d expect claims from women who’ve suffered” and have post-traumatic stress disorder, said Nancy Erika Smith, a New Jersey lawyer who sued Roger Ailes, the late Fox News chairman, on behalf of former anchor Gretchen Carlson.
“Can you imagine, you’re so young, you think you’re going to be a model, you go on a visit and it hardly seems seedy, and your self-worth is crushed,” Smith said. Such women are “not going to lead normal lives and the money can help.”
The number of women who claim that Epstein sexually abused them when they were children is already in the dozens and may grow, authorities say. On Wednesday, a New York law takes effect that temporarily removes time limits for many sex-abuse victims to sue for damages.
Lawyers for several women have said they will sue Epstein’s estate, seeking compensation for psychological damages. Epstein recruited middle- and high-school girls to give him erotic massages, with adult enablers helping to recruit others, accusers say.
As U.S. prosecutors in Manhattan consider their options, Attorney General William Barr has warned Epstein’s accomplices that the government’s criminal investigation will continue while vowing to help victims. “Any co-conspirators should not rest easy,” Barr said in a speech on Monday. “The victims deserve justice, and they will get it.”
A spokesman for the U.S. attorney in Manhattan declined to comment.
Although the source and extent of Epstein’s wealth remains shrouded in mystery, he shuttled on private jets between sizable homes in three states, as well as the U.S. Virgin Islands and France. Many of his assets were held by limited liability corporations that could make them hard to track.
Prosecutors could file a forfeiture action under the Trafficking Victims Protection Act, which women used to sue the Hollywood mogul Harvey Weinstein for allegedly pressuring them into sex.
In the Epstein indictment, prosecutors charged that he lured his victims into sexual acts in exchange for “anything of value.” In a civil case, prosecutors would likely make similar assertions but face a lower standard of proof than they would in a criminal case.
An attorney for sexual-assault victims, Lisa Bloom, said forfeiture typically produces lesser amounts of compensation for women than do private lawsuits, which can lead to multimillion-dollar settlements and verdicts.
“Victims usually do far better in civil lawsuits,” said Bloom, who represents some Epstein accusers.
For prosecutors intent on compensating Epstein’s victims, even a civil forfeiture faces obstacles. It remains unknown if Epstein obtained his wealth by defrauding others -- including L Brands Inc. founder Les Wexner, who has accused Epstein of misappropriating “vast sums of money from me and my family.”
It’s also unclear whether Epstein had a will and where it would be filed, whether financial creditors may have claims against his estate and whether any of his assets were transferred to vehicles that could shelter them from seizure, such as trusts, partnerships or corporations.
“Assets could be beyond creditors, to say nothing of the women claimants,” says Gerry Beyer, a Texas Tech University law professor. “Authorities will have to ascertain if he moved assets before he got in trouble.”
Estate attorney Bruce Steiner said many questions remain about Epstein’s assets and victims.
“We don’t really know how much he’s worth, how many claimants there could be, or how much they’ll settle for,” Steiner said. “I don’t know what the appropriate settlement ought to be for doing the things they said he did to 15-year-olds. This is just such an unusual story.”
--With assistance from Chris Dolmetsch and Christian Berthelsen.
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