The Billionaires looking to Silence Rep Thomas Massie for His Epstein Activism Made Their Money in Very Interesting Ways

John Paulson, who is in Epstein's Black Book made billions during the 2007-08 Global Financial Crisis in a supremely shady deal.

Above: an ad attacking Thomas Massie paid for by “Kentucky MAGA”

This week, many women who were criminally abused and preyed upon by Jeffrey Epstein and Ghislaine Maxwell spoke at a rare bipartisan press conference, with Democrats and Republicans both in attendance.

Republican Member of Congress Thomas Massie is notable for breaking with the rest of his colleages and taking principled stands that, it has to be said, are squarely in keeping with what would be considered “traditional” Republican values.

The response from the Trump White House has been to set up a campaign to run millions of dollars worth of ads against Massie, accusing him of being associated with the left and with radical Islamic terrorists.

The Political Action Committee is called “MAGA Kentucky” is being funded by these billionaires alone, and it was set up “Trump’s co-campaign manager Chris LaCivita launched MAGA Kentucky PAC.”

“MAGA KY was formed for the specific purpose of firing Thomas Massie — his constituents will soon learn that he prefers the politics and policy of AOC and the radical left — over President Trump,” LaCivita told NewsNation.

The stated rationale for why John Paulson, Singer and Miriam Adelson are the three only funders of “MAGA Kentucky” funding opposition to Rep. Thomas Massie is that he voted against U.S. support for Israel’s war on Gaza, which is an effective way of changing the subject from one radioactive crisis to another - to Israel from Epstein. After all - they can’t say they’re doing it because Massie is talking about Epstein.

There’s a story and interview with Massie, here.

Speaking to Massie on Wednesday's Rob Schmitt Tonight, Newsmax host Rob Schmitt asked, "You said today that high-level donors and other figures from both parties are being protected by the government because they are in that world, they're so powerful, they have such deep connections to the government in both parties. Let's start there. If you know that, and you said that today at the news conference, can we start and ask if you can give us some of these names that we all want to hear?"

Massie responded:

Well, let me give you the name of one of the billionaires who's running $2 million of ads in my district since I started this effort [to release the Epstein Files]. His name is John Paulson. He's a hedge fund manager and a major donor to the Republican Party, a major donor to the speaker of the House, a major donor to the president's campaign, and he's in Epstein's black book. Now, that's public, but that's indicative of the types of people who may be implicated or just embarrassed by a release, a complete release of these files.

Schmitt questioned, "You believe that's why we're not getting this full release that you've been demanding, is because there are so many high-level donors that might be connected to the Republican Party, or to both parties, that they want to protect?"

"Yeah. That's a big part of it," Massie concluded.

Paulson was named in July as one of the three major Republican donors working to oust Massie from Congress following his repeated criticism of Israel - the other two donors being Paul Singer and Miriam Adelson.

Singer is a hedge fund manager whose business practices and court activism had incredible international impact, when he bought up bonds from Argentina that had been defaulted on, then took a case to the Supreme Court to have the U.S. force Argentina to pay the bonds anyway. The U.S. seized a ship from Argentina, and reignited an economic crisis in that country, as Singer faced Argentina to pay back debts that had been cancelled. What’s particularly appalling about this is that Singer had been entertaining Supreme Court Justice Samuel Alito, as propublica had uncovered:

Singer had sponsored a vacation Justice Alito took at an Alaskan luxury fishing lodge in 2008. The lodge charged more than US$1,000 a day, and the round trip in a private jet cost close to US$200,000, according to the outlet’s estimates.

“In 2014, Justice Samuel Alito and the [Supreme] Court agreed to resolve a vital issue in a decades-long battle between Singer’s hedge fund and the nation of Argentina,” Ocasio-Cortez said. The ruling earned Singer US$2.4 billion.

Miriam Adelson is the widow of Casino Magnate Sheldon Adelson.

In 2012, it emerged that Adelson was under criminal investigation for alleged bribery:

The casino company run by the principal financial backer of Newt Gingrich's presidential bid, Sheldon Adelson, has been under criminal investigation for the last year by the Department of Justice and the Securities Exchange Commission for alleged bribery of foreign officials, according to corporate documents.

