GVI Yellow Book 2023: Epstein Settlement Accounting and Fund Findings

Snapshot

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Key Takeaways

• The audit identifies approximately $97 million received during fiscal 2023 under settlement agreements related to Jeffrey Epstein’s estate.
• Finding 2023-001(A) addresses accounting classification within a broader material-weakness finding.
• Finding 2023-016(D) addresses implementation of designated settlement funds within the report’s noncompliance findings.
• Management accepted the fund finding and set out a corrective plan. The report does not establish whether that plan was later completed.

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What the audit covers

BDO’s report accompanies its audit of the Government of the United States Virgin Islands’ financial statements for the year ended September 30, 2023. Its financial-statement scope covers governmental and business-type activities, discretely presented component units, each major fund and the remaining aggregate fund information. The Epstein-related passages sit within this wider government audit.

The internal-control report explains that testing was designed to support the financial-statement audit. BDO does not give an opinion on the effectiveness of the government’s internal controls. Its compliance discussion likewise does not provide an overall compliance opinion. The report also distinguishes component-unit testing reported separately.

The signed report is dated January 27, 2026. The 2023 in its title identifies the financial year being audited. This distinction matters because the settlement-fund legislation discussed below was enacted in 2024, after that fiscal year ended.

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The $97 million receipt figure

Printed page 60 specifically attributes approximately $97 million received in fiscal 2023 to settlement agreements related to Epstein’s estate. That is a fiscal-year receipt figure in the audit, rather than a complete valuation of every Epstein-related settlement. The same paragraph separately identifies $1.45 million from opioid-abatement settlements; that amount should not be folded into the Epstein figure.

Printed page 4 discusses approximately $97 million in settlement proceeds in its review of draft financial statements. It does not name the estate in that paragraph. The express estate attribution appears in the later passage, so the two locations should be cited together when explaining the issue.

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Finding 2023-001(A): Accounting classification

The settlement-accounting passage says the proceeds were classified as operating revenue instead of a special item within other financing sources in the governmental-funds statement. BDO also says they should have been reported as restricted fund balance under GASB Statement 54. This concerns the presentation and classification of receipts; it does not say the $97 million disappeared.

BDO classifies Finding 2023-001 as a material weakness in internal control over financial reporting. The settlement passage is one part of its wider year-end closing and financial-deficit finding, rather than a separate finding that every aspect of the settlement program failed. The surrounding discussion identifies delayed reconciliations, discrepancies between supporting schedules and the ledger, and adjustments kept in a manual working spreadsheet.

The recommendations for subsection A call for a documented closing calendar, timely reconciliations with supervisory review, checks against source records and other departments, prompt recording of adjustments in the accounting system, and targeted accounting training.

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Finding 2023-016(D): Establishing the funds

Appendix C’s legislative-appropriation subsection reports that the Southern Trust Company Settlement Fund and Survivors and Mental Health Healing Trust Fund had not been established as required by Act 8920. It sits under Finding 2023-016, noncompliance with laws and regulations. The same subsection separately addresses an opioid fund and committee required by Act 8694.

BDO attributes the implementation problem to apparently inadequate policies and procedures for meeting the statutory requirements. Its recommendation is to establish the required funds and committee, put administration and oversight procedures in place, and retain documentation of their establishment and use. These are the auditor’s conclusions and recommendations, not findings of personal misconduct by a named official.

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Management’s responses and timetable

For the year-end closing finding, the government concurs with BDO. Its plan describes stronger accountability for chief financial officers and fiscal leads under Executive Order 480-2017, with Finance leading coordination with the Office of Management and Budget, Property and Procurement, and other agencies. It proposes monthly fiscal oversight, improved reporting, controls, policies and training while acknowledging staffing constraints and that the finding would not be resolved immediately. Adjustments were planned for fiscal 2026, with improved results targeted for fiscal 2027.

The responsible groups for that response include Finance leadership, audit and accounting teams; OMB leadership and compliance staff; Property and Procurement’s leadership, fixed-assets and procurement teams; and agency financial officers and managers.

For the fund-establishment finding, management commits to creating both settlement funds, the opioid-abatement fund and its committee, adopting compliant administration and oversight procedures, and documenting establishment and use. The implementation date is fiscal 2026. The offices listed as responsible are the Treasury Director and Executive Assistant Commissioner.

BDO states that management’s responses received only limited procedures and were not subjected to the other financial-statement audit procedures. BDO expresses no opinion on those responses. A stated implementation date is therefore not evidence that corrective work was completed.

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The 2024 fund provisions

Section 1 of Act 8920 establishes a separate interest-bearing Southern Trust Company Settlement Fund under the Commissioner of Finance. It directs Epstein-related court proceeds into that fund except amounts separately identified in the settlement agreements, and requires legislative appropriation before expenditure. Section 1 also requires an initial spending report and subsequent annual reports.

Section 2 establishes the separate Survivors and Mental Health Healing Trust Fund. It covers mental-health services and facilities, together with services for residents affected by sexual assault, trafficking and child sexual abuse. The act assigns administration to Finance and includes a Human Services authorization route for disbursements, as well as legislative appropriations and reporting requirements.

The enactment certificate records legislative passage on September 27, 2024, a partial veto on October 10, and an October 16 override of sections 3, 9, 13 and 15. The attached pages retain the earlier veto markings, so a struck-through provision should be read alongside that certificate. This is the act referenced in the later-issued audit; the fiscal-year label should not be used to move the legislation back into 2023.

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What these records leave unresolved

The statute’s creation of a fund, the audit’s implementation finding and the movement of cash are distinct questions. Dated bank reconciliations, payment ledgers and expenditure reports would be needed to trace recipients, transfers and remaining balances. Appropriated money should not automatically be described as money already spent.

The findings are historical audit statements. They do not establish theft, identify every recipient or verify present-day fund balances. Neither a statutory fund name nor a management promise independently proves that the required accounting and oversight arrangements were operating.

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Evidence Appearances

PDF page numbers include the cover and contents; printed page numbers appear within the report. These finding and statute numbers are the relevant identifiers for this record.

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Related Background

U.S. Virgin Islands Government provides the broader settlement history. This document guide concentrates on the audit and its legislative reference.

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Original Document

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Sources

1. GVI Yellow Book 2023, BDO report dated January 27, 2026, particularly printed pages 1–5 and 60–61.
2. Act 8920 and enactment certificate, copy hosted by the Virgin Islands Port Authority; PDF pages 1 and 3–4.
3. Preserved EpsteinWiki PDF, byte-identical to the Department of Finance copy.