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GOVERNMENT OF



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PUBLIC HEARING



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FRIDAY, April 23,



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MEMBERS PRESENT



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CAIN MAGRAS, Acting Chairman



MARCIA HOLLINS,



Member



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STAFF PRESENT



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FRANDELLE GERARD, Acting Exec.



Director



NADINE THOMAS, Assistant Exec.



Director



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FRANCOIS DOMINIQUE,



Special Assistant



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‘ANA L. DAVILA, Director or Admn/Operations



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PORTER'S COURT REPORTING,



INC.



P.O. Box 11303



St. Thomas, Virgin Islands 00801



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No.



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Financial Trust Company,



Inc.



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MS. ROWE: You are very welcome.



THE CHAIR: Is there anyone who

would like to testify for or against this proposal?



(No response)



THE CHAIR: Not seeing anyone,

thank you again.



MR. PEGUERO: Thank you.



THE CHAIR: Let me call the next

applicant, Financial Trust Company.



Sorry for the interruption. If we can

proceed, we are now at the Financial Trust Company, Inc.



MR. HOFFMAN: Good afternoon, Mr.

Chairman and Miss Hollins, members of the staff. My name

is Paul Hoffman and I'm here as the attorney for

Financial Trust Company. But I'm really here and it’s my

great pleasure to be here to introduce Mr. Epstein,

Jeffrey Epstein who is the principal of the company and

who will make the presentation.



What you have before you is an application --



THE CHAIR: Before you proceed,

could we have Mr. Epstein sworn in, please?



MR. HOFFMAN: Sure.



(Thereupon, Jeffrey Epstein was sworn in by



the Court Reporter.)



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THE CHAIR: Thank you very much.

MR. HOFFMAN: The application is

for a designated service business in the -- as defined in



the Economic Scientific and Management Consulting

Services. And what personally gives me the greatest

pleasure and satisfaction here is that I believe Mr.

Epstein's company and his efforts mark what I think is

really a tremendous opportunity for the Virgin Islands to

expand our financial services sector, that entire area of

our economy where I think we can become second to none.



And with that said I would like to ask Mr.

Epstein to first tell you about himself and tell you

about the application. Obviously if there is any

question that I can answer either today or at any time

before your final consideration -~ I believe everyone

knows me -- and I will make myself and Mr. Epstein

available as required.



THE CHAIR: Thank you very much.



Mr. Epstein.



MR. EPSTEIN: Good afternoon. What

I thought I would do is just to give you a bit of

background about my personal history first and then

explain how my business comes out of my background in

effect.



I come from Coney Island in New York City is



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where I started out. And my first job was a school

teacher. I was a high school math and physic teacher for

a number of years. Like many teaching jobs, we are

usually under compensated. I think the great shame is

how low teachers are paid around the country.



What happened was I got an opportunity while

being a school teacher to have a job on Wall Street,

which is a place I knew the location of but I knew

nothing else about what Wall Street meant. At that time

I had no money. So I really did not know the difference

between a stock and a bond.



My first job was with a company called Bear

Stearns, which is one the largest investment banks on

Wall Street where I was for five years and only after

five years made the youngest partner in the history of

the firm.



In 1981, I left Bear Stearns to set up my own

financial consulting operation and over the past 18 years

have been advising clients around the world on how to

invest their moneys, how to make acquisitions, how to do

the necessary research needed in what has become an

extremely, complicated and interwoven global marketplace.



The main change really of all the financial

service business was in the mid-1970's when computers



first got involved in the application of investment



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decisions where you can graph the way stocks move, your

access to information worldwide and as the computers got

faster and faster. Up until only ten years ago, really

the beginning of fax machines, you actually had to be in

New York City to do financial business. You could do it

other places but it was very difficult. Because to

simply deliver a message Or a handwritten document across

town even in New York took an hour to get from uptown to

downtown. So in fact Wall Street begins as one building

in the early 1900's where people can yell at one another

and they can actually see one another because that was

their first communication.