In a separate civil lawsuit, a former executive of the company has alleged that Adelson ordered him to keep quiet about sensitive issues at the Sands casinos on the Chinese island of Macau, including the casinos' alleged "involvement with Chinese organized crime groups, known as Triads, connected to the junket business." The triads -- Chinese organized crime syndicates -- are allegedly involved in organizing high stakes gambling junkets for wealthy Chinese travelers.

You can read the details of the ProPublica investigation into Singer here.

When I heard that Paulson’s name, I pricked up my ears. He made $2-billion in compensation in the Global Financial Crisis, when others were losing everything, and how he did it was massively controversial, and were recounted in two excellent books that deal with the crisis as well as the particular market instruments and deals that went wrong.

One is The Big Short, by Michael Lewis, which was made into a fantastic film by Adam Mackay, and the other is the book, “Fixing the Game,” which by Roger L. Martin, which talked about the damage that was being done fundamental problems with the application and outcomes of shareholder value. Part of what’s great about them is that they understand the world they are telling stories about.

Paulson was singled out by Martin because hedge funds

“consistently among the most profitable businesses in America, earning supernormal returns year after year, even when the markets plummet and the rest of us lose ... hedge fund managers James Simons and John Paulson each made over $2 billion in personal compensation in 2008 while markets were plummeting.”

The way that Paulson made a huge chunk of that money is remarkable.

The term “The Big Short” comes from another kind of investment that can also have perverse incentives.

In the market, if you’re buying shares because you think they will go up, you’re going “long.” If you think it will go down, you can “short it,” so if the price crashes you collect. It’s different than buying stock, it’s more like buying insurance that you have to keep paying, and hopefully the other price crashes before you run out of money.

Since, as the old saying goes “markets can stay irrational longer than you can stay solvent,” that makes shorting risky. It has also been around for a very long time. It can be used as a kind of insurance, or “hedge” against risk. It’s like buying fire insurance on a home.

One of the problems during the global financial crisis was that this part of the market really is no different than gambling. It’s one thing to buy fire insurance on the home you live in. It’s another thing to buy fire insurance on someone else’s home, along with a whole bunch of other investors who are each also buying fire insurance on the same house. Also, as an investor buying fire insurance , you knew exactly which houses had bad wiring, gas leaks, or piles of oily rags next to the furnace.

That was the story of the Big Short, and of John Paulson in particular.

Roger L. Martin talked about the dangers of these kinds of “insurance” schemes.

“Hedge funds are entirely different — and dangerously so. They invest in publicly traded instruments or derivates thereof, so they are entirely creatures of the expectations market, rather than the real market ... when there isn’t an available security tailored to their investing interests, they hire investment banks to create custom investment vehicles for them [including] investments that produce value for the fund if they go down in price. That is, they can place a bet against investments — shorting them.

John Paulson, for example made billions by shorting subprime mortgages (with the help of investment bankers at Goldman Sachs, which created the now-notorious Abacus mortgage-derivative vehicles purely to help Paulson bet against the mortgage market.).”

In that case, Paulson asked Goldman Sachs to create a fund made up of 90 mortgage-backed securities, which he expected to fail, although it was rated “AAA” — the same as buying government bonds.

It resulted in Goldman Sachs being charged by the SEC:

“The SEC charge[d] that Goldman illegally withheld material information when it did not tell the Abacus buyers that mortgage bonds underlying the CDO had been selected with the help of Paulson & Company, one of the world's largest hedge funds. Paulson wanted to bet that the housing and mortgage markets would collapse. To do that, Paulson needed a CDO based on mortgage bonds likely to fall in value when homeowners stopped making their payments. Paulson was not included in the SEC complaint and has not been accused of any wrongdoing.

A synthetic CDO transaction requires two parties taking opposite views. The "long" party profits if the underlying securities rise in value; the "short" party profits if they fall. Each side places a bet and, in effect, the loser's losses become the winner's gains: it is a zero sum game.

All of these financial transactions are zero sum games. That’s the difference between the “real economy” an exchange of money for something that is not money. That’s why it’s win-win: each side gets something they didn’t have before.

With these investments, the zero sum nature of it makes it very volatile.

