Private Equity Billionaire Tied to Jeffrey Epstein Led Industry Backing for Kyrsten Sinema

Sen. Kyrsten Sinema's close relationship with the titans of the private equity industry, whose agenda she has relentlessly championed in Congress, continues to bedevil her reelection campaign. In 2018, the first year she was elected to the Senate, she was backed by powerful private equity executives. Leon Black, then the CEO of Apollo Global Management, one of the largest such firms in the world, was one of them.

Now Black is back in the headlines, this time accused of raping a 16-year-old girl in the home of Jeffrey Epstein, a serial sex trafficker Black financed with more than $150 million.

Black's support of Sinema is a window into the devil's bargain the one-time radical leftist cut in order to rise through the ranks. Wall Street financing enabled her rise, even as it has forced her into politically unpopular positions, defending indefensible private equity giveaways in the tax codes, and linked her to unsavory characters always at risk of becoming a public relations liability.

In 2018, Black and his wife together made a $5,400 donation to Sinema's campaign, the maximum legal contribution at the time. Three years later, Black was out from the top post at Apollo Global Management, the firm he helped found, after it was revealed that he paid the disgraced financier Epstein more than $150 million for estate planning and tax services. The Senate Finance Committee is currently investigating that payment and whether it involved tax evasion.

During her 2018 bid, Sinema received a smattering of donations from others in the private equity world, including a few dozen senior Blackstone managers, Bain executives, and Goldman Sachs financiers, but she received much more money through the Emily's List political action committee and from Google employees.

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After she entered office, however, what had begun as a smart bet on Sinema from private equity leaders like Black quickly evolved into a full-scale industry feeding frenzy, with private equity and investment firms seizing on her as a powerful ally in the fight to preserve their status quo.They have since become her strongest financial anchors, with hundreds of employees from the biggest Wall Street companies donating millions to Sinema's campaign. All told, Sinema has raked in well over $3 million from investment and private equity firms in the past six years. Sinema's office did not respond to questions about her association with Black and Apollo Global Management.

According to campaign finance data analyzed by Open Secrets, employees at Apollo Global Management represented the single largest corporate donor base to Sinema's campaign committee between 2017 and 2022, contributing a combined $172,025. The laundry list of executives who have given since her election to the Senate include the chair of one of the largest private equity firms in the world, KKR; top directors at the Carlyle Group; the CEO of Blackstone; and dozens of other senior investment managers.

Related Kyrsten Sinema Used the Winery Where She Interned to Fundraise With Private Equity

As The Intercept previously reported, Sinema has maintained close ties to the private equity industry, even interning - as a senator - then fundraising at a winery owned by private equity mogul Bill Price, co-founder of the private equity giant TPG Capital.

Her coziness with the industry has guided her hand against key Democratic priorities, including those designed to raise taxes on the wealthy in an effort to balance the federal budget. Sinema's obstinance has soured her standing in her own state, Arizona. After ditching the Democratic Party, she now faces a tough reelection campaign; as an independent, she'll be competing against both a Democrat and a Republican in the general election. Even as private equity cash continues to pour into Sinema's campaign coffers, her Democratic opponent Rep. Ruben Gallego outraised her in the first quarter of this year, suggesting that fury at her continued allegiance to corporate donors will have a lasting impact.

President Joe Biden's massive spending bill, the Inflation Reduction Act, was a pivotal point in Sinema's mounting unpopularity. Sinema, along with Sen. Joe Manchin, D-W.Va., had to be wooed for her yes vote. The Arizona senator was eventually placated by Sen. Chuck Schumer, D-N.Y., agreeing to kill many of the bill's taxation priorities, most notably efforts to close the carried interest tax loophole.

That's a tax break that allows hedge fund managers and private equity executives to pay taxes on their income as tax deferrable capital gains, subject to far lower rates than standard income. Eliminating the loophole would have generated an estimated $14 billion in revenue over 10 years.

The American Investment Council, which represents firms including Apollo, Blackstone, Carlyle, and KKR, staunchly opposed the reform effort, launching a media blitz pressuring Sinema and Arizona Sen. Mark Kelly to preserve the carried interest tax loophole - and in turn their executives' salaries.

Former Pennsylvania Sen. Pat Toomey, who now sits on Apollo Global Management's board, also lent a hand in the effort to preserve the tax giveaway. In the run-up to the bill's passage, he told the press that he was not speculating about what [Sinema] is going to do, but I do know there are some provisions in this field that she has had reservations [about] in the past," adding, I'm looking forward to chatting with her this week."

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Sinema's preservation of the carried interest tax loophole ensured that private equity billionaires like Black will continue to raise massive fortunes with little intervention by the IRS. The Senate committee interrogating Black's finances has accused the former executive of consulting with Epstein to avoid hundreds of millions in taxes with payments that were inexplicably large; well in excess of what Black paid any other financial advisors and far higher than the median compensation of Fortune 500 CEOs at the time."

Last week, Sen. Ron Wyden, D-Ore., sent a letter to Black asking for additional information about the payments. The request is part of an ongoing set of investigations by the Committee into the means by which ultra-high net worth persons avoid or evade paying federal taxes, including gift and estate taxes," Wyden wrote.

Just days later, a woman filed a lawsuit against Black, accusing him of raping her at Epstein's New York City townhouse in 2002, when she was a teenager. The filing in Manhattan federal court also alleges that Epstein confidant and convicted sex trafficker Ghislaine Maxwell had trafficked the then-16-year-old girl to that location. Black's lawyer denied the allegations and said that the plaintiff holds a vendetta" against him. The lawsuit marks the third rape allegation against Black, and the second one in a property owned by Epstein. (The billionaire has denied all such accusations, and a lawsuit related to the second alleged rape at Epstein's home remains pending.)

Last month, Black agreed to a $62.5 million settlement with the U.S. Virgin Islands to avoid a potential lawsuit in relation to the U.S. territory's ongoing investigation into Epstein's sex trafficking operation. This month, he continues to fend off investigators in the Senate.

The post Private Equity Billionaire Tied to Jeffrey Epstein Led Industry Backing for Kyrsten Sinema appeared first on The Intercept.