The major change happened with fax machines

where people in fact can deal with their clients in no

matter what country they were as long as there was

telephone service. In the United States we were pretty

lucky because telephone service existed in most places.

But. in Europe, in the Mediterranean the phone systems

weren't very advanced. So fax machines it took awhile.



The biggest change in the financial service

industry has come and is driven by technology in the

telecommunications industry. Now with the advent of

electronic mail in fact it's possible to do financial

business with a base located on aimost anywhere in the



world. And in fact some companies you probably are aware



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have divisions in countries on the other side of the

earth. And they have countries like India do their

paperwork but it's all down loaded by satellite and

returned the next morning.



One of my first businesses -- I mean, one of

my first clients was a man named Leslie Wexler,

W-e-x-l-e-r, who invented Victoria Secret, which the

women heard about and not only the men.



MR. DOMINIQUE: I never heard of

that.



MR. EPSTEIN: This was a man who

started a business with one store 28 years ago where he

was the cashier, the buyer, the window washer and the

salesperson. He had an idea that he would sell clothing.



In the past before Les Wexler came along,

when anyone wanted to buy clothes you went to a

department store and there was men's clothes and women's

clothes and everyone just sold clothing. He said we'll

sell clothes and limit it to women. So he started a

business called The Limited, which has grown over the

years and based in Columbus, Ohio to six thousand stores

and only in the United States. He's dedicated to only

being in the United States.



Why I speak so much about Mr. Wexler is



because he wasn't only my first and very large client but



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he was my mentor. So in my history of being a school

teacher as well as being mentored by someone as bright as

he was, it developed in me not only a sense of how I do

my business with a sense of integrity, but the

responsibility to bring people along with my success.



And not only the people surrounding only in my company

but the community at large.



I think the concept and responsibility of

giving back, just in fact makes more money, it's a great

business decision. I teach certain courses to people.

And one of the first things I talk about is in fact how

giving back is a great financial decision, not only a

moral but ethical decision.



With my personal history aside, I have and

continue to have clients around the world who rely on me



personally for investment advice.



THE CHAIR: Mr. Epstein?

MR. EPSTEIN: Yes.

THE CHAIR: You only have 15



minutes for a presentation. You've used ten already.



Please get to what your business is about.



MR. EPSTEIN: Sure.

THE CHAIR: Thank you.

MR. EPSTEIN: My business is



financial services, which is investment consulting,



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research acquisition of information that allows my

clients to make their investment decisions. I spent a

great deal of time vacationing up and down the world. I

came to the Virgin Islands a number of years ago. And

when I was made aware of the benefits and the

requirements of IDC, I realized that in fact the

financial service business would be a perfect candidate

to be located down here.



And in my application -- I don't want to

reread my application to you. You've all read it -- the

concept for me would be to hire people, which I realize

there is a great talent pool here and under utilized

frankly such as the university and from government. I

need people who can collect research information for me,

help me with execution, follow-up with the accounting.



And I'm the only one really who speak to my

clients. But the financial infrastructure here I have

already set forth I would have at least ten employees at

a minimum.



The benefits my employees -- would not be

unusual for my employees because I've always thought it

was necessary to frankly give scholarships for people who

work for me so they can get an education and be as

fortunate as I was having a quality education.



The normal health benefits are mostly now



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cafeteria style because people have different

requirements and bring them along.



I thought that -- obviously I'm committed to

hiring Virgin Islands residence. I think the talent pool

is easily found frankly. And I was hoping even on the

upper levels to encourage potential Virgin Islanders who

have been off island to come back to work for me as maybe

senior tax people.



I would envision really my core group being

here in the Virgin Islands, formed by Virgin Islanders

and have training. And if I bring anybody down, it would

be on top of the ten people that I'm committed to here.

But training would be an important fact.