“In the Abacus deal, completed in April 2007, Paulson took the short side and two major investors took the long side: IKB, a large German bank, and ACA Capital Management, a New York-based investment firm. Paulson worked with ACA to choose the 90 underlying mortgage-backed securities.

But there is dispute about Paulson's exact role. The SEC claims Goldman led ACA to believe that Paulson was taking the long side -- that he would bet the securities would rise in value -- when Paulson was actually taking the opposite view. This, according to the SEC, led ACA to believe Paulson thought the securities were safer than they were, and that its interests and Paulson's were the same. Goldman, however, says it "never represented to ACA that Paulson was going to be a long investor."

In the end, Goldman Sachs settled and paid a fine of $550-million and “acknowledged that its marketing materials for the subprime product contained incomplete information”.

“Information asymmetry” and “incomplete marketing materials” are one thing, and what mattered here is that the buyers didn’t realize that Paulson was betting against them.

Paulson knew the investments were risky - he had selected them for that very reason. The other investors bought them because they thought Paulson thought they were safe, when in reality, he needed a sucker to buy the investment

It’s spelled out in this Reuters article.

Hedge fund manager John Paulson tells Goldman Sachs in late 2006 he wants to bet against risky subprime mortgages using derivatives. The risky mortgage bonds that Paulson wanted to short were essentially subprime home loans that had been repackaged into bonds. The bonds were rated "BBB," meaning that as the home loans defaulted, these bonds would be among the first to feel the pain.

2) Goldman Sachs knows that German bank IKB would potentially buy the exposure that Paulson was looking to short. But IKB would only do so if the mortgage securities were selected by an outsider.

3) Goldman Sachs knows that not every asset manager would be willing to work with Paulson, according to the complaint. In January 2007, Goldman approaches ACA Management LLC, a unit of a bond insurer.

ACA agrees to be the manager in a deal, and to help select the securities for the deal with Paulson. In January and February 2007, Paulson and ACA work on the portfolio, coming to an agreement in late February.

Goldman never tells ACA or other investors that Paulson is shorting the securities, and ACA believes that Paulson in fact wanted to own some of the riskiest parts of the securities, according to the complaint.

4) Goldman puts together a deal known as a "synthetic collateralized debt obligation" designed to help IKB and Paulson get the exposure they want. IKB takes $150 million of the risk from subprime mortgage bonds in late April 2007. ABN Amro takes some $909 million of exposure as well, and buys protection on its exposure from ACA Management affiliate ACA Financial Guaranty Corp in May 2007.

Goldman's marketing materials for the deal never mention Paulson's having shorted more than $1 billion of securities. Goldman receives about $15 million in fees.

5) Months later, IKB loses almost all of its $150 million investment. In late 2007, ABN is acquired by a consortium of banks including Royal Bank of Scotland. In August 2008, RBS unwinds ABN's position in ABACUS by paying Goldman $840.1 million. Most of that money goes to Paulson, who made about $1 billion total.

As Thomas Massie mentioned, Paulson is a supporter of Trump, a major donor to the Republican Party.

The Daily Beast reports that Apr. 6, 2024, Paulson hosted Trump’s record-setting $50.5 million Palm Beach fundraiser, and a document that released the names in Epstein’s Black Book included Paulson.

The focus on Epstein and Ghislaine Maxwell’s relentless criminal abuse of girls and women is so white hot and disgusting that it dominates the debate.

As is often the case with political and legal scandals, the fact that the offense is both disgusting, easy to understand and that many of the people known are high-profile “celebrities” in entertainment, politics and business only adds fuel to the fire.

If people wonder why so many notable figures were associated with Epstein, or in his orbit, it is because Epstein was providing people with financial advice on how to hide hundreds of millions of dollars. As a billionaire in America, he was offered not just respect, but sycophantic scraping, grovelling, wonderment, envy and admiration that goes along with hoping that the local lord will see fit to brush some crumbs off his table.

It was Epstein’s financial crimes that gave his power and influence, not the sex crimes. Openly committing sex crimes with impunity - and enticing others to do the same - was a brazen declaration of Epstein and Maxwell’s untouchable status.

Epstein was a money launderer, a liar, and a cheat, and used all those skills in the service of enriching his, shall we say, ethically challenged clients.

