Steven J. Hoffenberg was a brash New York debt mogul who was sent to federal prison after admitting to carrying out a fraud scheme that prosecutors said was one of the largest such crimes in U.S. history at the time. , Connecticut, where he lived for about two years. he was 77 years old.
The death was confirmed Friday by daughter Hayley Hasho and later confirmed by Derby police.
Derby Police Lieutenant Justin Stanko said Mr Hoffenberg had been dead for about a week since his body was found. Officers were conducting checks after being contacted by a friend of Hoffenberg’s and a private investigator, Lieutenant Stanko said.
An initial autopsy by the state coroner’s office showed no signs of trauma on the body, police said in a news release, and also said the official cause of death was pending the results of additional toxicology tests.
Mr. Hoffenberg briefly controlled the New York Post in 1993 during a turbulent period, but two years later it was due to a Ponzi scheme involving his flagship company, Towers Financial Corporation (primarily a collection company). pleaded guilty to conspiracy and fraud charges. He bought debt from businesses such as hospitals, nursing homes and telephone companies.
Prosecutors said Towers sold more than $460 million in fraudulent notes and bonds to investors, using some of that to pay interest owed to previous investors. The rest was spent supporting a house of financial cards that relied on inflated earnings and bogus profits to make Towers look like a giant healthcare finance company.
Mr. Hoffenberg, who pleaded guilty and once owned a company jet, a limousine, a yacht, a Long Island estate and a Manhattan apartment, admitted he was the mastermind behind the scheme. He tried to blame someone else: His former work colleague Jeffrey Epstein was later charged with serial sexual abuse of young women and girls.
According to court and census records, Stephen Jude Hoffenberg was born in Brooklyn on January 12, 1945, to the twin brother of Harry Hoffenberg, who worked for an insurance company, and his wife Bernice, Martin. .
In 1993, The New York Times reported that Steven Hoffenberg liked to describe himself “in a Horatio Algier way.” He said he dropped out of the City College of New York and started his career with just his $2,000.
In the 1970s, many New York City small business owners identified Mr. Hoffenberg as a so-called bust-out artist. He took over businesses and used them to buy goods on credit, sell them for cash, and not pay suppliers. His goal fell into financial ruin. He arrived at the liquidation sale in a chauffeured limousine.
A New York judge, commenting on a lawsuit filed by the original owner of such a business in 1980, called Mr Hoffenberg’s actions “shocking the court’s conscience.”
As Hoffenberg’s business grew, his financial maneuvers became more complex. In 1980 he formed a private company to own the concentric corporate shells that make up the Towers. In 1986, that company acquired a publicly traded shell company in a transaction that allowed Mr. Hoffenberg to take Towers public without filing a formal prospectus with federal regulators.
By that year, Towers had added finance and leasing divisions to its core pickup business and claimed nearly 1,200 employees and $95 million in national sales.
Not sure if the numbers are true. Mr. Hoffenberg, who developed a reputation as a workaholic and a loner, was also prone to exaggeration.
For example, in his 1987 annual report, he called the company’s toll collection division “a leader in its field,” but did not provide details. That same year, he told Towers shareholders that the company would soon seek a listing on the Nasdaq. it never did.
It was in 1987, Hoffenberg told The Times in 2019, that he met Epstein, a Brooklyn-born college dropout, after a teaching position at Manhattan’s prestigious Dalton School was offered to investment firm Bear Stearns. It was when I got a job at
The takeover boom of the 1980s was in full swing. Hoffenberg hired Epstein as a consultant for $25,000 a month. The arrangement lasted for about six years.
“I thought Jeffrey was the best hustler on two legs.” Hoffenberg told The Washington Post in 2019“Talent, charisma, genius, criminal mastermind. We had something that could make a lot of money. We called it Ponzi.”
Years later, Mr. Epstein rose to prominence as an enigmatic money manager and moved into elite circles as a convicted sex offender. In between, he hanged himself in a federal prison in Manhattan.
Hoffenberg and Epstein started out as corporate raiders, first buying two small insurance companies in Illinois for $20 million.
They attempted to acquire Pan American World Airways in 1987 with several prominent partners as advisors, including former President Richard M. Nixon’s brother Edward.
Hoffenberg and Epstein siphoned money from one of the insurers to make Pan Am’s bid more viable, but failed anyway. They used a similar strategy the following year, looting a second insurance company on Emery Air Freight. Hoffenberg later described it in court filings as a “colossal failure.”
When the acquisition fell through, The Washington Post reported that the insurer had become insolvent and became a trustee. Thousands of customers in Illinois and Ohio lost millions of dollars intended to pay for medical bills. Illinois regulators and the Securities and Exchange Commission have sued Towers.
By 1988, the Towers scam began to escalate, according to prosecutors. From that year onwards, the company sold more than $270 million of his promissory notes, offering high returns and targeting those with limited funds, such as widows and retirees.
Hoffenberg’s most flashy move came in January 1993, when Peter Karikou, owner of the financially troubled New York Post, asked him to bail out the newspaper.
Mr. Hoffenberg enjoyed the opportunity.
“I’m here for the glory,” he told then-Post columnist Mike McCalary. Want to.”
The thrill was short-lived. SEC blocks Hoffenberg’s access to funds needed to buy newspaper, forcing another fearless New York businessman, Abraham, into his controversial partnership with Hirschfeld it was done. When the bid failed, Rupert Murdoch, who previously owned the post, bought it again.
Everything stopped immediately. Towers went bankrupt, and federal prosecutors filed a fraud case against Mr. Hoffenberg. He eventually pleaded guilty to five counts, including conspiracy to commit securities fraud and conspiracy to obstruct justice by directing employees to lie to SEC investigators.
His attorney told the judge that a petition had been filed “to spare Mr. Hoffenberg the trauma, embarrassment and costs of the trial.”
But after getting out of prison, Hoffenberg told a grand jury that it was Epstein who was not indicted in the case, and that he manipulated the deal that kept the Towers fraud alive.
“He was an architect,” Hoffenberg told The Washington Post.
After being released from prison in 2013, Hoffenberg said he wanted to make amends to those who were deceived. He also made common cause with the woman Epstein said he had sexually assaulted.
One of the women, Maria Farmer, said she and Mr. Hoffenberg became friends. It was she who called the Derby police.
She said Mr. Hoffenberg is not a public figure.
“If I had to describe him in one word, it would be ‘kind,'” she said.
Mr. Hoffenberg has been married at least twice. His first marriage ended in divorce, according to a Times article in 1994. Details regarding his second marriage to Lisa Twardowski were not immediately available. Ms. Twardowski, whom Lisa Twardow attended, passed away in 2014.
Information about Hoffenberg’s survivors, other than Hasho, was not immediately available.
In an interview, Hashow, whose mother had an affair with Hoffenberg at the time of the federal prosecutor’s office, said he first met his father after he was released from prison when he was 19. She and her mother “never profited from his financial endeavours”.
“Stephen had an extraordinary charm and a brilliant mind, but he didn’t put it to good use,” said Hasho. “The rest is in God’s hands.”
It’s unclear how Mr. Hoffenberg, who once lived in Sutton Place on Manhattan’s Upper East Side, ended up living in a small ground-floor unit in Derby, an old factory district an hour and a half from New York City. .
Pamela Gelder, who owns the apartment with her husband, said Hoffenberg was “an ideal tenant.”
“He calls me at 8:00 a.m. on the first day of every month and asks when I can pick up my rent,” she said. “How can you be angry with a man like that?”
Gelder said he didn’t know about his history.
“I’m glad I didn’t know,” she said.
Mike Baker contributed to the report. Kitty Bennett contributed to her research.