As we talked at the break, my business is

only for clients. And the tax break, I understand, is

only for clients located outside the Virgin Islands. But

eventually I see people I train being able to do business

here on their own with local residents, which I think is

a great advantage for them.



Again my focus is also on the young people.



I think there are people here who have had futures that

looked uncertain. And I think financial services from

the Virgin Islands becomes -- because it's

telecommunications. And the advantages I think like the



old days where people needed to know how to read, people



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need to know and understand computers and the access it

gives them to information immediately. So I hoping that

the committee considers my application.



If I were to receive these benefits it's my

hope to start an operation here and immediately give back

to the community. I've made a commitment in my

application for a minimum of $10,000.00 in charitable

contributions as a new start up business because I see

that as being an important part of -- I don't want to use

the word obligation. It's a desire of mine to help

people around me.



So if there are any questions?



THE CHAIR: What type of

financial services do you see yourself providing,

investment assistance or what specifically?



MR. EPSTEIN: I choose to be

investments. In fact I had’to choose someone's

investment allocation at the lunch break. I was asked

between stocks and bonds which stocks, how to balance out

everyone's investment portfolio but investment portfolio

not in the common terms.



It's more like a financial doctor. It's a

very personal decision on how you invest your money, how

you leave it to your children, how much income you need,



and your tax situation.



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So it's an entire package. It's a full



health -- financial health operation.



THE CHAIR:



MR. EPSTEIN:



THE CHAIR:

offices presently located?



MR. EPSTEIN:



THE CHAIR:

employees do you have there?



MR. EPSTEIN:



JHE CHAIR:



MS. HOLLINS:

questions.



THE CHAIR:



Ms. Gerard.



MS. GERARD:

broker dealer?



MR. EPSTEIN:



MS. GERARD:



Are you an attorney?

No, I'm not.



Where are your



In New York.



And how many



I have 16 there.



Miss Hollins.



You asked all of my



Sorry about that.



Are you a licensed



No, I'm not.



And would you use a



broker dealer in New York or would you do a pass through



to a local operator here?



MR. EPSTEIN:



be determined by what type of investment.



and committed to use local people as best as I can.



The executions would

I'm determined



But



certain types of transactions you can only use a very



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large firm because it's a capital requirement. But there

is no further plan more than that.



MS. GERARD: Would any of the

Virgin Islands employees be required to be security

licensed?



MR. EPSTEIN: They would not be

required to be security licensed because I'm an

investment consultant and a registered broker dealer.



But I in fact would encourage them to become, even if

they weren't working for me because they would be

involved with the terminology of the securities industry

on a regular basis, I think it's helpful for everybody to

have that education.



MS. GERARD: Would you provide the

training?



MR. EPSTEIN: Yes. I just think

that's a great benefit for people in general because they

can go off and do as they please. Again with the local

community especially, which I think there is a lack of

financial service advisers here.



MS. GERARD: And in terms of the

health planning for your clients I would assume -- I

mean, I'm an insurance person.



MR. EPSTEIN: Okay.



MS. GERARD: We have -- I'm not



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sure how we do with life and health sales. Is that --

you don't do any sales?



MR. EPSTEIN: No, I don't sell

insurance. I have nothing to do with insurance. I do

not sell insurance. I advise them in terms of maybe how

much insurance they should have.



MS. GERARD: So it's strictly



financial consulting?



MR. EPSTEIN: That's correct.

MS. GERARD: And that would be

investment?

MR. EPSTEIN: I am saying I advise



people on their financial health.



MS. GERARD: Good. That's it.

Thanks.



THE CHAIR: How long after you

begin operations would you see reaching the ten employees

or is that right away?



MR. EPSTEIN: I would like to do it

immediately. I have been holding off even looking for

employees. I've spent sometime at the university

actually sitting in on some classes to see the level of

university students. But I have not begun. I have to do

it as soon as I could.



THE CHAIR: Mr. Dominique.



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MR. HOFFMAN: And on that if I

could just interject here, that's been primarily at my

advice and that not with any disagreement on Mr.

