Steven Jude Hoffenberg is the former founder, Chief Executive Officer, President, and Chairman of Towers Financial Corporation, a debt collection agency, which was later discovered to be a Ponzi scheme. He rescued the New York Post from bankruptcy, and briefly owned the paper. Towers Financial collapsed in 1993, and in 1995 Hoffenberg pleaded guilty to bilking investors out of $475 million. He was sentenced to 20 years in prison, plus a $1 million fine and $463 million in restitution. The SEC considered his financial crimes to be "one of the largest Ponzi schemes in history" prior to Bernie Madoff's crimes a decade later.
In the early 1970s Hoffenberg founded Towers Financial Corporation, a New York City debt collection agency that was supposed to buy debts that people owed to hospitals, banks, and phone companies. He was its Chief Executive Officer, President, and Chairman. It was later discovered to be a Ponzi scheme. In 1987 Hoffenberg hired Jeffrey Epstein to help with the Towers Financial Corporation. Hoffenberg set Epstein up in offices in the Villard Houses. They unsuccessfully tried to take over Pan Am in a corporate raid with Towers Financial as their raiding vessel. Their bid failed, in part because of the 1988 terroristbombing of Pan Am Flight 103 over Lockerbie, which ultimately contributed to the airline's bankruptcy. A similar unsuccessful bid in 1988 was made to take over Emery Air Freight Corp. He rescued the New York Post from bankruptcy and briefly owned the paper. During this period, Hoffenberg and Epstein worked closely together and traveled everywhere on Hoffenberg's private jet. Hoffenberg began using Towers Financial funds to pay off earlier investors and pay for a lavish lifestyle that included a Locust Valley, Long Island mansion, homes on Sutton Place in Manhattan and in Florida, and a number of cars and planes. In 1993 the Towers Ponzi scheme imploded, in February 1993 the Securities and Exchange Commission began a civil action against him and others, and in March 1993 Towers Financial filed for bankruptcy. In April 1995 Hoffenberg pleaded guilty to bilking investors out of $475 million. The SEC considered his financial crimes as "one of the largest Ponzi schemes in history" prior to Bernie Madoff's crimes a decade later. In court documents, Hoffenberg claimed that Epstein was intimately involved in the scheme. Epstein left Towers Financial before it collapsed and was never charged for being involved with the massive investor fraud committed. In February 1994 he was arrested, and in 1997 Judge Robert W. Sweet sentenced Hoffenberg to 20 years in prison, plus a $1 million fine and $463 million in restitution. He settled a civil suit with the U.S. Securities and Exchange Commission for $60 million. Hoffenberg is currently paying back all of the above investors' debt. In July 2019, Hoffenberg claimed that Epstein was his “uncharged co-conspirator” in the Ponzi scheme. Former Towers investors made similar allegations in a lawsuit filed in August 2018. The lawsuit also alleges that the millions in stolen investments were the seed capital for Epstein's hedge fund, which it values at $50 billion.
