EFTA00583046.pdf

1. Jeffrey Epstein and Financial Trust Company, Inc. invested hundreds of millions of dollars with Highbridge as an investment manager with its many sub-advisors from 2001 to the present. 2. Daniel B. Zwim had been one of those sub-advisors beginning in 2002 and, according to the Securities and Exchange Commission, remained a sub-advisor through at least 2007. 3. Mr. Epstein has had virtually no contact with Mr. Zwim, except for a five minute face-to-face introduction and various telephone calls trying to resolve disputes. 4. Glenn Dubin negotiated and solicited each of Mr. Epstein's investments with the Zwirn fund, as well as the commissions and the other terms in respect thereof. For example, at Mr. Zwirn's request, Mr. Dubin requested that Mr. Epstein pay a 2% management fee to the Zwim fund, rather than Mr. Epstein's offer of 1.3%. In addition, after the purchase of highbridge by JPM. Mr. Dubin solicited Mr. Epstein, through Financial Trust Company, Inc., to invest an additional $20 Million with the Zwim fund in dec 04. and negotiated a side letter with Mr. Epstein limiting Mr. Epstein's lock-up period to two years, as opposed to the three-year lock-up period the Zwim fund was imposing on other investors. 5. IN early 05, Highbridge began to withdraw its managed account with Mr. Zwim at the direction of M. Morgan. In early oct 05 mr epstein was notified that there had been irregularities at the firm.. He immediately demanded a full withdrawal. Mr Dubin , as per his affidavit, and in conjunction with Dan Zwim, persuaded Mr Epstein to reduce the demand to 80 million dollars.. a written demand was sent on Nov 13. Unbeknowest to Mr Epstein at the time Mr. Zwim was focused on liquidating the managed account. THis provided the motivation for fraudulently inducing Mr. Epstein to stay in the Zwim fund, so that the Highbridge managed account would continue to be liquidated without impediment threatened by Mr. Epstein's demands for the withdrawal of his investment. In this regard, it is important to note that Mr. Epstein specifically asked Mr. Dubin whether Highbridge was maintaining its money under management with Mr. Zwim, and Mr. Dubin specifically told Mr. Epstein that Highbridge was doing so. Later, Mr. Zwirn and his company actually entered into an agreement to buy out for $30 Million Mr. interest (i.e., the interest of Dubin & Swieca Asset Management) in Mr. Zwirn's company that was managing the Highbridge managed account and used management and incentive fees paid by Highbridge in respect of its managed account to pay for a the initial portion ( 12. 5 million ) Mr. buy-out. See Lee Deposition, EFTA00583046 pages 80-86. Later Mr Dubin reqlinguished his interest when the fund was transferred tp fortress investments. 6. According to sworn deposition testimony given by David Lee, Mr. Dubin continued to advise on investments, though the events of mismanagement (e.g., withdrawing funds for management fees that were not actually due and to pay for Mr. Zwim's personal airplane) began in early 2005, the same time that Highbridge began withdrawing its funds from the managed account. 7. There is no question that Mr. Epstein moved to redeem his entire interest in the Zwirn fund in September 2006 and would have pursued that complete redemption but for (a) Mr. insistence that it would cause a run on the bank, and (b) Mr. request that Mr. Epstein's redemption demand be reduced to one for $80 Million. Documents now show clearly that Mr. Dubin was notified promptly by Mr. Zwirn and knew at least as early as September 2006 regarding the mismanagement that had occurred at Mr. Zwirn's company. Mr. Dubin never notified Mr. Epstein, but continued to liquidate the Highbridge managed account. In a meeting with Jim Windells and Steve Susman, Mr. Dubin was adamant to Mr. Susman that had Mr. Dubin known about the "plane problem," he would have told Mr. Epstein to withdraw his entire investment. When Mr. Dubin made that statement to Mr. Susman, Mr. Dubin thought that the first meeting at which he was present and at which the "plane problem" was discussed took place in 2007, but the documents clearly establish that the meeting took place in September 2006, during the very same period that Mr. Epstein made his redemption demand. Mr. Windells is aware that Mr. Dubin made that statement to Mr. Susman. 8. Although Dubin & Swieca Asset Management was a partner in Zwim's management entities, we do not know whether Henry Swieca was involved at all. 9. According to Mr. Zwirn, Mr. Dubin was notified that Mr. Epstein's redemption was not consistent with Mr. Zwim's understanding (see Mr. Zwirn's email to Mr. Dubin on November 14, 2006), the day after Mr. Epstein's $80 Million redemption demand). However, Mr. Dubin was Mr. Epstein's sole contact for Highbridge's sub- advisor, Dan Zwirn. As such, Mr. Dubin affirmed Mr. Epstein's demand to withdraw his entire investment in early October 2006, and Mr. Dubin has also affirmed that it was he and Mr. Zwirn that convinced Mr. Epstein to reduce his redemption demand from the full $140 Million to $80 Million. EFTA00583047