Epstein, too was at the heart of the Global Financial Crisis, running a company owned by Bear Stearns, which was not just a fuse, but the detonator that set off a string of financial chain reactions across the Global economy.

I wrote here about Epstein’s involvement with cryptocurrency, where his business interests overlapped with multiple members of Trump’s circle.

Epstein had told a reporter that Vladimir Putin was a client, and it’s reported he was talking with a member of the Russian Intelligative to set up a cryptocurrency workaround for Russia so that they could avoid sanctions with Ukraine.

Howard Lutnick - “Trump’s current Secretary of Commerce, was quite literally Jeffrey Epstein’s neighbor. - Howard Lutnick manages² somewhere north of $100 billion - roughly one fifth³ of the military budget of the United States - for Tether, the central bank of the cryptocurrency economy and the favoured financial services provider of criminals, terrorists, and rogue nuclear states⁴ the world over.”

Brock Pierce - “I wrote (a lot) about Brock Pierce’s incredibly sordid history and deep connections to things like cryptocurrency, Tether⁷, and the Israeli government last year in my catalogue of New York City mayor Eric Adams’s crypto grifting. I mentioned Pierce’s connections to Epstein in passing in that post but there’s a bit more to it…,” including connections to Ghislaine Maxwell’s sister.

Peter Thiel - Epstein was an investor in Valar Ventures, one of the firms associated with Thiel’s adventures in Tolkienized late stage capitalism and one that has done some investing in the cryptocurrency space.

One wonders why the original 2015 investment didn’t get the kind of triumphant press release that usually accompanies these kinds of deals.

It’s worth mentioning that Thiel is a major backer of Rumble, the video platform created as a right wing alternative to YouTube. Other Rumble backers include luminaries like Vivek Ramaswamy, JD Vance, Howard Lutnick.”

Rumble’s founder, Chris Pavlovski, is Canadian.

Larry Summers - Economist and advisor to Barack Obama. “Summers served (serves?) on the boards of some of the largest and most exploitative cryptocurrency companies. Epstein’s connections to Summers in particular and Harvard more generally are fairly well documented.”

Ehud Barak - Retired Israeli General and former Prime Minister of Israel. “according to the sources collected by NFTEthics Jeffrey Epstein, Ehud Barak, and Peter Thiel were co-investors in an Israeli company called Reporty Homeland Security that was later renamed to Carbyne.”

Steve Bannon - Michael Wolff recounted that he was present when Bannon met Epstein, just after Trump had won the 2016 election. Bannon told Epstein that Epstein had been the only person they had been afraid of during the campaign. Cryptadamus mentions that there are 15 hours of video of Bannon coaching Epstein on what to say in a 60-minutes style interview. That’s not the only connection - the other being to the Brock Pierce.

“Bannon was one of Brock Pierce’s early business partners. Their collaboration began in the pre-bitcoin era, a few years after Mr. Pierce was arrested in a house in Marbella filled with guns and child pornography but a few years before he anointed himself “the hippie king of crypto”. The two men’s partnership has at this point spanned decades. In 2022 Bannon even advised Mr. Pierce’s rather quixotic senatorial campaign (as did Steven Cheung, the Trump spokesman)

Paulson, Singer and Adelson share, along with Lutnick, with the distinctly non-Jewish Trump, Steve Bannon, Peter Thiel, Brock Pierce and the Russian Security Services: that Epstein’s lawless approach to abusing women and girls was no different than his lawless approach to finance.

There are two entirely separate sets of “Epstein files” - the alleged gigabytes of photos, videos and other documents that were seized, as well as thousands of financial transactions totalling over $1-billion.

Senator Ron Wyden is demanding that the Treasury Department release Epstein’s banking files to the Finance Committee.

The Oregon senator, who has been investigating Epstein for years, specifically requested in his letter -- which was sent on Tuesday -- "all files related to transactions with Epstein and any co-conspirators," including "suspicious activity reports" (SARs) issued by financial institutions.

The reports flagged concerning payments made to or from Epstein, his convicted co-conspirator Ghislane Maxwell and 58 other people and groups, according to Wyden.

