Howard Rubin, money manager, charged with sex trafficking

Famed money manager Howard Rubin and his former personal assistant were arrested Friday morning on charges of sex trafficking and transporting women across state lines for commercial sex acts over the course of a decade.

Prosecutors alleged a litany of stomach-churning, abusive acts against women by the 70-year-old Rubin, who first gained infamy in the 1980s with an unauthorized trade that cost his then-firm tens of millions in losses.

A federal magistrate judge in Brooklyn, New York, ordered Rubin detained without bail, for now, after prosecutors argued the former Salomon Brothers bond trader was a flight risk and that he had discussed hiring a “hit man to target women who had filed a civil suit against him.”

Prosecutors also cited the retired Wall Streeter’s alleged prior attempts at witness intimidation and said that the victims in the case are “universally” afraid of him, before Magistrate Judge Peggy Kuo rejected Rubin’s bid to be released on a $25 million bond.

Rubin is alleged in a 10-count indictment to have participated in sex acts with the women in luxury hotels in New York, and later rented a two-bedroom penthouse apartment in Manhattan that was converted into a so-called “sex dungeon” outfitted with bondage, discipline, dominance, submission and sadomasochism equipment, as well as soundproofing.

The equipment allegedly included a device to “shock or electrocute women,” prosecutors said.

“During many such encounters, Rubin engaged in conduct beyond the scope of the women’s consent,” the indictment in U.S. District Court in Brooklyn, New York, alleges.

“During many of these encounters, Rubin brutalized women’s bodies, causing them to fear for their safety and/or resulting in significant pain or injuries, which at times required women to seek medical attention,” the indictment charges.

The former Soros Fund Management financier and his ex-personal assistant, Jennifer Powers, 45, spent at least $1 million of Rubin’s money “operating and maintaining the trafficking network,” which lasted from at least 2009 through 2019, the indictment said.

Rubin was arrested by FBI agents at his home in Fairfield, Connecticut.

He pleaded not guilty during his appearance Friday afternoon in Brooklyn court, which was delayed by a medical incident that led to him being evaluated at a hospital.

Prosecutors in a letter to Kuo asked that Rubin be held without bail, “because no condition or combination of conditions can reasonably secure Rubin’s appearance in court as required or the safety of the community.” The letter noted that he had “extraordinary wealth, some of which is held in accounts overseas.” In 2024, Rubin had more than $74 million in a Cayman Islands account, the letter said.

Prosecutors said that there were at least 10 other people who helped Rubin facilitate his alleged crimes, and cited tax documents that they argued indicated his financial crimes continued until his arrest.

They said Rubin was found with eight cell phones and three BlackBerry devices. He would not reveal where his passport was, and did not surrender it when arrested.

Rubin’s lawyer argued he was not a flight risk because two of his adult children and his grandchildren live near him.

The lawyer also cited Rubin’s health condition, saying he had a stroke in July.

Kuo rejected that argument, but Rubin’s defense team could make a new bail application. He is next scheduled to be in court on Oct. 20.

Powers was arrested at her home in Soutlake, Texas, and is scheduled to appear in U.S. District Court for the Northern District of Texas next week. She is also charged with bank fraud in connection with alleged misrepresentations she made to a bank while financing the mortgage for her and her husband’s home in Southlake, Texas, authorities said.

Prosecutors want a “substantial bail package” for Powers.

If convicted of sex trafficking, Rubin and Powers each face a maximum possible sentence of life in prison and a mandatory minimum sentence of 15 years in prison.

Rubin was sued in November 2017 by two self-identified Playboy models and another model from Florida, who claimed they were beaten, sexually abused and raped by Rubin in multiple incidents in New York City in 2016.

In April 2022, a civil jury in Brooklyn federal court found Rubin liable for sex trafficking six women who had sued him and Powers, and ordered him to pay them a total of $3.85 million in compensatory and punitive damages. Powers was not found liable by that jury.

Rubin is currently appealing the civil judgment.

A spokesman for the U.S. Attorney’s Office in Brooklyn had no comment when asked why there was a lag of nearly eight years between the filing of the civil lawsuit against Rubin and the office obtaining a criminal indictment against him. At the time the lawsuit was filed, a lawyer for women who sued Rubin told CNBC that the U.S. Attorney’s Office had reached out to him about potentially investigating the financier.

The detention letter by prosecutors says that after Rubin was sued, he told a woman whom he had seen for commercial sex from 20014 through to 2019, “that pursuant to his arrangements, a hitman was contacted on the dark web to target women who had filed a civil suit against him, but he did not ultimately retain the hitman.”

Rubin, after working as a bond trader at Salomon Brothers, also did stints at Bear, Stearns and Merrill Lynch.

He first gained public notoriety in 1987 for making unauthorized trades at Merrill Lynch, which the firm at the time said contributed to a massive $250 million loss from mortgage securities. Rubin’s action at Merrill, which led to his termination, is detailed in Michael Lewis’ Wall Street memoir “Liar’s Poker.”

Powers is accused in the indictment of facilitating Rubin’s commercial sexual encounters from at least 2011 through 2019, allegedly recruiting women to travel to New York and be paid for their acts with Rubin, as well as managing “the fallout from women’s complaints” stemming from those acts.

CNBC requested comment from Rubin’s attorney, Michael Gilbert, and from Powers’ lawyer.

The indictment alleges the sex trafficking of six women, some of whom were also identified as women who were transported across state lines with the intent to engage in prostitution, in violation of the Mann Act.

“Rubin and Powers required the women to sign non-disclosure agreements … which purported to require the women to assume the risk of the hazards and injury of the BDSM encounters with Rubin, prohibit the disclosure of information about the BDSM sex with Rubin and require the payment of damages in the event of a breach,” the Brooklyn U.S. Attonrney’s Office said in a statement.

“Rubin used the NDAs to threaten the women with legal consequences and public shaming if they sought legal recourse,” the office said.

Prosecutors in their letter to the judge said that “Rubin and Powers kept a stash of blank NDAs in a safe in the Penthouse, which they required women to sign.”

“Women were not provided with a copy of the NDAs before being required to sign,” prosecutors wrote. “Women were required to attest that they were not under the influence of drugs or alcohol at the time of signing, when at times they had been provided with alcohol and/or drugs by Rubin, Powers or their co-conspirators before being presented the NDA.”

The office also said that after Rubin’s alleged sexual encounters with women, “Rubin and/or Powers used Rubin’s money to pay the women by wire transfer or a payment service such as PayPal or Venmo.”

“At times, Powers structured the payments to avoid sending a single transaction of $10,000 or more, to avoid triggering reporting obligations by the bank,” the office said. “The indictment alleges the defendants spent at least $1 million of Rubin’s money operating and maintaining the trafficking network.”

“As alleged, the defendants used Rubin’s wealth to mislead and recruit women to engage in commercial sex acts, where Rubin then tortured women beyond their consent, causing lasting physical and/or psychological pain, and in some cases physical injuries,” Brooklyn U.S. Attorney Joseph Nocella said in a statement.

“Today’s arrests show that no one who engages in sex trafficking, in this case in luxury hotels and a penthouse apartment that featured a so-called sex ‘dungeon,’ is above the law, and that they will be brought to justice,” Nocella said.

“Human beings are not chattel to be exploited for sex and sadistically abused, and anyone who thinks otherwise can expect to find themselves in handcuffs and facing federal prosecution like these defendants,” he said.

— CNBC’s Mallory Leonard and Jim Forkin contributed to this story