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Speaker 1: What's up, everyone, and welcome to another episode of the

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Epstein Chronicles. If there's one thing that the rich and

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the affluent are good at, it's hiding their money. And

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one of the most effective ways of doing that is

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to invest in high end art. And that's why you

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see people like Leon Black with literally billion dollar art collections,

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because this is a man who doesn't want to pay taxes, right,

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And look, I'm not knocking them for that. Who the

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hell wants to pay taxes? But every year we do,

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and then you have people like Leon Black, Jeffrey Epstein,

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and the Epstein class, and they find all kinds of

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creative ways to make sure they're not paying any money

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out of their pocket. Ever when it comes to taxes,

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and this is exactly what Leon Black was paying Jeffrey

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Epstein for this kind of tax advice. I mean, did

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you really think you was paying one hundred and fifty

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million dollars for actual tax advice? That would be a

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bit extreme. No, seems like quite the bill for basic

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tax advice. I would think that a guy like Leon

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Black with so much money would be a bit more frugal,

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but I guess not. I guess he just wants to

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blow a bunch of dough on tax advice from a

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guy that's not qualified to give it, but sure keep

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feeding us that ridiculous narrative. Today's article is from CNBC

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and the headline Epstein Files highlight how wealthy borrow against

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art collections. This article was authored by Robert Frank. So

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what happens is they just leverage themselves and borrow, borrow, borrow, borrow,

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and they never have to even pay it all back.

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They just keep the griff going forever. And that's how

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these rich people roll. Meanwhile, the rest of us are

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getting blasted with what I call the poor people's tax,

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and what I mean by that is all the extra

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fees you end up paying if you're poor, God forbid

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you have bad credit. Meanwhile, you have guys like Leon

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Black who are making literally billions of dollars and hardly

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paying anything in taxes. A four hundred and eighty four

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million dollar art loan secured by a billionaire Leon Black,

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and disclosed in the latest Epstein Files highlights one of

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the fastest growing and most lucrative corners of the art world.

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And this is something that not only people like Leon

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Black or Jeffrey Epstein were up to. We're talking about

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people like cartel bosses, international criminal organizations, and of course oligarchs.

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And I don't just me and Russian ones. I'm talking

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about all of them. I mean, how many big mouths

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who ran around talking about corruption and this that the

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other thing ended up being in like the Paradise papers,

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that exposed a whole bunch of these people for the

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scoundrels they are. But of course nothing ever came of it, right,

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nobody want to prison. Financial sector never really affected, just

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business as usual. To a March twenty fifteen document released

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as part of the Epstein files, Black secured the loan

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from Bank of America backed by works of art. While

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not unusual for top private banking clients, the loan made

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headlines for its size and exotic collateral, which included blue

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chip works by Picasso, Geocommetee, Tition, Matisse, and others. Art lending, however,

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has become an increasingly valuable tool for both wealthy collectors

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and wealth management firms vuying to manage their fortunes. The

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global market for art loans is estimated at between thirty

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eight billion and forty five billion today, According to a

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report from the art tactic. The market is expected to

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top fifty billion by twenty twenty eight, growing at about

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twelve percent a year, and I expect that to continue

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to just blow up considering how many of these people

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are looking for places to stash their money, and without

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volatile tile, a lot of different areas are you can

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avoid a lot of that volatility by investing in something

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like high end art because it really doesn't lose its

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value right. In fact, it continues to increase and all

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these people know it, so they're able to borrow by

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using this sort of art as collateral. But the problem

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is a lot of times they're borrowing off of money

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that they never even pay taxes on. And I think

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a pretty good example of how this all plays out

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is in the show Billions. There's a part where Bobby

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Axelrod has all this different art and he is trying

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to hide the art from people trying to come get it,

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and I think it illustrates how these high end people

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will use the art market to try and hide their money.

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And I think, besides real estate, I think that the

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art market is an area that is being heavily used

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by these oligarchs. And I think there is plenty evidence

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to back that up. I mean, we know that Leon

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Black for sure was utilizing the art market, and when

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you start putting the pieces together, it's pretty obvious what

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he was doing. Now, look, it's one thing to know something,

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it's another thing to be able to prove it. And

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considering how little they care about actually following the money here,

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I highly doubt we're ever going to get to the

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bottom of any of it when it comes to Leon Black.

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I mean, just look at what's going on in Congress.

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They were requested to speak with Leon Black. I mean,

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what why not just hit them with a subpoena and

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force them to come in like everybody else, But instead

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he gets a cordial invite. Why is that? Why isn't

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Leon Black being treated like any other possible criminal. Adam Chin,

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managing partner of International Art Finance and longtime art finance expert,

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said art loans are away for collectors to pull cash

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from paintings that they can also continue to enjoy on

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their walls. Oh yeah, you see this painting over here.

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I drew a five billion dollar loan off it. I mean,

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imagine having that kind of collateral hanging on your wall.

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Most people have to go in, you know, give their

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title up to get some money on it. Hey, let

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me get you know, five grand on my title and

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I'll pay it back. And if I can't pay it back,

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well you've got to take my car now. I can't

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go to work, can't live my life, et cetera. But

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this is all the hustle right here right. They know

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these people are never gonna default. They'll gladly give these

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loans out, just another way to lounder money. It's the

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best of both worlds. Jin said. You can monetize an

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otherwise non income producing asset and it's still great to

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look at. Well awesome, I'm glad. I'm glad. All of

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you stiff upper lip types are enjoying yourselves down here

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on the bottom rung. Not very much fun. Far from

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signaling a lack of funds. Art loans are typically used

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by the wealthy to provide ready cash leverage financial investments

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and avoid hefty tax bills. Oh well, what do you know?

