In ancient Greece, Apollo was associated with prophecy, which seems quite fitting for a Wall Street firm that thrives on foresight. Apollo Global Management owes much of its success to its dynamic founder, Leon Black. However, at some point, his vision wavered, leading him down a path that resembles a modern Greek tragedy.
This rise and fall story is expertly explored in “Money to Burn” by William D. Cohan, a writer and former investment banker. Cohan begins by recounting how Drexel Burnham Lambert reached the pinnacle of finance before its dramatic collapse in 1990 due to securities violations and the fallout surrounding its “junk-bond king,” Michael Milken.
Drexel’s implosion provided fertile ground for Black and other veterans of the firm to launch Apollo. They initially purchased a substantial, distressed junk bond portfolio, mirroring Drexel’s strategy. Apollo adeptly seized opportunities during the financial crisis, resulting in impressive profits.
Throughout its history, the firm has seen both successes and failures, yet it has generally thrived. Today, it stands as a financial powerhouse, managing to generate retirement funds that contribute to its lending activities. Leon Black, along with partners Marc Rowan and Josh Harris, has amassed significant wealth, becoming billionaires in the process.
Though “Money to Burn” recounts a success story, it also delves into the darker side of newfound fortunes—public scandals and the fear of betrayal, even from those closest to you. Leon’s father, Eli, faced his own corporate disaster that tragically ended in his suicide, which may have fueled Leon’s drive for success to overshadow his father’s failures. Unfortunately, Leon also made detrimental deals, the gravest being his association with the controversial financier Jeffrey Epstein.
Leon met Epstein in 1996, and Epstein eventually joined the board of the Leon Black family foundation. Despite lacking extensive formal education, Epstein was skilled in navigating complex financial issues, which Leon faced due to his high income. Epstein provided valuable assistance, but his fees were substantial. Emails quoted in “Money to Burn” reveal Epstein presenting himself as a loyal friend, hinting at his financial need and suggesting alternative payments like real estate.
Leon claimed uncertainty about the total amount he paid Epstein, attributing it to a casual, handshake arrangement that felt insignificant to someone of his wealth. However, an investigation revealed a staggering $158 million paid to Epstein, prompting speculation about the true nature of their relationship.
As a convicted sex offender who died under suspicious circumstances in 2019, Epstein’s shadow loomed large. Investigations found no direct link between Leon and Epstein’s illegal activities, yet Cohan was surprised by Leon’s seemingly lax financial dealings with Epstein, especially given his reputation as a tough negotiator.
On January 25, 2021, following a critical report, Leon announced a leadership transition plan. However, shortly after, he was accused by former model Guzel Ganieva of harassment and assault, with a later lawsuit alleging rape. Leon’s resignation came swiftly, even though he remained the largest shareholder of Apollo. A previous arrangement with Ganieva involving a $21 million payout for silence unfolded in a dramatic manner, underscoring the complex personal dynamics involved.
The ongoing conflict between Ganieva and Black resulted in mutual lawsuits, while also straining Leon’s relationship with Harris. Harris denied any conspiratorial intent, which added to the chaotic situation.
The downfall of a powerful figure due to personal failings is a classic tale, but Cohan’s narrative tends to drag, perhaps due to his thorough research overshadowing concise storytelling. The book, while lengthy, offers readers insights into the greed and moral dilemmas that often accompany Wall Street’s high-stakes game.
Despite Apollo’s cooperation during writing, Cohan doesn’t shy away from highlighting the firm’s more questionable actions, such as its infamous acquisition of Noranda Aluminum and its tactics during the bankruptcy of Caesar’s. A fund manager’s remark about Apollo fostering unethical standards on Wall Street resonates deeply.
Cohan leaves unaddressed the broader implications of private equity firms like Apollo. While they can arguably harm the companies they target through excessive debt and layoffs, they can also drive improvements and efficiency. Apollo’s successful turnaround of Hostess, for instance, shows that these firms can have a positive impact amidst their controversies. Who truly measures social conscience in finance, anyway?