Epstein's part. But to avoid any sense of a presumption

we have not gone out in any formal way and inquired of

people.



But I have assured him again as a former

school teacher that I don't think that we are going to

have a problem. I just don't believe in that. I have

that confidence in St. Thomas.



THE CHAIR: Mr. Dominique.



MR. DOMINIQUE: Lately we are

experiencing the coming of financial business

institutions. How did you get the information of

settling here? Was Mr. Hoffman responsible for your

coming?



MR. EPSTEIN: No. In fact I'ma

physic professor by heart and I can't get it out of my

system. When I go someplace new I do a bit of research,

at least to find out about the cultural history, the

political history and the economic history. And in fact

on the computer I pulled up the economic development

program set up by the Virgin Islands Government and I

read it myself.



MR. GERARD: The website.



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MR. EPSTEIN: Oh, is that your

website?



MS. THOMAS: Yes.



MR. EPSTEIN: The blue background



was very nice.



MR. DOMINIQUE: You are saying that

you will pay for employees continued education, is that

correct, as part of your employer's contribution?



MR. EPSTEIN: Yes.



MR. DOMINIQUE: If you were granted

the benefits would you have difficulty or would you

commit to making say a direct scholarship to a student

out there maybe at the UVI or to some other institution?



I ask that because indeed while you are

proposing scholarship or tuition reimbursement to

employees, it's two-phase. But the fact may be that some

people may take it, some may not. But in terms of

gradual progression, moving somebody who's unable to move

on up, would you like to make a commitment to that?



MR. EPSTEIN: I not only would like

to make a commitment, I would gladly make a commitment.

But I think it's important because it's not only my

employees I would like to give scholarships for -- and I

think it's presumptive of me to assume that the



scholarships only be used in the Virgin Islands. It's



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possible and I think potentially advantageous to have

scholarships available to Virgin Islanders to go

elsewhere, to get an American university education.

Because you could see from the application I fund things

at NYU in New York and other schools. And I would commit

to a scholarship program but to be used judicially and

let the local people decide where it should be used.



MR. DOMINIQUE: If you were to

relocate here would you maintain your office in New York

City or would you shuttle down? Is that the plan?



MR. EPSTEIN: My plan is there is

an core group of people that I would probably keep in New

York. They have been employees of mine for a long time.

So I don't think it's fair to simply pickup and leave.



But my core business -- because my core

business frankly is me. And the people around me provide

information to me would be here in the Virgin Islands.



MR. DOMINIQUE: Under the retirement

plan is it an employee/employer contribution or are you

carrying that?



MR. EPSTEIN: It's a 401(k) with an

employer/employee contribution. And again I decide I

believe the best retirement and benefit plan. It's a

much more cafeteria style, using under the rules to let



people choose what they want to choose, whether they want



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it to be participation or potentially profit sharing.



MR. DOMINIQUE: Thank you. I simply

want to state that I, too, spent quite sometime in the

mathematics area, ten years doing this. And maybe I

should have done like you did.



THE CHAIR: Do you intend to

relocate to the Virgin Islands and become a resident of

the Virgin Islands and pay your personal taxes here?



MR. EPSTEIN: Yes.



MS. GERARD: I noted on your

application your relationship with the Tri Lateral

Commission.



MR. EPSTEIN: Yes.



MS. GERARD: How did that happen

and what role do you play?



MR. EPSTEIN: Well, again in no

offense, I've been extremely fortunate. David

Rockefeller was the founder of the Tri Lateral

Commission. I advise the Rockefellers on certain

financial issues. That's why I sit on the board up until

recently at Rockefeller University.



And he suggested that politics aside -- and

that's very difficult for him to say -- the concept of

Tri Lateral is that business people would stay basically



the same. They would be at the Rotary Club. The



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business clubs stayed together while the politics changed

dramatically in different countries.



