10 1 12 13 4 15 16 WwW 18 aie w 22 2 24 25 : gil TAgtN ss10 cio! STATES come THI PONSMIC COVRLORNENS THIASDAY, Noverber 45, 2032 42:43 pom. to 3:32 pom. Fort Authority Conference Roan St. Thomas. Virgin Jslaniz Lal is AESENT ALBCAS BRYAN, Chairrtan HATIAN SIMMONS, Vice Chatroan LIMN HILLIN BACORS. £59., Harder PANOCSPH ALLEN, Herber JOSE PONM, Meebe: STAFF PRESED- PEACIVAL CLOUDS. CCD JEMWIPER NUSENT+HILE, AED HOARY SHOCK, ESQ., Legal Ceurse! FRED HANELEMAW, ESQ, Sisectcr of Legislative & Legal Affaico HAASARITA BENCAMII, Directer ef Applicacions OTEPHANIC VERAY, Direster of Compliance SECH NSFFANI, £89., Investigator SOWE.C SCO*AGE, Tusiic Pelaticns COREME LEWIS, Ecard Liaisan PIORTER*S Coats REPOATEUS, tht. €.0. Box 1135) St. Thomss, Virgin Islancs COG! TPAUS RIPT BL POATER'S COORT AEFCRTING, Ts. cd4te Thh-T4l0 LHOS x LEM DESCRIPTION PASE te. 3 Mesting Called to Order 3 No. 2 Roll Call 3 No.3 Review and Approval ct Agenca 4 No. 4 Cases lor Public Hearing 8. Southern Trust Company, Inc. et a (Hepring Adjourned.) TRANSCRIPT BY PORTER'S COURT REPORTING. INC (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC (340) 775-2423 | 1 of 21 sheets Page 1 to 4 of 83 12/18/2012 12:44:34 PM Sent anea wp a) we ek mk ok oR ok ok ok hk an oamh wn -o0o wo 19 ™. L) 7 1 MS. KELLERHALS: Good ahtemoon, 2 Chairman, Commissioners and Staff. I €ppreciate the 3 opportunity to come before you today and speak with you 4 regarding my client, Southern Trust Company, Inc. § I'm here today with Mr. Jeffrey Epsteln who is 6 the President of Souther Trust. And after a brief 7 Introduction covering the business and its compliance with 8 the statutory requirements of the EDC program, I'm gaing to 9 tum the floor aver to Mr. Epstein and he will talk to you a 10 little bit about the new business model. 11 Souther Trust, which will be located on the 12 Island of St. Thomas is applying for benefits under Category 13 lla asa designated service business. And once it gets up 14 and running It will provide cutting edge consulting services 15 to companies around the world tying in part upon the use of 16 blomedical and financial Informatics. The client base for 17 this company fs going to range from individuat consumers to 18 scientist, to investment companies looking to create new 19 strategies using what's called mine Information. 1 want to 20 get a few housekeeping out of the way and on the record 4 21 before Mr. Epstein explains to yOu exactly what itis they 22 aregoingtobedaing, 23 Souther Trust is going to meat all the statutory 24 requirements including that with respect to capital 25 investment. In fact Southern Trust has indicated in their TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 (No Response) THE CHAIR: (No Response} THE CHAIR: Motion carries. Motion to accept the agenda as amended. Abstention? MR. PENN: So moved, Mr, Chalr. THE CHAIR: Second? MR. SIMMONDS: Second. THE CHAIR: Properly moved and seconded. Ali those in favor? (Chorus of Ayes) THE CHAIR: Opposed? (No Response) THE CHAIR: Abstentions? (No Response) THE CHAIR: The agenda stands approved. Cases for Public Hearing, Southern Trust Company. Who speaks to this matter? MS. KELLERHALS: THE CHAIR: I do. Mr. Smock, could you ’ swear in the testifiers? (Thereupon Erika Kellerhals, Esq. and Jeffrey Epstein were duly sworn In by Attomey Smock.) TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 B 1 application will exceed the statutory Investment requirement 2 of $100,000.00. 3 We've also set out a detailed employee benefit 4 plan. And one of the things that's nated about the plan 5 itself Is In addition to providing generous lead packages, 6 life Insurance and a donated leave program, the company 7 actually includes one hundred percent employee and dependent 8 coverage for health insurance. So the company wil! absorb 9 the cost cf all health insurance. And they have agreed to a minimum $50,000.00 per year charitable contribution In 11 addition to the mandatory contributions to the Territorial Scholarship Fund and the Department of Labor database. And those of you who know Mr. Epstein he has been a long-term resident of the Virgin Islands knaw that he has given _ generously over the course of the last 11 years to various 16 charities In the Virgin Islands. 17 We did request as part of the apptication a 18 waiver of the 2 employee requirement for the first five years 79 down to five employees. There were a couple of different 20 reasons for doing that. One is as Mr. Epstein explains and 21° as we explained in the application, there are some very 22 specialized job positions needed by virtue of the business _ 23 = model and what the business Itself would be doing. And it's 24 anticipated that getting to maximum capacity and finding the 25 right employees will teke a significant period of time. And TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 12/18/2012 12:44:34 PM Page 5 to 8 of 83 2 of 21 sheets f i ™ \/ 3 7° asa result of asking for that waiver of the employment 2 requirement down to five, we are also asking that the 3 percentage residency requirement also be amended from 60 percent to SO percent far the first five years. Hh . i'm now going to turn the floor aver to Mr, & Epstein and he can talk to you a little bit about his 7 background in this business In particular. 