"The Treasury records shine a light on how high-profile individuals paid Epstein staggering sums of money, which was then used to move women around the world or engage in dubious transactions indicative of money laundering," Wyden said in a statement.

"The facts are clear. Treasury has the authority to produce the Epstein files to the Finance Committee. You have simply chosen not to," Wyden wrote to Bessent.

In fact, John Paulson was one of the leading contenders to be chosen as Trump’s Treasury Secretary. In November 2024, a Reuters Headline read “Bessent in focus for US Treasury secretary after Paulson exits race”

Nov 12 (Reuters) - Billionaire investor John Paulson said on Tuesday he was dropping out of contention for U.S. Treasury secretary in Donald Trump's new cabinet, putting the focus squarely on fellow investor Scott Bessent, the other main candidate in the race.

Paulson, who had been one of the frontrunners for the role under President-elect Trump, said on Tuesday his "complex financial obligations" will prevent him from holding an office in the new administration.

"I intend to remain actively involved with the president's economic team and helping in the implementation of President Trump's outstanding policy proposals," Paulson said in a statement. The Wall Street Journal earlier reported the statement.

When Bessent was nominated, I wrote that he would be a terrible pick, based on a speech he delivered at the Manhattan Institute, The Fallacy of Bidenomics: A Return to Central Planning at a conference “Toward a New Supply-Side: The Future of Free Enterprise in the United States,” a delusional misreading of the economy.

The Board of Trustees of the Manhattan Institute include MAGA Kentucky donors Paul Singer and John Paulson, as well as Miriam Adelson’s daughter, Susan Leibovitz-Adelman and former Trump cabinet members Betsy Devos and Bill Barr.

It should be clear now that whatever economic system Trump, Bessent, or John Paulson claim to stand for, it’s not free enterprise. It’s a system of unjust enrichment.

There is one economic principle that is driving opposition to the release of the Epstein files: good, old fashioned self-interest.

Since Watergate, there’s been a saying that “It’s not the crime, it’s the cover-up.” What is so manifestly unhinged about the Trump Presidency is not only the blatant commission of crimes in broad daylight, with Trump brazenly using his office as a scheme to make himself a billionaire, taking payments for criminal pardons, and dismantling justice and oversight of the markets, further legalizing a string of financial scams, swindles and rip-offs.

Just as brazen as the daylight robbery are the absurd and childish attempts at a cover-up and blatant lies that don’t have a shred of evidence to back them up.

If the stakes weren’t so high, and the threats so real, it would be hilarious.

One of the most recent ludicrous twists in the saga was that an undercover reporter went on a date with the Acting Deputy Chief of the Department of Justice, Joseph Schnitt, whom she met on a dating app. She recorded the conversation, where he disclosed that Ghislaine Maxwell’s transfer to a minimum security prison was a violation of policy, since she was a sex offender, and that the plan was to scrub all the Republicans from the Epstein files, and leave only Democrats.

Never have the crimes been more blatant, or the cover-up more amateurish and open - but it succeeds because they have so much money to spread their message.

One of the reasons we got here is that in 2016, Epstein was used by Trump and his campaign to neutralize accusations of Trump’s abuse of women by pointing at Bill Clinton’s long history of womanizing and more serious accusations.

When a tape from Access Hollywoods surfaced with Trump saying that as a celebrity, he could just grab women by their private parts - which was seen for a few hours as a possible knockout blow to his campaign, Trump and Bannon responded almost immediately with a press conference featuring several women who accused Bill Clinton of sexually harrassment or assault.

There’s a saying that “for a narcissist, every accusation is a confession” a spiffed-up version of “I know you are, but what am I.”

In Trump’s case, it is a deliberate tactic that was taught to him by his mentor, mob lawyer, and McCarthyite, the legendarily odious Roy Cohn. Cohn called it “You, not me”. All of Trump’s relentless accusations are things he’s guilty of himself.

The Epstein case does matter deeply. It matters politically, because it is the first time since being re-elected that Trump has been put on the defensive and has been left scrambling over and over again. The cover-ups are being done in plain sight. And in addition to justice for the direct victims of Epstein’ and Ghislaine Maxwell - who number more than 1,000 - the financial side of Epstein’s crimes is an opportunity to expose the demimonde of international finance that made Epstein’s crimes possible.

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