<table><tr><th>From:</th><th>Jeffrey Epstein &lt;jeevacation@gmail.com&gt;</th></tr><tr><td>Sent:</td><td>Saturday, November 27, 2010 9:51 AM</td></tr><tr><td>To:</td><td>David Stern</td></tr><tr><td>Subject:</td><td>Re: Daily Mail: Duchess of Debt</td></tr></table>

who talks?

On Sat, Nov 27, 2010 at 4:36 A=, David Stern > wrote:

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Duchess of debt: Fergie's ultimatum to her creditors... Accept a quarte= of what I owe you or risk getting NOTHING

By RICHARD KA= <http://www.dailymail.co.uk/home/search.html?s=y&au=hornamef=Richard+Kay+> and GEOFFREY LEVY <http://www.dailymail.co.uk/home/search.html?==y&authnamef=Geoffrey+Levy+>
Last updated at 2:08 AM on 27th November 2010

Much as it pains the Royal Family - in this of all months - the cameras are=once more turning on the Duchess of York. She is beginning, yet again, the=process of dragging herself up from that place where she says she has been=residing in recent times - 'the gutter'.

As it happens, in Fergie's case the '=utter' remains the sumptuously comfortable Royal Lodge in Windsor =reat Park, of which she is said to be still 'very much the mistres=' after four years lodging there with ex-husband Prince Andrew. Mi=d you, these days she has to make do without the dozen or so personal staf= who used to be at her beck and call.

With Windsor Castle looming ominously in the backgrou=d, Fergie has been filming the six-part documentary examining her downfall= Finding Sarah, which she is contracted to make for Oprah Winfrey'= new TV network in America.

Pleasant debt? Fergie, pictured here for America's Harper's Bazaar,=remains 'very much the mistress' of the Royal Lodge in Windsor Gre=t Park

Whether this turns out to be a personal sto=y of downfall and dishonour, or survival and redemption, we must wait and =ee. But at 51, the trampoline life of the Duchess does seem to have her bo=ncing skywards once more, though where she will land is anyone's g=ess.

Fergie has been working hard on the television series= in which she will examine her own battles with those who have been closes= to her, with her weight and, of course, with money. She is currently livi=g 'quietly — no big nights out' according to someo=e who sees her regularly.

Most people would consider this highly sensible, in v=ew of the tricky and at times bitter negotiations that have been going on =ith the Duchess's creditors. Debts of almost £2 million remai=ed even after Prince Andrew initially bailed her out with £1.5 millio= of his own money earlier this year.

Now, as the Mail revealed this week, the Duchess, in an extraordinary move,=seems to have managed to sidestep the bankruptcy proceedings, which would =ave been an unsavoury diversion in royal wedding year, given that her two =aughters will be sitting on the family pews at Westminster Abbey on April =9. So just how has she done it?

We understand that Fergie's creditors have be=n made an audacious offer of just 25 per cent in settlement of the money t=ey are owed - in other words, 25p in every pound.

The offer was sent to them in letters and emails on behalf =f the hard-nosed City accountant Price WaterhouseCoopers, who were engaged=by Prince Andrew to get to grips with his ex-wife's finances. It s=t a deadline for acceptance of October 20 this year.

What's more, it was conditional on all of the= accepting it. Indeed, the letter spelled out that in the event of there n=t being universal acceptance, the Duchess might have to recourse to an =80 individual voluntary arrangement' to pay what she can over a =eriod of five years. This could mean, the letter warned, that creditors mi=ht receive less than they were being offered now.

The offer of a mere quarter of what they were owed di=mayed some creditors. In the event, most have accepted the deal, but two h=ve refused to settle. The amount they were owed is understood to total aro=nd £150,000, and this debt could still derail the entire process and =lunge Fergie back into bankruptcy proceedings.

Ironically, the two dissenters, we have learned, were=not the swanky Mayfair lawyers Davenport Lyons (£204,000) or Selfridg=s in Oxford Street (£51,000) that featured high on the list of credit=rs — but are from among the Duchess's most intimate circle= One of them, we understand, is Kate Waddington, the Duchess's close=friend for nearly 20 years and her long-time public relations consultant u=til they parted company over the humiliating tabloid sting in which Fergie=attempted to sell access to

Prince Andrew in exchange for £500,000.

The other is Johnny O'Sullivan, a 42-year-old bachelor who worked f=r the Duchess as a personal assistant for 14 years until last year, and no= lives in the U.S. Like Ms Waddington, he counted the Duchess as a friend.=/div>

Likely dissenter: Kate Waddington (left), who was Sarah Ferguson's clos=st friend for nearly 20 years Indeed, O'Sullivan was the person whom Fergie referred to when she =as filmed accepting a £27,000 down payment from the undercover newspa=er reporter posing as a businessman anxious to get alongside government tr=de envoy Andrew. When her desperate ploy was exposed, the Duchess explaine= she wanted the money to help O'Sullivan meet the fees for a postg=aduate course at a New York university he had enrolled on.