8 MR. EPSTEIN: Thank you. 9 What's happening In today's environment Is the fact that most everyone here has a computer In front of them. Most of the time if you look back 25 years If you wanted to know whose genetics determined your current circumstance, if you wanted to get financial advice, if you wanted to get medical advice you would ga to one doctor. You would, hopefully, choose the right doctor and he would according to his experience say, fine, maybe you have a stomach ache and we have in response to your problems three or four solutions. In fact If you were going to ga into the Army years ago they classified your health like only five categories. Were you sort of very healthy, healthy or were you F-4, Everything was very general and very broad — categories. As you afl are aware everything nowadays has 25 become personalized. You have your clothes that you wear 7, TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 ~ Ww) 11 1 on all different types of cancers that specifically nave his — 2 ONA sequence involved. So the chances of a successful 3 treatment are now viable where before as he said last night" 4 he would be dead In four weeks. 5 So as of medical advance you are able for the 6 first time to have custom made medicine but you can't do 7 ~~ that without accessing a vast database of Information. Even 8 If you are the best doctor in New York or California or 9 here, you can only read what you can read. You have 24 hours @ day. The new sequences in biomedicine will allow you to access every publication that affects your area and you don't have time to read it. So my company's algorithms will [n fact digest the information as best as they can currently and then spit out its recommendations. So you'll have computer generated solutions for medical problems, which fs the next century's” work on how to get people healthy. | My real business has always been money. People want to know which companies to invest In and you might have been lucky enough -- I was poor but if your parents had any money and they wanted to simply find the stock to buy or how to Invest their money, again they had to find a stockbroker or a local banker or someone they could go to and ask their advice, And that one person's advice was only as good as the college they went to or their experience in the TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340} 775-2428 10 can be custom made. Everyone has many options on how to set up thelr computers. What's happening in the worid Is that many decisions that used to be made by one single individual now it’s impossible to get accurate Information without accessing vast numbers of databases. What Southern Trust © __ will do will be basically organizing mathematical algorithms 7 so that IF I want to know what my predisposition Is for — 8 cancer we can now have my genes specifically sequenced. 9 Unfortunately, it hit home as of yesterday for me 10 exactly what my company does. One of my closest friends was 41 __ diagnosed two days ago with a terminal cancer. Now he's at — 12 the best hospital. I've known him since | was six years 13° old. His tumor needs to be sequenced. We will spend time 14 going through the DNA of his exact tumor. 16 Now that was the first step that’s available 16 today. It hasn't been available ever before. But that’s 17 only the first step. Now we know specifically what type of 18 cancer he has. 19 In the past unless you are lucky enough to have 20 = the right doctor when you went to diagnose that problem and 24. he can say, well, Jose or Albert I've seen this beforeand — ey you Were out of luck. Now what we'll do Is we'll use this — 23° one sequence, his own DNA and the specific problem he has 24 _ with his cancer and access worldwide databases of every 25 = drug, every single drug across the world that's been tested _ TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 ad Aaa Ww wo =» 12 business. Now, just as I -- with my friend or as a simple example years ago If you had asked me what is the name of George Washington's horse? I lived in Coney Island. George Washington's horse, okay, what would I have to do? I'd have to get on the bus and go to the library. I'd have to ask the librarian for a book on George Washington. Hopefully, somewhere in the appendix would be a note that said George Washington's horse or otherwise I was in trouble. I'd have to actually read the book. 11 I would then go back, make a report, come to my 12 school. And as you all know right now we go to Goggle and 13° in a nanosecond Goggle searches 10 billion documents for the 14 names of George Washington's hoarse. And you can find out — 15 what the horse ate for breakfast on a certain day. — 16 So my company will then take the concept of 17 building these search algorithms but not searching the 18 Information for the name of George Washington's horse but in 19 fact searching the world's databases for what is the best — 20 investments. 1 can't spend 24 hours a day golng through all 21 _ the Investments around the world but my computer can do ft — 22. ina nanosecond, — 23 Unbeknownst to most people today again when I 24 ~~ first started on Wall Street I was a school teacher. The 25 = stock exchange traded a couple of million shares per day and TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 oon mh uwh «a — o 3 of 21 sheets Page 9 to 12 of 83 12/18/2012 12:44:34 PM {f™. f™. WY 133 1 that was a big -- and if you had a 100 million shares a day 2 It was a calamity. Now everyday, every minute those numbers 3 of shares are traded but not by people. Seventy-Five or ~~, Eighty percent of all the trading around the world -- when 1 iz vy say trading, all the statistics you read about how many shares traded today Is done by a computer. In fact some of | the computers trade thousands of times per second buying and selling at small Increments. So the speed at which decisions are made you have speed by computers but you need a search engine, just like Goggle has a search engine for documents, a method to search the financial arena for the best investments in my financial arm of Southern Trust and the best medicine. So again If it was me personally -- this again It hits very close to home. I'm leaving for New York after this meeting to go sit with the sequencers to see if I can save my friend. And this is the first time In history that it’s probably a chance because most people don't know when they say you have lung cancer, cancer is not really a thing. It’s not like -- you 20 see we used to -- the past 30 years we know we had a 21. disease. You had the flu or you had some type of liver — 22 = disorder. Cancer is very different. Cancer ts not a thing. 