(NEW YORK) -- Attorneys for the estate of notorious sex offender Jeffrey Epstein told a judge in the U.S. Virgin Islands this week that they are "extraordinarily close" to resolving a civil case filed by the government of the island territory against the late financier's estate, once valued at over $650 million.
"We've been having intense negotiations and talks for settlement. We are very, very, very close," said Gordon Rhea, a lawyer for Richard Kahn, a former accountant for Epstein and one of the estate's co-executors. "And I think one more push ... and we could be at the finish line."
The news of a potential deal came on Wednesday during a virtual conference in Superior Court in St. Thomas, where the parties continued to spar over the estate's legal fees and other expenses. The hearing was the first since the case was filed more than two years ago by Denise George, the attorney general of the U.S. Virgin Islands.
Carol Thomas-Jacobs, a deputy attorney general, acknowledged talks are ongoing and that progress is being made, but said there were a few "sticky issues" that remain.
"We remain open to engaging in settlement discussions until there is some resolution," Thomas-Jacobs told Superior Court Judge Harold Willocks. "We hope we can reach a resolution."
Epstein died by suicide in prison in 2019 while awaiting trial in New York on conspiracy and child sex trafficking charges.
The government's case against the estate, filed in January 2020 under the U.S. Virgin Islands' racketeering statute, alleged that Epstein created a network of shell companies, charitable organizations and individuals that participated in and conspired with him in a decadeslong pattern of criminal activity tied to alleged sex trafficking of minor girls and young women.
"Epstein, through and in association with defendants, trafficked, raped, sexually assaulted and held captive underage girls and young women at his properties in the Virgin Islands," the complaint said.
The government also contends that one of Epstein's U.S. Virgin Islands-based businesses, Southern Trust Company, misrepresented the nature of its work to fraudulently obtain more than $73 million in tax incentives.
After filing the lawsuit, George placed liens on all of Epstein's properties, including two private islands off the coast of St. Thomas, as well as the estate's bank accounts, which effectively gave her office control over the estate's money.
The government has since sent dozens of subpoenas to financial institutions and individuals around the world previously associated with Epstein, including billionaire investors Leon Black and Glenn Dubin, as well as Epstein's former paramour Ghislaine Maxwell, who was convicted of sex trafficking in federal court late last year. Maxwell has a pending motion for a new trial based on alleged juror misconduct.
The estate, which filed a motion to dismiss the government's lawsuit in 2020, has so far refused to engage in any pretrial exchanges of documents with the government, arguing that it would be wasteful and unnecessary to do so until a court rules on its motion to dismiss the claims.
The government filed an amended complaint last year that added the estate's co-executors, Khan and Epstein's long-time attorney Darren Indyke, as individual defendants, alleging that the pair were "indispensable captains" in Epstein's criminal organization, who had "profited substantially from their relationship with Epstein."
"This includes their direct participation in virtually all of the business operations and financial activities of Epstein's trafficking network, including facilitating forced marriages among Epstein's victims to secure their immigration status," George said in a statement early last year.
Indyke and Kahn were selected by Epstein as co-executors in a will he updated two days before his death. The documents stipulate that each of them be paid $250,000 annually for their management of the estate. The two men, through their attorneys, have denied the allegations in the lawsuit and deny any involvement in misconduct by Epstein.
Daniel Weiner, an attorney for the co-executors, told ABC News by email in 2021 that Indyke and Kahn "categorically reject the allegations of misconduct made for the first time today by the Attorney General of the Virgin Islands regarding their purported roles in the so-called 'Epstein Enterprise.'"
"Neither Mr. Indyke nor Mr. Kahn had any involvement in any misconduct by Mr. Epstein of any kind, at any time," Weiner wrote. "It is enormously regrettable that the Attorney General chose to level false allegations and to unfairly malign the Co-Executors' reputation without any proof or factual basis to do so."
The government's attorney, Thomas-Jacobs, expressed concern during the hearing that the estate's value had been greatly diminished over the last two years, and described some of the expenses of the estate, including more than $15 million in legal fees to date, as "extremely outrageous." Since its initial valuation of $656 million, the estate's coffers have dwindled to $166 million, according to the estate's most recent accounting in probate court.
"We are absolutely concerned that in the end, there will be no money left for the people of the Virgin Islands," she said.
Those comments drew a sharp rebuke from estate attorney Marc Weinstein, who noted that the estate had paid $175 million in taxes and $150 million to Epstein's victims, which he said accounted for the bulk of the estate's expenses over the last two years.
"I assume nobody on the government side is saying we shouldn't pay the taxes and we shouldn't pay out to the victims," Weinstein said. "They just keep throwing out the numbers to make it sound bad."
The estate recently filed an emergency motion for a release of $1.3 million in legal fees incurred primarily for mediation with Epstein's victims, that the government has thus far declined to pay, according to court records.
In a statement to ABC News, George declined to comment on the status of negotiations, but said the government is "determined, among other things, to address tax benefits that Epstein fraudulently obtained from the Government and People of the Virgin Islands and to protect assets for Epstein victims who may not have resolved their civil claims."
George's statement noted that the estate has also refused to disclose the details of several trusts established by Epstein, including the "1953 Trust," the sole entity listed in Epstein's last will and testament. The beneficiaries of that trust have not been publicly disclosed.
"These concerns, along with the alleged conduct of the co-executors ... in facilitating Epstein's conduct, including through marriages allegedly forced upon his victims, raise significant concerns about the appropriateness of their management of the Estate," George wrote.
Given the reported progress in settlement talks, Willocks placed the case on hold for at least 90 days to allow for the parties to try to reach a negotiated resolution. He set a hearing for early May on the dispute over the legal fees.
Weinstein, however, predicted that the case could be resolved without the need to be in court again.
"This case is unbelievably close to resolution," he told the judge. "I think if the parties focus on that effort, this will be done, and you probably won't see us again -- unless they don't pay our fees and our expenses. That's the only reason we're going to be before you."