After the Justice Department released a trove of new documents tied to infamous sex offender Jeffrey Epstein, journalists digging through them have found extensive connections to Silicon Valley. TechCrunch’s Sean O’Kane examined how a mysterious businessman named David Stern built a relationship with Epstein and pitched him investments in multiple electric vehicle startups, including Faraday Future, Lucid Motors, and Canoo.
On the latest episode of the Equity podcast, Kirsten Korosec and I talk to Sean about what he learned, and we discuss whether the Epstein revelations will lead to broader fallout in Silicon Valley. You can read a preview of our conversation, edited for length and clarity, in the transcript below.
Sean explained that there are always people at the edges who don’t necessarily want to be front and center in the investment scene. He started looking through these files in part because, a decade ago on his beat, there was a ton of Chinese investment in the space. This was before the rush of EV startups in China that we see today. In autonomous vehicles, but electric vehicles especially, there was a moment where Chinese investors and companies, including state-owned automakers, wanted to be viewed like Silicon Valley startups. They came to Silicon Valley, invested in companies, helped get them off the ground, or even set up offices.
It was in that environment that a lot of the companies he has covered for a long time popped up. There was never a full picture of how a lot of them were funded. One company in particular, Canoo, which is now bankrupt, had perhaps the most mysterious set of investors. They were not upfront about it when they first came out of stealth in early 2018. It took a lawsuit between people who ran the company for the investors to be revealed. At the time, the investors were a businessman in China who was the son-in-law of a former senior CCP official, a giant electronics magnate from Taiwan, and a very strange third founding investor named David Stern.
There was so little information about Stern. He was some sort of German businessman with connections to China, but it wasn’t clear how he got involved. The only thing Sean remembered hearing at the time was that Stern was close with Prince Andrew, which seemed very strange. That idea stuck in his head for a long time, so he went looking for that information as more files came out, assuming that proximity to Prince Andrew meant proximity to someone like Epstein.
That was the case, more so than he could have imagined. Stern turned from an enigma into someone present through all this dealmaking ten years ago. In the span of about a year and a half, he was pitching investments in Faraday Future, trying to convince Epstein to throw a couple hundred million dollars into that company, and trying to buy the stake that Faraday Future’s founder had in Lucid Motors at the time. He also pitched investments in Canoo. Epstein never invested in any of those companies despite that proximity, but it was a revealing sweep of a decade of relationship that Stern had with Epstein, from approaching him initially in 2008 to being seemingly very close to him by the end.
Kirsten noted that the whole thing is interesting, as looking back with new information really changes your perception of how deals were unfolding. For those who didn’t follow mobility, it was akin to how we think about physical AI today. Everyone was talking about it. Every automaker wanted a piece of the future of transportation, so it makes sense that some of these more secretive types were also jumping in. She added that Sean made a point while editing the story: it was clear Epstein and David Stern weren’t really about investing and building companies. It was all about how to make the most money the fastest. That is historically important and gives insight into how, in addition to his crimes, Epstein was a complete operator to make money as quickly as possible, which is visible in these emails.
Sean agreed. He opened his story with a moment in time when Lucid Motors, which had pivoted to being a passenger vehicle startup, was struggling to raise its Series D to start production of its first electric sedan. They were struggling behind the scenes in part because the founder of Arrival had amassed a major stake and was making it look like an uninvestable company. The hype at the time created opportunities for people like Stern and Epstein. In emails, Stern asks Epstein if he can get information from Morgan Stanley. Epstein passes that information back, and they discuss whether to invest for a long-term return or to sell quickly if Ford came in with an acquisition offer. Ultimately, they didn’t go through with that, but Stern did eventually invest in Canoo and help get that company off the ground.
Pulling back from the specific industries, an important piece of context is that Epstein pleaded guilty to soliciting prostitution from a minor in 2008. Almost all the emails discussed in these stories come after that. This is also a story about how people became comfortable with the idea that this guy had a shady past. Because he was a source of connections to power, to famous names, and to money, a lot of people were willing to look past that.