23. «Its a process. It'saprocess. — 24 What do I mean by that? It doesn't mean I have 25 something in my lung that has a little “C" that says cancer, eo, TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 oon o 40 11 72 13 14 15 16 7 18 +9 LJ 15 us manufacture cars. Now the computers are helping to design. They In fact design their own ilttie parts. In the new version you can actually printout just like a fax machine started 20 years ago, you could have the computer design the part and make it, It actually prints parts, So Southern Trust will be basically building up a database searching mechanism to search things on an Individual basis both In the medical field and the financial field. Again it’s an exciting area that the idea Is that the diseases that affect the local population -- J do lots of work in Africa. To backup Africa is for me a fertile ground for experimentation because It has been so underdeveloped it is not burdened with the current system. What do I mean? When telephone companies now come to places like ‘Senegat where | was a couple of months ago, they don't put copper in the ground. They don't have te worry about laying © cables and going to everyone's house. They leapfrag the old _ systems going directly to cellular. So though Senegal and Ivory Coast are poor countries, 70 percent of the people have cell phones because they were able to not deal with the local in-breaded telephone companies who had to charge a ridiculous sense of money because they had already !ald all this plpe and copper TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 want fark WN ew —- ab ob ok oh aewn- © . ey aewnheiodo OW on om wee 14 1 It means that my lung is doing something. Itls a process, 2 itis cancering. My lung Is cancering or my prostate Is 3 cancering. In my friend's case his brain, bones and liver — 4 arecancering. — So In the past -- unfortunately anyone diagnosed with @ disease for lung cancer you could only treat them with a lung cancer approved drug. Like { have a breast care center In New York. So now It turns out that many females for breast care you can treat it with things that were only used before for prostate. And the only way they got to that is they realized that in certain studies in the Netherlands just by these search engines there had been good results based on the computers being able to search the database, the solutions for specific types of problems. Why the Virgin Islands? Again we have high speed connections in St. Croix. So I have to beg both servers to hold my database Information. The high level people that 5 6 Cf 8 9 10 11 12 13 14 15 16 17 18 aticians to ct 19 down and help program the computers. Some people actually — 20 have to be here and monitor the computers. And these — Ps _ algorithms - it’s amazing but true -- much of the work — RK hopefully to be done later In life. 23 So that five, ten years away is the computers 24 themselves will help redesign some of the computer programs. 25 = Just like In the cars we first bullt some computers to help TRANSCRIPT BY PORTER'S COURT REPORTING, INC, (340) 775-2428 16 In the ground. The same thing here, Africa has almost no medicine, It's difficult. But with searching as opposed to testing people everyone is not the same, not everyone needs an aspirin and not everyone needs the same aspirin or the same amount of aspirin. The Idea would be to build up a personal medica! database for lots of people. That's It. And ask as many questions about the subject. I enjoy it. MR. SIMMONDS: Good afternoon. [ get the financlal part. 1 mean you got a billion dollars to Invest. You search for the best investments and you invest ~ other people's money. The medical part I'm not sure I get as yet. [ mean I'm not going to ask you how much something like that would cost because it sounds like it would be really expensive, Gut who are you catering too? 1 mean people are going to come to you and say, you know what, I have an ailment. I need you to search and see if there is a cure. — MR, EPSTEIN: No, it's the drug companies, To devefop a new drug now cost a billion dollars because you sort of start from scratch and It's really like trial and error in your backyard, trying to figure out which 23 piece fits In this screw. So the drug companies spend the 24 first five years testing all the different parts to see if — 25 it will work on this drug -- on this disease. The drug TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 oan nak wn = ee ee ee ee ee ee ee ey Ne OwoanrwtowmraWwnwn OG 12/18/2012 12:44:34 PM Page 13 to 16 of 83 4 of 21 sheets XY 7 Ne 19 1 companies would much rather have my computer do the trials. 1 MS. KELLERHALS: It's in the proposal in 2 anderos. — 2 part because It fits the business mode! better. It allows 3 MR. SIMMONDS: But you are not testing 3 them as Mr. Epstein explained there Is that remp up while aay anything, You are basically just searching for already 4 they are getting the programs together. .__/ tested products. 5 MR. EPSTEIN: I much rather it be 6 MR. EPSTEIN: The algorithms 6 = sharter frankly. 7 themselves will be almost ilke a chemistry lab in the 7 MR, ALLEN: You much rather It be 8 computer. In the old days when you had to test for 8 shorter? $ something you had to actually build it to see if it would 9 MR. EPSTEIN: Sorry. 1 would like to 10 work. When the Wright Brothers built their airplane they 10 get it done as fast as possible. 