Hello, and welcome back to Dry Powder. 

In today's email: The saga of Dan Novack, the maverick First Amendment attorney who persuaded the Justice Department to turn over its draft complaint against JPMorgan Chase for due-diligence issues leading up the financial crisis, and who is now engaged in an even more grueling battle to force the F.B.I. to cough up documents relating to its 2006 investigation of Jeffrey Epstein. 

Thanks,

Bill

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The Epstein Posthumous Legal Battle

One lawyer’s quest for ten thousand pages of documents surrounding the F.B.I.’s 2006 investigation of the now-deceased predator. Plus: Notes on my dealings with the S.E.C. and Lazard Frères.

Dan Novack, an enterprising First Amendment attorney, is one of the country’s foremost experts at prying documents out of the federal government using the Freedom of Information Act, or FOIA. Novack first came to my attention several years ago, after he successfully obtained a draft complaint in which Benjamin Wagner, then the U.S. Attorney for the Eastern District of California, alleged inconsistencies with JPMorgan Chase’s due-diligence process in the lead-up to the financial crisis. The document was never filed, and shortly thereafter, JPMorgan reached a then-record $13 billion settlement with the Department of Justice. I later wrote about the saga for Vanity Fair. If Novack hadn’t unearthed it, despite the bank’s efforts to keep it buried, it’s likely it never would have seen the light of day.

Since then, of course, Novack has been keeping busy. In addition to being a pro-bono FOIA attorney, Novack is associate general counsel at Penguin Random House, the big book publisher, and has served as counsel to First Look Media, the publisher of The Intercept, and as counsel to A360 Media, the publisher of, among others, The National Enquirer and RadarOnline. It’s in the latter role that Novack has been trying for nearly five years to get the F.B.I. to cough up documents stemming from the agency’s 2006 investigation of Jeffrey Epstein, the notorious sex trafficker. 

You can imagine how that’s been going. Starting in April 2017, Novack’s clients, RadarOnline and James Roberston, one of the three authors of the 2019 book, Epstein: Dead Men Tell No Tales, filed a FOIA request with the F.B.I. about its Epstein investigation. In May 2017, after the F.B.I. failed to respond to his request, Novack filed a lawsuit in the Southern District of New York. In October 2017, the federal court ordered the F.B.I. to process 500 pages a month from the agency’s main Epstein investigative file and to turn over any disclosable material to him. 

For the next 21 months, the F.B.I. complied with the request, but as I myself have experienced with prior FOIA requests, the vast majority of the pages produced were redacted, or blacked-out. As justification, the F.B.I. cited, according to Novack, a desire to protect Epstein’s privacy—“a notorious convicted sex offender,” Novack wrote, incredulously, in one court filing. The documents the F.B.I. produced were virtually indecipherable. There was a snippet here about how “JE” said that “he knew models” and also something about how he “eats salad” and drinks “lots of water” and, bizarrely, the word “exercise” floating by itself in a sea of emptiness. Another, barely more legible document, mentions that the F.B.I. interviewed Alfredo Rodriguez, Epstein’s butler at his mansion in Palm Beach for many years. But what Rodriguez told the F.B.I. was blacked out before it was shared with Novack.

In August 2019, following Epstein’s arrest one month earlier—based, in part, on the F.B.I.’s investigation—the agency offered a new justification for redacting so much of its monthly document production: FOIA regulation 7A, which attempts to guard against the release of documents that might interfere with a legal proceeding. The F.B.I. continued to cite 7A even after Epstein’s suicide, but Novack wasn’t told why until federal prosecutors announced they were building a case against Ghislaine Maxwell, Epstein’s longtime girlfriend and partner. The F.B.I. redacted almost all of the material Novack received between August 2019 and January 2020, when the F.B.I. stopped producing documents altogether. Maxwell was arrested on July 2, 2020.

The F.B.I. has been trying to get the judge in Novack’s case, Paul Gardephe, to toss it out on summary judgment. Novack, meanwhile, has been trying to convince the judge to force the F.B.I. to turn over the documents to him, on his summary judgment motion. In an August 2021 court filing, Novack wrote that he couldn’t quite believe that the F.B.I. “justifies withholding more than ten thousand pages of material principally on the basis that release of the records would interfere with the prosecution of Epstein’s alleged co-conspirator Ghislaine Maxwell.” On October 29, he wrote Judge Gardephe a letter reiterating his disbelief that the F.B.I. was withholding its Epstein investigation files—many of which Maxwell and her attorneys had already seen; she had access to something like 1 million documents from the government’s files, according to the Maxwell court docket—to try to prevent Maxwell from getting an advantage in her trial. 