So that separate from the Council on Foreign

Relations, which I'm also a member of which deals with

world leaders and the politics of those countries, which

should be a underlying system of communication between

business leaders around the world.



MS. HOLLINS: Are you fully

committed to a specific island?



MR. HOFFMAN: I really ought to

advise him not to answer that, Miss Hollins.



THE CHAIR: If you get her vote

you lose mine.



MR. HOFFMAN: Now, friends.



MR. DOMINIQUE: Lastly, Commissioner,

for your investment you have $300,000.00. For some of

the other type of similar businesses I have seen the

investment seems to be very much smaller. Can you

explain to us what type of office you are planning to set

up here with $300,000.00?



MR. HOFFMAN: If I might answer

that. One of the things that we are also asked to do was

with respect to location of offices. And at the time of

the application we were actually negotiating with two



people and had focused on one.



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The numbers in the statement number ten with

respect to the leasehold improvements and so forth are

probably at this point slightly understated because the

office -- the architect's latest estimate for getting

this leasehold improvement is above this 120. And so I'm

going to try to get it back down to 120 is my mission

because I don't see where it's going myseif. But I think

there is very easily a $100,000.00 in simply leasehold

improvements to a building, which quite frankly was

damaged after Marilyn and not fully repaired and the

landlord refuses to do it and we want do it.



With respect to the other information there,

a lot of the computers and copiers and printers are

relevant. Telecommunications is the key to this and also

a back-up, a whole series of back-up systems which gets

to be, unfortunately, very expensive.



And just so the record is clear, Mr. Epstein

is fully committed and understands with respect to the

leasehold improvements, which is really a construction

contract as well as the acquisition of this equipment.



He was been told by me and others what the program

requires by way of making the opportunity to bid, to make

those sales and do that work to local, qualified

suppliers and so on. And that should not be an issue.



THE CHAIR: Miss Thomas.



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MS. THOMAS: Hi. My question goes

back to your statement regarding being a high school

teacher and you said that you had a relationship with

NYU. Did you teach courses at NYU or have you taught

courses at NYU?



MR. EPSTEIN: No, I took courses at

NYU. And then I thought because some of those financial

courses that I did take were so helpful to me as a young

student that when I was fortunate enough to become

successful with my career I thought I should give back to

the university to help. That's how it happened.



MS. THOMAS: You have sat in on

some of the classes at UVI. Do you think it's a

possibility since you are thinking of moving to the

Virgin Islands that you could also, perhaps, teach a

course there?



MR. EPSTEIN: I'd love so. As I

said outside this room, I believe that the future of the

Virgin Islands is really with the young people in getting

them to understand not only the ethics of business, which

is very difficult nowadays, but the advantages by having

new communication systems that they really can be here

and do many of the things that no one ever thought

possible before.



MS. THOMAS: Okay, thank you.



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THE CHAIR: Thank you very much.

Any other questions?



Miss Hollins.



MS. HOLLINS: Do you do things



similar as the Garden Brothers do?



MR. EPSTEIN: I'm not familiar with

them.



MS. HOLLINS: Mark Lipton.



MR. EPSTEIN: If you tell me what



they do, then I can tell you.



MS. HOLLINS: Investment advisers.

They are two brothers on the Internet.



MR. EPSTEIN: No. Do you want to

know if I have any hot stock tips? Is that it?



In fact I'm much more the specialist. It's a

personal one to one. I don't put out a market letter. I

don't give investment advice to the general population.



THE CHAIR: Mr. Epstein, Mr.

Hoffman, thank you very much.



MR. HOFFMAN: Thank you.



THE CHAIR: Before you go, is

there anyone else here who wanted to testify on this

particular application?



(No response)



THE CHAIR: Not seeing anyone,



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thank you very much.



MR. HOFFMAN: I appreciate your

indulgence. And I, needless to say, request your

favorable and prompt decision.



Thank you very much. We'd ask to be excused.



(Recess)



(After Recess)



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