41° Rew it and it crashed. They few it and that’s when they 11 MR, ALLEN: Yes, I understand that. 412. changed the wing. 12 But some of the computer models that you discussed It's so 13 And now what you do Is you design it in the 13° way out. Is this your thinking or this is something that is 14 computer. The computer inside all the new space ships are 14° on the market that you are trying to tap Into? 15 al! designed by saying here Is the wind, here is the gravity 16 MR. EPSTEIN: lam not a mad man. So 16 and the product comes out at the end. So there Is big drug 16 it might appear that way. 17 companies that want to know what's the most likely pathway 17 MR. ALLEN: No, I'm just asking if 18 to hit this type of disease. 4B this fs your thought brand new or there is something aut 19 MR. SIMMONDS: Why would It take five 19 there that you are trying to bring It here. 20 = years before local folks could be tralned In doling this sort 20 MR, EPSTEIN: Both. There are 21° of -- 21 =~ products just beginning. They have not yet been fully 22 MR. EPSTEIN: ft won't take five. it 22 developed. Database mining Is a very -- product is probably © 23 will be growing simultaneously because the mathematics It's 23 the wrong word. The database mining which mining means as 24 = like the new programs. For example, the last Windows 24 = in the past you got to dig Into the ground, Here the 25 program that came out last week, Windows 8, took 600 people {25 concept of database mining Is very well established but not Tao TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 we? ) 18 20 1 six years to do. Naw It’s not that many people but you need — 1 In these two areas, 2. high tevel programmers, — 2 Normally, for example, as you know when you go in 3 So 1 would like to have young people -- I'ma 3 your computer it might target you for a specific type of 4 teacher by heart -- engaged early on. But the programming 4 advertisement because it knows that after you've been 5 Initially will take time to get up and running and been & testing it untli tt sort of becomes a model for its 7 ~~ performance, 8 MR. SIMMONDS: Thank you. 9 THE CHAIR: Mr. Allen. 10 MR. ALLEN: Good afterncon, Mr. 17° Epstein. I've been listening to you quite Intense. 12 You are asking for five years exemption and you | 43 nead instead of 80/20, you need 50/50. You know that's — 14 going to take going back to the Legislature to change the 45 statute? 16 MS, KELLERHALS: We are aware that they 17 = did bring In an amendment to go to the Legislature -- that 18 = the Legislature actually passed legistation that would 19 reduce the number of employees to five. 1 understand that 20 = it was vetoed by the Governor, But based upon my ZA discussions with the EOC staff it was my understanding that ) at thls time based on the circumstances of each applicant it 23 would be considered. 24 MR. ALLEN: That's the reason why 28 it's in this proposal? TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 5 searching for French fries. Sa they mine all the pecple in | 6 the area who Is looking for French fries and said, you know, 7 Randolph seems to like that. So we'll send him a message. _ 8 - So the concept itself is very well established, 9 using the medical really the next couple of years. — 210 MR. ALLEN: I have no more 11 questions. 12 THE CHAIR: How do you get around 13 all the proprietary medical information, though? 1 mean how 14 does that -- 15 MR, EPSTEIN: Because you Initially 16 start out -- most people they opt in or opt out. Sometimes 17 ~~ they, even for the first sequencing, potentially to answer 18 your question, when the human geno project is first begun a 79 question came In If they sequence my geno, my persona! geno, 20 = is that Information tied to Jeffrey Epstein or will it be 21 anonymous? And everyone whose genes get sequenced has the 22 = right to say I don't want my name associated with my gene 23 because maybe if I have something that’s bad | might have a 24 =rocker gene from a waman pre-deposing me to breast cancer } 25 won't get health insurance. TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 5 of 21 sheets Page 17 to 20 of B3 12/18/2012 12:44:34 PM . ° fa l LD S 24 Le 23 1 So the decision of having your name associated 1 everything Is Interconnected. But again the only real way 2 with the sequence is your decision. However, the sequence 2 te have certain types of things is servers that are not 3 then goes Into a big pile and says the person who had that — 3 connected to the Internet directly. a> , Sequence was responsive to this drug. ‘So there Is no name Bs THE CHAIR: How do you anticipate —. attached. So there Is no Privacy Issue. § that this business will grow so that it would actually 6 If It turns out that most people don't mind 6 affect employment? 7 having their names I was surprised. But most people say, 7 MR. EPSTEIN: Because if things go as 8 look, if I'm doing something good for society and it’s 8 I planned It will need a significant number of people, 8 helpful you say, yes, I've had a problem and if I can help 9 hopefully, again, probably between five to ten years or 10 others my name could be attached. That's a decision I would 10 maybe more operate a virtual laboratory. So you need lots 11. make. 11. of people. You need ta watch and help the mathematicians. 12 THE CHAIR: So it's a biomedical 12 It's accessing the computers and training people to operate 13 Goggle that -- 13 the systems. 14 MR. EPSTEIN: Yes. 14 As you know If you thought about it years ago, 20 15 THE CHAIR: += that tracks genes, — 15 years ago if we sald we are going to have to program a 16 preference gene receptivity to different medications In 16 computer, It's impossible. I can't do it. I'ma pretty 47 order to make doctors more efficient. 17 good mathematicians. But now students coming up can program 18 MR. EPSTEIN: Yes, and drugs more 18 = things that were unthinkable years ago. 19 efficient. 19 THE CHAIR: And the office space or 20 THE CHAIR: But how do you get pald? 20 will there be an office space? 