section_path: Career/Investments/Hedge funds
section_name: Hedge funds
paragraph_text: Hedge funds
  
  Between 2002 and 2005, Epstein invested $80 million in the D.B. Zwirn Special Opportunities Fund, a hedge fund that invested in illiquid debt securities. In November 2006, Epstein attempted to redeem his investment after he was informed of accounting irregularities in the fund. By this time, his investment had grown to $140 million. The D.B. Zwirn fund refused to redeem the investment. Hedge funds that invest in illiquid securities typically have years-long "lockups" on their capital for all investors and require redemption requests to be made in writing 60 to 90 days in advance. The fund was closed in 2008, and its remaining assets of approximately $2 billion, including Epstein's investment, were transferred to Fortress Investment Group when that firm bought the assets in 2009. Epstein later went to arbitration with Fortress over his redemption attempt. The outcome of that arbitration is not publicly known.
  
  In August 2006, Epstein, a month after the federal investigation of him began, invested $57 million in the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage hedge fund. This fund was highly leveraged in mortgage-backed collateralized debt obligations (CDOs).
  
  On April 18, 2007, an investor in the fund, who had $57 million invested, discussed redeeming his investment. At this time, the fund had a leverage ratio of 17:1, which meant for every dollar invested there were seventeen dollars of borrowed funds; therefore, the redemption of this investment would have been equivalent to removing $1 billion from the thinly traded CDO market. The selling of CDO assets to meet the redemptions that month began a repricing process and general freeze in the CDO market. The repricing of the CDO assets caused the collapse of the fund three months later in July, and the eventual collapse of Bear Stearns in March 2008. It is likely Epstein lost most of this investment, but it is not known how much was his.
  
  By the time that the Bear Stearns fund began to fail in May 2007, Epstein had begun to negotiate a plea deal with the U.S. Attorney's Office concerning imminent charges for sex with minors. In August 2007, a month after the fund collapsed, the U.S. attorney in Miami, Alexander Acosta, entered into direct discussions about the plea agreement. Acosta brokered a lenient deal, according to him, because he had been ordered by higher government officials, who told him that Epstein was an individual of importance to the government. As part of the negotiations, according to the Miami Herald, Epstein provided "unspecified information" to the Florida federal prosecutors for a more lenient sentence and was supposedly an unnamed key witness for the New York federal prosecutors in their unsuccessful June 2008 criminal case against the two managers of the failed Bear Stearns hedge fund. Alan Dershowitz, one of Epstein's Florida attorneys on the case, told Fox Business Network "We would have been touting that if he had. The idea that Epstein helped in any prosecution is news to me."
  
  Between 2002 and 2005, Epstein invested $80 million in the D.B. Zwirn Special Opportunities Fund, a hedge fund that invested in illiquid debt securities. In November 2006, Epstein attempted to redeem his investment after he was informed of accounting irregularities in the fund. By this time, his investment had grown to $140 million. The D.B. Zwirn fund refused to redeem the investment. Hedge funds that invest in illiquid securities typically have years-long "lockups" on their capital for all investors and require redemption requests to be made in writing 60 to 90 days in advance. The fund was closed in 2008, and its remaining assets of approximately $2 billion, including Epstein's investment, were transferred to Fortress Investment Group when that firm bought the assets in 2009. Epstein later went to arbitration with Fortress over his redemption attempt. The outcome of that arbitration is not publicly known.
  
  In August 2006, Epstein, a month after the federal investigation of him began, invested $57 million in the Bear Stearns High-Grade Structured Credit Strategies Enhanced Leverage hedge fund. This fund was highly leveraged in mortgage-backed collateralized debt obligations (CDOs).
  
  On April 18, 2007, an investor in the fund, who had $57 million invested, discussed redeeming his investment. At this time, the fund had a leverage ratio of 17:1, which meant for every dollar invested there were seventeen dollars of borrowed funds; therefore, the redemption of this investment would have been equivalent to removing $1 billion from the thinly traded CDO market. The selling of CDO assets to meet the redemptions that month began a repricing process and general freeze in the CDO market. The repricing of the CDO assets caused the collapse of the fund three months later in July, and the eventual collapse of Bear Stearns in March 2008. It is likely Epstein lost most of this investment, but it is not known how much was his.
  
  By the time that the Bear Stearns fund began to fail in May 2007, Epstein had begun to negotiate a plea deal with the U.S. Attorney's Office concerning imminent charges for sex with minors. In August 2007, a month after the fund collapsed, the U.S. attorney in Miami, Alexander Acosta, entered into direct discussions about the plea agreement. Acosta brokered a lenient deal, according to him, because he had been ordered by higher government officials, who told him that Epstein was an individual of importance to the government. As part of the negotiations, according to the Miami Herald, Epstein provided "unspecified information" to the Florida federal prosecutors for a more lenient sentence and was supposedly an unnamed key witness for the New York federal prosecutors in their unsuccessful June 2008 criminal case against the two managers of the failed Bear Stearns hedge fund. Alan Dershowitz, one of Epstein's Florida attorneys on the case, told Fox Business Network "We would have been touting that if he had. The idea that Epstein helped in any prosecution is news to me."