What did not emerge at that time was that O'S=Ilivan was among Fergie's biggest private creditors.

She is thought to have owed him more than £70,00., made up of unpaid salary and fees as well as cash, which he invested in =artmoor, the company she founded to control her business interests in the =S. and which folded with debts of £650,000.

O'Sullivan refuses to talk about the matter, =ut according to friends he is 'very hurt' that he has been=offered so little, especially as the money he used to help Fergie'= business was his life savings.

Kate Waddington is equally adamant that she will not =iscuss what is clearly a distressing situation for her on a personal level=and a financial one. She has had a ringside seat for most of the turbulent=events in Sarah's life, from her separation and her affairs to the=rollercoaster of her financial crises. She was at first on Fergie'= private staff before leaving to set up her own PR company, Soho-based Spu=nik Communications, in 1998 which then represented Sarah as a client. =A0

20-year-ol= And Princess in recent Eugenie. times she We also understand took on the Ms Duchess Waddington =80 s is socially owed upwards energetic of daughters, £70=000. If Princess she accepted Beatrice, the 22, offer and from Fergie's advisers, she would r=ceive a mere £18,000.

All the same, Miss Waddington does not consider her d=spute is with the Duchess, who is her daughter Flora's godmother. =ccording to a Buckingham Palace source intimately involved in the negotiat=ons, her fury is directed at Prince Andrew.

This source says Ms Waddington has made it plain she =eels Andrew has not recognised all the work she has done for his two daugh=ers.

For several years, Sputnik employed someone virtually=full-time on the Duchess's account, when much of the work involved=the princesses, whose activities required constant organising and public r=lations guidance.

'Nine times out of ten, Andrew's offi=e would ask Kate's firm to handle things,' says the Palace=insider.

Meanwhile, Fergie's advisers are trying to br=ng the overall debt down by scrutinising and challenging some bills from c=rtain creditors.

But these are relatively small fry. 'Without =artmoor, she would not have been in this situation; says one advi=er.

For Prince Andrew, who drily describes himself as a m=n 'with three children' to look after, this is a tense per=od. He put his hand into his own pocket to help the woman from whom he has=been divorced for 14 years after ten years of marriage, because he knew hi= daughters expected him to help out their mother.

'Beatrice and Eugenie would have been very up=et if he hadn't helped out their mother - and so would the Queen,=E2 says a courtier.

'It is still a source of some concern, and a =istraction for the girls who are both at university. The general feeling i= that the sooner this mess is cleared up, the better for everyone. =99

Andrew's contribution helped pay off her doze= 'personal staff' who were made redundant in the spring wh=n Fergie's finances finally spiralled out of control.

The way they were: Prince Andrew and Fergie together at Upton House in 1992=to see their daughter Beatrice, four, in a nativity play Fergie can no longer employ her own staff - but, as ever, friends continue =o ride to her rescue. One is John Caudwell, the mobile phone tycoon and on= of Britain's richest men. His daughter Libby has, we understand, =een helping the Duchess with her charities.

Also still on the scene is Geir Frantzen, the Norwegi=n frozen food magnate who gave Fergie the £160,000 Bentley she can st=lI be seen being driven in. He is understood to have offered her a bolthol= for Christmas.

Fergie is dreaming now that her Oprah series will ope= doors to a new television career. And she is still hoping her Little Red =hildren's book about a red-headed girl will be made into a series =f money-spinning cartoons.

She also plans to kick-start herself on the lucrative=after-dinner speaking circuit. Certainly, she will have to go into high-earning mode if she is to continue=not only flying first class but routinely arriving at airports with 25 pie=es of luggage.

But even Fergie has her standards. She was offered, we can reveal, a =98monster' sum - believed to be 'well to the north of =A3200,000' - to join the so-called celebs in ITV's I =99m A Celebrity ... Get Me Out Of Here! =he declined.

She also declined lucrative offers from American tele=ision networks to join the commentary team for the wedding of Prince Willi=m to Kate Middleton, a job for which you might think she is eminently qual=fied. She is, of course, unlikely to be on the guest list.

But because her daughters will be there with the Roya= Family, she considered that, too, to be inappropriate.

Maybe, just maybe, the erring Duchess is beginning to=acquire good judgment and restraint.

Read more: http://www.dailymail.co.uk/news/art=cle-1333506/Duchess-debt-Fergies-ultimatum-creditors--Accept-quarter-I-owe=risk-getting-NOTHING.html#ixzz16TCPSme2 <http://www.dailymail.co.uk/news/ar=icle-1333506/Duchess-debt-Fergies-ultimatum-creditors--Accept-quarter-I-ow=-risk-getting-NOTHING.html#ixzz16TCPSme2>

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