“The agency continues to insist that releasing documents Ghislaine Maxwell has already seen to the public would give her an advantage at trial,” he wrote, with his emphasis. “How?...This case has never been about personal privacy or law enforcement. It is about the personal privacy of law enforcement. If the government wished to shield itself from embarrassment via the law enforcement exemption, it should have investigated Ghislaine Maxwell in 2006—or at any point prior to Plaintiffs’ 2017 FOIA request. An agency cannot upgrade its exemptions by creating new facts. Especially when those facts are themselves temporary.” He continued: “Once Ghislaine Maxwell’s trial commences next month, the factual basis for the law enforcement exemption will evaporate. The FBI’s invocation is therefore entirely cynical—a tactical gaming of FOIA merely to delay an inevitable public reckoning.”

On December 30, of course, Maxwell was convicted of recruiting and grooming teenage girls for Epstein to abuse. She is to be sentenced in June. For his part, Novack believes that with Epstein’s death and Maxwell’s conviction, the F.B.I. has run out of reasons not to share the Epsetin documents with him and the public. “Why are they trying to protect Epstein and Maxwell?,” he wondered aloud to me in a recent interview. He figures the F.B.I. is determined to withhold the documents because they reflect poorly on the Department of Justice and how they handled the 2006 investigation of Epstein. He’s hoping the judge will rule in his favor, and soon.

Sometimes persistence pays off when it comes to FOIA. As part of writing The Last Tycoons, my 2008 book about the investment bank Lazard Frères, I lodged a FOIA request with the Securities and Exchange Commission to try to obtain documents related to Lazard’s involvement with International Telephone & Telegraph’s highly controversial proposed acquisition of Hartford Fire Insurance Co., in 1969. At $1.4 billion, it was the largest merger ever, at the time. The intrigue about the deal involved what Lazard and its two prominent investment bankers, Felix Rohatyn and Andre Meyer, allegedly did for ITT, Lazard’s client, on whose board of directors Felix also served, in order to try to insure that ITT’s acquisition of The Hartford would qualify as a tax-free deal for Hartford’s shareholders, making a deal with ITT more attractive to them. 

There were SEC investigations and grand jury appearances regarding whether Lazard pulled off some shady stuff to help ITT. It all looked pretty ugly, and potentially worse. There was a risk that Felix might have been indicted for what he did, which would  snuffed out the career, in its adolescence, of one of Wall Street’s most legendary investment bankers. As a former Lazard banker myself, I was determined to figure out what happened. 

At first, the S.E.C. denied my FOIA request for the Hartford investigation documents. I pushed back, arguing that some of the material had been already made public years before to the journalist Cary Reich for his excellent Financier, an unauthorized biography of Meyer. Thanks to Reich’s endnotes, I was able to provide the S.E.C. with the file number for the Hartford investigation. The agency didn’t see that coming. Cornered, the S.E.C. relented and acceded to my request. It shipped some 40 unmarked, uncatalogued boxes of documents to a warehouse outside of Philadelphia for my perusal. When I got there, the boxes were stacked up against one wall. It was overwhelming. The documents had been thrown into the boxes, willy-nilly. I started thumbing through what was there, only to be told by a warehouse employee that I had one hour to go through the boxes, after which time I had to leave and the boxes were to be returned to Washington. I protested. 

Long story short, I managed to convince the S.E.C. to FedEx the boxes, at my expense, to its New York office, in the Woolworth Building, so that I could go through them meticulously. Day after day, hour after hour, for several months, I trekked downtown to go through the ITT-Hartford material, taking notes and figuring out what had happened. Some nights, I closed down the S.E.C.’s office after the government employees had long departed. I was allowed to make only a few copies of a document here and there. (Don’t ask me why.) 

Finally, I brought my laptop down to the S.E.C. and just started writing up what I found, using the files that I had eventually put into a recognizable order. In “Felix the Fixer,” Chapter 5 of The Last Tycoons, I told the complete story for the first time—and for what will probably be the last time—of what the Lazard bankers did for ITT in the Hartford deal that almost put the firm’s star banker out of commission, and how Lazard and Felix managed to slither away, pretty much unscathed. It’s quite a tale and couldn’t have been told without those 40 boxes of documents. 

Here’s to hoping Dan Novack succeeds in getting the Epstein documents he is seeking from the F.B.I.

FOUR STORIES WE'RE TALKING ABOUT