A combination of theft, forgery and other crimes, not to mention IRS fines, taxes and the cost of settling civil suits, and you can shrink a multi-million estate very quickly.
John Sullivan’s estate may have started out at $8 million, but in just two and a half years, it had been whittled down to about $200,000. The attorney representing the estate in a trial charging a man with forgery, theft and money laundering, presented jurors an amazing list of IRS filings, attorney’s fees, civil suit settlements and missing money that have all but decimated the estate.
Wealth Advisor’s recent article, “Litigation Leaves $8M Estate With $200K,” tells the story of a Texas attorney named Michael Deadman who was appointed temporary administrator of John Sullivan’s estate in January of 2015. He recovered $4.9 million from John Young, who was awarded the estate in 2014 based upon a contested will that bail bondsman Ray Zapata was convicted of forging.
In a bewildering presentation of IRS filings, and what looked to be non-stop attorney’s fees, Deadman told jurors of the $1.29 million IRS fine on a $4.4 million overseas account in Liechtenstein. Sullivan was in an IRS program that let him to pay taxes on the overseas investment over 10 years, which was deducted from the estate.
Deadman also said he had paid out $1.1 million in attorney fees to several firms after taking over the estate. The Sullivan estate paid $262,000 in property taxes and attorney fees for a property that Sullivan owned in Spain. The attorney also said the estate paid $1.6 million to settle sex abuse claims by two men against the decedent. In fact, there was evidence at the trial of a list of attorneys and accountants who continued to bill the estate, even while the trial continued.
Texas attorney Joe Hernandez first complained about Sullivan’s alleged will filed by Chris Hartman. Hernandez was called by state prosecutors and laughed at defense attorney’s accusations that he and Ray Zapata profited by sharing clients. Hernandez and Zapata had offices in the same building. Zapata was a bail bondsman and Hernandez was a defense attorney. Zapata testified in his forgery trial that Hernandez paid him 20% for referrals, but Hernandez told jurors that it was a lie. The Texas Disciplinary Rules of Professional Conduct (TDRPC) for attorneys forbids this practice.
Hernandez also testified that he had a confrontation with John Young before the will was probated. Hernandez said that he and his brother Frank attended the Sullivan estate probate hearing and told jurors that it was a “shocker to see someone lying through his teeth!”
Zapata was testifying at the time that John Sullivan had written the will in question, leaving his estate to Young. Hernandez pointed at an enlarged high-resolution image of the will in the courtroom and confirmed Zapata’s handwriting.
A handwriting expert brought in to analyze the contested will and handwriting samples from the three men—Sullivan, Zapata and Young—didn’t have the definitive answer attorneys may have hoped for. Instead, handwriting expert Sarah Pryor told the members of the jury that it’s “far from conclusive that Ray Zapata wrote the will.” However, to make matters less clear, she also said it is “far from conclusive that John Sullivan did not write the will.
The trial –with who-knows-what’s-coming-next twists and turns—continues in Texas.
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