Overview
Steven Hoffenberg was a businessman who ran Towers Financial Corporation, a debt-collection company that turned into one of the largest Ponzi schemes in American history at the time of its 1993 collapse. Hoffenberg pleaded guilty in 1995 to defrauding investors of approximately $475 million and was sentenced to 20 years in federal prison. Jeffrey Epstein worked with Hoffenberg in the late 1980s but was never charged in connection with the fraud — despite evidence later presented in civil proceedings that he had played a significant operational role.
Hoffenberg’s Operation
Towers Financial purported to be in the debt collection business, acquiring portfolios of medical debt and other receivables and collecting on them. In reality, it was a classic Ponzi scheme: new investor funds were used to pay returns to earlier investors, while the principals extracted significant sums.
Towers Financial defrauded thousands of investors, many of them elderly individuals who invested their retirement savings.
Epstein’s Role
Hoffenberg has given interviews stating that Epstein was an active participant in the fraud — not a peripheral figure but someone who worked on the Towers structure and was involved in the investor fundraising elements. Hoffenberg maintained that Epstein had been a co-architect of the scheme and should have been prosecuted alongside him.
Epstein denied involvement and was never charged. The SEC investigated but did not bring charges against Epstein. Why he escaped prosecution while Hoffenberg faced 20 years in prison has never been fully explained.
Some investigators and analysts have cited the Towers case as the first documented instance of the pattern that recurred throughout Epstein’s life: potential prosecution that somehow failed to materialize despite apparent evidence.
Hoffenberg’s Post-Prison Statements
Hoffenberg was released from prison after serving approximately 18 years. He gave multiple interviews in the post-2019 period, after Epstein’s arrest and death, reiterating his account of Epstein’s role in the Towers fraud. He died in 2022.
He consistently maintained that Epstein’s escape from prosecution in the Towers case was inexplicable except by reference to the same powerful-person dynamics that characterized all of Epstein’s subsequent avoidances of accountability.
Sources
Hoffenberg interviews and statements; SEC Towers Financial investigation records; civil fraud litigation documents; journalism on Epstein’s early career.