21 MR, EPSTEIN: The drug companies 21 MR. EPSTEIN: Yes, sir. 22 ~~ instead of having -- as f said imagine having your own 22 THE CHAIR: It will be in St. 23 = little chemistry lab In a computer as opposed to having a 23 =Thomas? 24 thousand people. So they pay me forthe algorithm. 24 MR. EPSTEIN: Yes, sir. 25 THE CHAIR: So they pay you a 25 THE CHAIR: But the server will be uo TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2426 as 2” } 22 24 4 membership fee to access your server or they pay you for an 1 onthe level three establishment on St. Croix? — 2 algorithm that you actually sel! them instead? 2 MR. EPSTEIN: Don't know yet, 3 MR. EPSTEIN: There will be just ike 3 THE CHAIR: Because J know I heard 4 in any other product because there are different algorithms, 4 you mention St. Croix and the access to the band. But you 5 Some will be outright purchases, probably the simple ones. 5 are figuring you can tap in a fiber anywhere and get there? 6 There will be leases for longer runs and most people will be 6 MR. EPSTEIN: Yes, You want the 7 coming back. Sometime If you want to know -- fust like a 7 access. So that's really for the trading aspects. § search engine In answer to one question. So you get pald 8 it turns out -- and again it's an Interesting § for that one plece of advice, ongoing advice or exclusive 9 fact, that computers that trade, the algorithms that's a 10 rights like drug companies might want to have fora specific § [10 different part of the business, the computers that trade it 11° answer, — 11 makes a tremendous difference if you have fiber and high 12 THE CHAIR: And these mathematicians 12 speed fiber but not high speed fiber. 13° build these algorithms to build themselves or they bulid 13 So just as a silly example there was a company [n 14 algorithms specifically for whatever question Is posed 14 New York that moved Its offices three streets closer to the 145 because I know you mentioned -- I still want to know why you 1§ stack exchange and pald millions of dallars to upgrade their 46 have a server here, though? 18 space so they can be three streets closer because then they 17 MR. EPSTEIN: I'd like to have 17 = getan edge. 18 everything here for security purposes. As you know 18 MR. SIMMONDS; Mr. Chair, if | might 19 everybody !s hacking servers. The only way realty 19 follow-up on something that you asked? 20 unfortunately to make sure you are secure is to have 20 THE CHAIR: Sure. Re tocation wise, Once you put your server -- 21 MR. SIMMONDS: So what then do you see Ne } THE CHAIR: So your server wili be 22 ~~ as the economic benefit to the territory? 23 = more or less your vault rather than a server to power 23 MR. EPSTEIN: Well, obviously, 24 = anybody else anywhere else? 24 hopefully -- 25 MR. EPSTEIN: Yes, yes. The systems 25 MR. SIMMONDS: I mean you are TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 12/18/2012 12:44:34 PM Page 21 to 24 of B3 6 of 21 sheets ’ " Nn in VJ 25 7] 27 1 suggesting that it will be at least five years, maybe even 1 the algorithm or can have advice but I prefer only the 2 longer before you start ramping up employment, 2 algorithm. 1 don't want to do financial advice. This is 3 MR, EPSTEIN: I think there will be 3 > much more sophisticated. >, revenues of a considerable number of millions of dollars at 4 THE CHAIR: When you say they buy a —_’ the end of the fifth year. But the ramp up these are high & position in the algorithm, you can invest in an algorithm? 6 dollar revenue items to the company. So obviously fn terms 6 MR. EPSTEIN: Yes. So if you go on, 7 of the taxes and In terms of employment. 7 for example, many trading sites you, yourself, can sign up 8 MR. SIMMONDS: I'm sorry, taxes for the 8 asa subscription and say I get the Albert ryan newsletter, 9 five or so Individuals that -- 9 When you think about that what was that? That was someone 10 MR, EPSTEIN: No, no, the business 10 who Is willing to pay you a mon y fee for your personal 414 taxes. teegucat at ete ee aeae kg except It’s not a person. 12 MR. SIMMONDS: The business taxes? 12 It'sacomputer. — 413 MR, EPSTEIN; Yes, sir. 13 THE CHAIR; Why isn't this a Tech 14 MR. SIMMONDS: But you are getting an 14 Park business, though? 15 exemption. 15 MS. KELLERHALS: ~ We couldn't come to an 16 MS. KELLERHALS: —_Right, but the 16 agreement with the Tech Park. So there Is an understanding 17 exemptions are only 90 percent on eligible Income. 18 MR. SIMMONDS: So you are saying that 19 the 10 percent would be substantial for the territory? 20 MR. EPSTEIN: Yes. Theanswerigs 21° “yes”, And combined with employment it's a little down 17 that we could go to the EDC. 18 THE CHAIR: Because I was trying to 79 figure out If there was a distinctive difference because it 20 Is alittle different. It is an Internet provided service 21 but your core business is not really Internet. a oh say antiquated but somewhat. You would come to me and say what should I buy? And I'll use my judgment based on 30 years In the business of what you should buy. J didn't really use computer search engines to find It. It’s a very 15 different business. This ts not financial advice. Thisis 16 the mathematics and the product of financial algorithms for 17 sale. 13 THE CHAIR: So you have clients that 19 have invested In this and these algorithms produce not 12 13 14 22 side. 22 MR. EPSTEIN: No, it's database. — 23 THE CHAIR: How was this -- 23 THE CHAIR; It's data. 24 MR. SIMMONDS: You are already a 24 MR. EPSTEIN: Yes, data and it's — 25 resident of the Virgin Islands, right? 25 management. — Cate TRANSCRIPT BY PORTER'S COURT REPORTING, INC, (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC {340) 775-2428 held 26 28 1 MR. EPSTEIN: Yes, sir. [ also have q THE CHAIR: Right, 1 go it. 2 homes in New York and Florida. Most people prefer -- 1 2 MR. PENN: In the projections you 3 prefer to be down here. This is my favorite place to be. 3 have two revenue lines, fee income and investment Income. 