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Shocking huh? And really, as much as I despise it,

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we need to look directly at Congress and ask them

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what they're doing. They allow all this, they write the laws.

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All these people are just utilizing the loopholes that already exist.

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So if Congress cared, they'd write better laws. Private banks

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often grant art loans to top clients at low interest rates,

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knowing the client as hundreds of millions or even billions

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in other assets in case the loan's default. The interest

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rate on Black's loan in twenty fifteen was one point

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four to three percent, according to the document, one point

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four to three percent. How many of you out there

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are getting that rate? I'll wait, not very many of you. Now.

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I'm sure some of you might be, and that's great,

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I'm happy for you, but I'm certainly not getting one

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point four to three percent. You go out and buy

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a used car right now, and you get it from

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like a credit union or whatever, and you're still gonna

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end up paying like seven point nine to nine percent

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on your loan right around there, even with good credit. Now,

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obviously it varies and it bounces around, but for the

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most part, that's right around what you're looking at. Meanwhile,

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you have guys like Leon Black score on a one

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point four to three percent rate, and you wonder why

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we all stay poor and they continue to get rich.

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The bulk of the art lending market is dominated by

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the auction houses, especially Southeast Financial Services, as well as

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specialty lenders like International Art Finance. Scott Millicon, global head

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of lending at Southeast Financial Service, said collectors use the

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proceeds for a wide variety of purposes. The company now

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lends against classic cars as well as art lend against anything.

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If you have some collateral and you're looking to, you know,

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get a loan, you can find somebody that will probably

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lend you the money. What it comes down to is

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the interest rate. That's the most important part, right, what

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the hell's the big and how long is it running?

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Because that's how you get smashed. It's not the actual

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loan itself. For the most part, the loan is usually

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you know, doable, right, manageable. It's the excessive fees that

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get tacked onto it, this tax that tax finance charges

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and before you know it, you're looking at six dimes

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more than you thought the car was going to be.

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But of course, guys like Leon Black they don't have

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those worries, and they have vehicles and this art and

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everything serves a purpose, and for Leon Black, that purpose

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is to avoid taxes. That was the whole entire scam,

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the whole plot, the whole entire reason that he was

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getting advice quote unquote from Jeffrey Epstein. Many of our

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clients borrow against their fine art collections to invest in businesses,

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pursue new art acquisitions, or release cash without selling works

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they love, Millicon said. Chinn said. Many of today's collectors

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are top leaders in private equity and hedge funds. I

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bet they are. What did I just tell you? But

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I'm sure all of them are planned by the rules right.

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Since they're used to using leverage to turbocharge their wealth

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in their investments in businesses, they view leveraging their art

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collection as a natural extension. Chin estimates that the total

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value of art held in private hands is between one

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trillion and two trillion dollars, with art loans representing a

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tiny fraction of the total, well under fifty billion. He said,

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the industry has plenty of room to grow one trillion

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and two trillion. How much of that wealth do you

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have hanging on your walls? I can tell you right now,

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I have zero. Fuck. I don't even have a knockoff

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antl atoms on my wall. Art is the most underleveraged

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data set on the planet, he said. Art loans also

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generate lucrative tax benefits. Selling a work of art triggers

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a capital gains rate of twenty eight percent, a higher

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rate for collectibles than other categories, along with the three

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point eight net investment income tax, bringing the top rate

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to thirty one point eight percent. Selling in certain states

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also trigger stay taxes. Well it should. An art loan,

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even at today's elevated lending rates typically is around eight

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percent to nine percent. It's still far more efficient than

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paying a tax. Plus, borrowers can usually keep the art

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on their walls. That's what this is all about. Taxes. Okay,

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ignore everything else and understand this is about them hiding money.

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That's it. That's the whole story. The art lending business

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has also benefited from a twenty seventeen tax change that

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eliminated the use of soul called ten thirty one exchanges

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in the art market. The practice allowed art collectors to

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avoid capital gains taxes by swapping one work for another

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without the benefit. Many art collectors turned the loans to

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provide liquidity without the tax penalties. Always a loophole, always

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a technicality, and that's on Congress, not on the people

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that are utilizing these loopholes and technicalities. Congress should do better.

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They should know that they're screwing up. Or is it

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that they do know and they're leaving these loopholes in

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there because the people that are benefiting are the same

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people that are donating to them to get them elected.

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I'll leave it up to you to decide. Chinn said

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that given the art market's recent rebound and following interest rates,

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art lending is poised to continue its strong growth. The

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art market is a strange market, he said, but if

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you look at every other asset class event, it gets fractionalized, securitized,

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and leveraged. It's the nature of the universe. Well, it

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should be highly regulated. Has there ever been a market

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that needs regulation more than the high end art market? So, folks, look,

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this just goes right on top of what we've talked

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about previously about the high end art market and about

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how it's utilized as a tax haven for people like

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Leon Black. And it's been my opinion from the very

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beginning when we first learned about Leon Black and his

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relationship with Epstein, that Jeffrey Epstein wasn't giving him tax advice,

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not in the traditional sense, but instead was helping him

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hide that money. And I think as these receipts continue

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to come out, I think that becomes more clear by

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the day. So like usual, we'll keep on top of it,

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and when we have some more information to share, we

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most certainly will. All the information that goes with this

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episode can be found in the description Fox