4 It's a more difficult business environment but I prefer to 4 Itseems that -- Is the fee Income both the medical and the § behere. I prefer to have my employees here. I've had a § finanelal? 6 very successful time here. 6 MR. EPSTEIN: {t's a mixture. Again it THE CHAIR: How Is this different, 7 according to what the client wants to do, whether they want 8 the financial side than what you were doing before? 8 to havea single -- you can Invest, for example, in the 9 MR. EPSTEIN: What I was doing before 9 follow-up in only the band algorithm. So you would then be 10 was really financial advice which is almost I don't want to 10 paying for your piece of a bond algorithm. If you wanted to 11. have more you would be fee for the entire business. 12 MR. PENN: I was just trying to get 13 a feel for how much of the business you estimated because 14 your estimate would have been medical versus financial. 16 MR. EPSTEIN: I think it will move. 1 16 think it wifl start off being more financial because the 17 medical is much more sophisticated. But in terms of overall 18 sort of doing good thing, hopefully, I think the medical 19 area would be more exciting. 20 = Information but -- they do produce information but tt 20 MR. PENN: And how many people 24. actually trades based on that information. 21 would you say would you need to da what you project for year on ) MR. EPSTEIN; That's correct. 22 = five? I’m not going to put numbers on the record but I see 23 THE CHAIR; The computer. 23 nearly a doubling of your estimates between year one and 24 MR, EPSTEIN: Yes, the computer can 24-year five and I'm just trying to figure out -- 25 trade. And the client they can either buy its position In 25 MR, EPSTEIN: I wanted to be TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC, (340) 775-2428 7 of 21 sheets Page 25 to 28 of 83 12/18/2012 12:44:34 PM f rf 29 1 conservative. If things go well we'll meet a lot of people. 2 MR, PENN: But [ mean I guess with 3 the question you had before about the mix 50/50 -- om) MR, EPSTEIN: Yes. ey MR. PENN: -- in year five what do 6 you project that to be to generate what you project even 7 though it's conservative? How many bodies are you 8 considering? 9 MR. EPSTEIN: Again I would like as 10 many as posstble frankly. But the Idea is how well will a 11° product this mechanism take. Especially because It’s 12 medical you don't want to sell something before It’s ready. 13° And once it’s ready then there would be people in the 14 marketing department. There will be a bunch of other 415 things. So it’s difficult to put a number on it. 416 MR. PENN: How do you market that? 17 MR, EPSTEIN: - Well, for the medical 18 things through the drug companies as weil as certain medical _ 49° NIH, the hospital divisions, the medical countries. Iceland 20 = Is one of the few countries ~- and that’s another discussion _ 21 at some point because Iceland Is an isolated community and 22 they have 50 years of genetic information. So everyone In 23 = Iceland has a genetic sequence and you can then see what's 24 ~=happening, the children, what was really inherited. Es 25 breast cancer Inherited, not inherited. Is schizophrenia by oo, TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 @ 31 healthier at the moment but they have tremendous amounts of data but almost no information. THE CHAIR: Wow! MR. EPSTEIN: Because now they have 300,000 people and ail thelr ancestors. Now what do we do with it? It was the same problem when we had the human 8 geno. It was 8 book of three billion letters and ittook — 9 ten years to do and three billion dollars to do it, three 10 _ bililon collars to do it only ten years ago, That same 14. sequence you can now walk Into your doctor and have It done 12 for $65.00. You can sequence your entire geno for $65.00. _ 13 MS, MADURO: T have one question for 14 Legal Counsel. So through the Chair may I ask my question 15 to Legal Counsel? 16 With respect to the fact that the Governor has 17 vetoed the proposed legislation, how will that impact us 18 Inasmuch as we are in a public hearing and this board Is 19 going to have to later decide moving this application 20 forward without the approved legislation? NOM he wt = 21 MR. SMOCK: You'll have to remind me 22 ~~ which legislation are you talking about? 23 MS. MADURO; On the amount of 24 employees that the companies may have. Traditionally we 25 would approve an application with a minimum of 10 and move TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 ae 30 simply looking at all the data that was accumulated? Places, frankly, like St. Thomas are the perfect place to sequence people because it's so isotated. You are able to get much better data than ever before. And it also ends up -- and that's one of the advantages of being here as opposed to New York. THE CHAIR: But when E think of genetic sequencing -- and 1 know we are getting way out ona 9 limb. 10 41 412 13 14 415 16 17 4 2 3 4 5 6 7 8 MR. EPSTEIN: No, ask. THE CHAIR: ‘Imean ! would think that you would have to have sore DNA sampling of these — people going back for 50 years and 50 years ago we didn't have that type of technology. So how do you -- I mean —- people have died. How do you trace that? Howdo youdo sequencing of somebody who Is no longer here? MR. EPSTEIN: in Iceland they've kept 18 the sequencing. They started taking blood. So they have a 18 kept blood samples from everyone. That was very forward 20 thinking. So they were simply able to get the sequence out 4. of the blood. — cs THE CHAIR: Got you. That was 23 ~~ confusing. 24 MR, EPSTEIN: Yes, it's 50 years of 25 data. It’s the only country. it doesn't make them any TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 32 1 forward in the event that the applicant cannot ramp up to 10 2 we would do a modification or a waiver of employees. But in 3 this Instant we are going to start out knowing that we are 4 not going to have 10 employees. © 5 MR. SMOCK: So we'll be dealing with 6 the old legislation. 7 THE CHAIR: But the law allows for 8 us to walve the employment In any case. 9 MR. SMOCK: if we wish, 10 THE CHAIR: For due cause only 11. because those employees are not needed. 12 MR. SMOCK: If we wish to. 13 MS. MADURO: True. But we 14 traditionally do it by coming back to public hearing. So in 15 the interest of time and because we now know that the 16 applicant is not intending to ramp up to that I think it 17 should be notated on the record so that we don't have to | 18 come back in the event that the applicant is approved toa _ 19 walverp or a modi on ft. a, 20 MR. SMOCK: I believe It’s already a 21 part of the application. 22 THE CHAIR: How many mare people are 23° doing this? 24 MR. EPSTEIN: There is a couple doing 25 = Itin California. Steve Jobs had 2 group that was trying to TRANSCRIPT SY PORTER'S COURT REPORTING, INC. (340) 775-2428 12/18/2012 12:44:34 PM Page 29 ta 32 of 63 6 of 21 sheets Saux a fs la WS Se 35 1 help him and It was a [little too short. They didn't get it 4 THE CHAIR: {s that what it is? 2 done in time but they were getting there. In fact the last 2 MR, EPSTEIN: Yes. 3 day of his Jife they thought they were able to sequence his 3 THE CHAIR: So are you planning -- (™, gene in a way and maybe find a useful drug and he had 4 and I know you have contributed generously before. So are ay enough, They said we think we can try a new one that’s 5 you planning to do -- [ know we have one applicant that 6 specifically tailored for your specific problem and he sald — 6 started our Junior Achievement Program and we have some 7 can't do this anymore. And then they had a blg meeting. 7 others that did a financial piece that seems to be 8 They tried to convince him to try it and he sald I'm done. | 8 successful at Chariotte Amalie High. Junior Achlevement has 9 THE CHAIR: Where are you getting 9 gone viral. It's all over the Virgin Islands now. 10 = your mathematicians from? 10 Are you going to do any programs to start to 11 MR, EPSTEIN: Usually from the United 41 bulld that type of Interest and expose young people to that 12 States. 12 = kind of -- 13 THE CHAIR: That's a big place. 13 MR. EPSTEIN: I'm willing ta do any of 14 MS. HILL: i'm sorry, where? 14 those things. Again I come from a background where I had no 15 MR. EPSTEIN: United States, I had 15 money and it was only by understanding math and science that 16 hoped to get some from Europe just like engineers but it 16 1 was able to live the life [ currently lead. So I would 17 turns out that they don’t exist anymore and anybody In this 17 love to doit. 18 level of mathematics anywhere, they don't exist in China 1B THE CHAIR: Any other questions? 18 because you need a bit of a creative person as opposed to 19 MR. EPSTEIN: lll be more than happy 20 = simply a copy cat. They don't exist in Europe. And if you 20 in some other forum to sit down and say fine. In fact in 21 = are really good you are already here, So the universities 21° some of the scholarship money that I have given before here 22 usually. 22 in St. Thomas was to try to find children to go to visit 23 THE CHAIR: So you already have one? 23° Harvard, encourage them. 24 MR. EPSTEIN: I've had one. 24 One of the things I did five years ago Is | 256 THE CHAIR: And what was his profile 25 brought a whole bunch of Noble Prize winners here to St. eo TRANSCRIPT BY PORTER'S COURT REPORTING, INC, (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 ees 34 36 1 Uke? 1 Thomas for lectures at the university again so kids can see 2 MR. EPSTEIN: Harvard. It's usually 2 they don’t have to be In the music business. Science is as 3 Harvard, MIT. But this is Harvard and he used to be at the 3 fun and exciting. 4 institute of advanced studies at Princeton. 4 MR. SIMMONDS: One of our board members 5 THE CHAIR: So in your five-year 5 is the Provost at UVI. So we certainly will have him get in 6 plan you are going to send some Virgin Islanders to Harvard? _ 6 touch with you and see what kind of programs could be 7 MR, BRYAN; No, Twanttetrainthem 7 developed in conjunction with UVI to train mathematicians. 8B here. 8 MR. EPSTEIN: Not only mathematicians, 9 THE CHAIR: How do you do that, 9 In fact it's a longer discussion. 1'm willing to have as 10 though? 10 = many discussions anybody here would like to have on the 11 MR. EPSTEIN: Because it's much -- you 11 record, off the record. But that Apple computer sitting In 12 have to start off thinking that, for example, Algebra Is not 12 front of the Chairman has more teaching ability than all the 13 as important as It used to be. Programming is important. 13 teachers in St. Thomas but people don't understand how to 14 And you don't have to -- in the ofd days you have to 14 suse it yet still, not only here but most places because the 15 actually poke holes in the card to program. And now the 15 teacher unions don't like that idea. 16 younger people can have their little abortage (phon) do 16 There is something that I would always encourage 17 ~~ things simply by typing in and raise the abortage 47 adults to do as I would encourage all children Is something 18 right-hand. You type it in and It already programs, 18 that some people know about and some might not. It's called 19 So advance programming is very different. It’s 19 the Khan Academy, K-h-a-n, Academy. Now If you haven't seen 20 = nothing -- 3'm sure If you have children how they text, for 20 it you should go on line. It teaches every subject you *. example, they speak In B26, see you secon. You could ask me 21 = Jearn in high schoo!. You can watch It when you want. it's Ne ) five minutes ago haw am I going to teach -- one of the 22 simple. You don't feel embarrassed If you don't understand 23 problems is how do you teach kids to talk because in fact 23 it the first time because you can play it over and over 24 they are starting to talk as they text. So adults don’t 24 again. You can blog with other children or people your own 25 understand it. 25 age to learn the same subject or maybe having the same TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 9 of 21 sheets Page 33 to 36 of 83 12/18/2012 12:44:34 PM Sesoacess (~ fa XQ 37 Ly, 39 1 problems you have. I don't understand how miosis works or 1 If you got sick and I got sick we go to the best doctor. 2 = mitosis In bio-medicine. 2 The best doctor for a 100 percent likelihood is 3 So I can blog now and say who else? Can someone 3° connected on that machine somehow. So how can you find that Soa explain to me how the chromosome split and they get answers. 4 person in the right place that's connected with that __/ So, yes, It's 2 tremendous amount of things to be done. § Information? [t's really exciting. 6 THE CHAIR: You know we were having 6 THE CHAIR: That is. 7 that discussion the other day and that's a serious shift 7 MR. EPSTEIN: Yes, but things Ilke the 8 now. Because the most important thing is teaching kids how 8 Khan Academy you don't need -- if you want to learn 9 to learn on the Internet because all of the Information is 9 mathematics you don't really need to go to high school. 10 already there. They don't need to sit. Florida has this 10 THE CHAIR: So why can't we fix the 11° future schoo) E think it's calted Florida Virtual School. 71° LEAC, man, if we can do al! of that? 12 And they have their whole high school curriculum on line for 12 Anymore questions? 13. anybody In the nation to go cn and doit. But in the Virgin 43 MR. SMOCK: Mr. Chairman, for the 14 = {slands tike Iceland we are in the middle of nowhere. 44 record to follow-up on Commissioner Millin’s question and 15 MR. EPSTEIN: You see that's sort of 15 comments, this application did request fewer than 10 16 insenslbly the same thinking I grew up with. Sut the middle 16 persons. But Section 708 of Title 29 Subsection F does 17 of nowhere just like Africa you have an Apple computer 17 provide for the record that: 18 sitting on the Intemet, So in fact you are not in the 18 19 middle of nowhere. You are in the middle of everything. 19 To be eligible for the granting of 20 = You are in the middle of everything. You just have to 20 benefits you must employ at least 271° understand how to use this thing. And it’s not taught in 2i 10 persons on a full-time basis. 22 =the school. 22 And such enterprise and all employees 23 And not only are the computers now used to say so 23 and such enterprise shall be subject 24° =~you can team Algebra but It turns out -+ and if again let's 24 to the exceptions contained In Section 25 look ten years down the road If I’m successful it turns aut 25 711 of this subchapter be residents eta TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 od 38 40 1 that with 14 people In the room everyone has a different 1 of the United States Virgin Islands 2 learming skill and they learn differently. Some people are 2 provided however that the applicant may 3 very visual. Once they see a motorcycle part they can put 3 employ fewer than 10 such persons upon 4 \ttogether. I can't. Some people need to hear it verbally a demonstrating to the Commission that the 5 because they learn verbally. Some people learn visually. 5 employment of this number of persons in 6 Some peopte have a combination of the two. 6 his particular enterprise would not be 7 if you go back S00 years there was not one person 7 economically feasible or practical. And 8 that Sat In the classroom and said to the people in the 8 upon a further finding by the Commission 9 field sit in here and let me lecture you and don't mave E] that the desirability of the proposed 10 while Idolt. infact asf described It the thing that 10 enterprise outweighs the fact that itis 11. everyone leams to do and really learns well ts to walk and 11 not labor Intensive. 12 noone taught them. No one taught you to walk, 12 13 THE CHAIR: So what you are 13 1 believe this application also ask for a 14 suggesting is in 10 years we may be able to have a -- your 14s residency reduction also. But it Is permitted under the 75 same product that would be able to take a genetic code of 15 code if this commission so finds. 16 how somebody Is, figure out what Is the best way for thern to 16 MS. HILL: And if I may, Mr. 47 learn and put it on the Internet for them? 17 = Chairman, the amendment to the legislation to reduce the 18 MR, EPSTEIN: I don’t want to say -- 18 five, we have submitted to Senater Malone the appropriate 19 that's pushing it but yes. It's the Frankenstein version 19 wording. And my understanding is that that amendment Is ta 20 = but It's true, yes, In fact it will turn out that certain 20 be dealt with on Monday by the Committee of the Whole to on people can |eam certain things. Certain people can move 21 address the EDC requirements. So we should be okay. f) through space differently. 22 THE CHAIR: Fantastic. Maybe we 23 So your skill set lf you think about it the 23 ~~ don't have to do anything. 24 questions that people ask are questions they have to find 24 Anymore questions? 25 the right person to ask. You want to find the best doctor. 25 (No Response) TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 TRANSCRIPT BY PORTER'S COURT REPORTING, INC. (340) 775-2428 12/18/2012 12:44:34 PM Page 37 to 40 of 83 10 of 21 sheets 4 4 THE CHAIR: Thank you. fS. KELLERHALS: Thank you. a EE ee | = 1 zz ‘ I foo a & a ae 2 ee ee eee EE ee ee De EE Ee 2 eee Ew ns eee eee zz Es | ee eee EE ee ee ee EE ee = as mz = a mE tT eee TRANSCRIPT BY PORTER'S COURT REPGRTING, INC. (340) 775-2428 a |