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Richard E. Jacobs, The Cleveland Indians

Richard E. Jacobs Owner of the Jacobs Group, Jacobs Real Estate Services, The Richard E. Jacobs Group and former owner of The Cleveland Indians

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Nephew Sues Richard E. Jacobs over Handling of Late Brother's Estate;
Suit Filed by Walter & Haverfield LLP

"Nov 9, 2004 ... Nephew Sues Richard E. Jacobs over Handling of Late Brother's Estate; Suit Filed by Walter & Haverfield LLP"

"CLEVELAND -- Suit Claims 'Ongoing Campaign of Conflicts of Interest, Self-Interested Transactions and Self-Dealing'

Richard E. Jacobs, the shopping center magnate and former owner of the Cleveland Indians, has used his control of family trusts and partnerships to further his own interests at the expense of his late brother's widow and children, according to a lawsuit filed today by nephew David H. Jacobs Jr.

The complaint, filed in U.S. District Court in Cleveland, accuses Richard Jacobs of a "consistent and ongoing campaign of conflicts of interest, self-interested transactions and self-dealing" in his roles as trustee of two family trusts and as general partner and managing partner of two family partnerships.

The lawsuit seeks Richard Jacobs' removal as trustee of the two trusts, which were established by his late brother, David H. Jacobs, for the benefit of David Jacobs' family, and seeks the appointment of a fully independent trustee.

It also asks for damages and demands a full accounting of financial transactions of the trusts and related family businesses.

Total damages are not known, the suit alleges, but may include at least $50 million that family trusts could have netted if Richard Jacobs had called a $200 million loan used to finance properties in downtown Cleveland.

Additional charges that Richard Jacobs breached his duties to the trusts' beneficiaries stem from the sale of family-owned shopping centers to two real estate investment trusts (REITs), from a Jacobs investment of $218 million and from the expenditure of more than $30 million for severance and incentive pay for employees of the Richard E. Jacobs Group (REJ Group), which, the lawsuit claims, was inappropriate and not justified from a business perspective.

David Jacobs Jr., of Santa Monica, Calif., is one of three children of David Jacobs, who, with his brother, built a lucrative real estate and shopping center empire -- the largest privately held regional shopping center business in the country -- that consisted of 37 shopping centers as well as hotels and office buildings.

In Cleveland, the Jacobs brothers were key figures in the development of the downtown skyline, investing millions in projects that included Society Center (now Key Center), the Galleria and Tower at Erieview and the old Ameritrust Bank complex.

They owned the Indians from 1986 to 2000, and Jacobs Field bears the family name.

Placed a disproportionate burden on JRI, where he is general partner, when he obligated the partnership to pay more than $30 million for severance or "stay pay" packages for employees of the REJ Group.

The suit says Richard Jacobs arranged the payments without seeking the consent of JRI's limited partners, including David Jacobs' children and the family trusts, and without informing them until significant funds were paid to the employees.

The payments were aimed at preventing REJ Group Employees from leaving as Richard Jacobs negotiated the sale of properties to the CBL REIT; "stay pay" packages are bonuses to induce employees to remain with their employers.

JRI paid all of the "stay pay" and severance expenses of the REJ Group; other Jacobs business entities that also used the REJ Group's real estate management services did not share the burden, the suit says.

Moreover, it is believed that stay pay bonuses went to employees who also had been given ownership interests in the properties being transferred.

The bonuses were unnecessary, the suit maintains, since these employees already had incentives -- profit from their own interests -- to continue working through the transaction.

Acting as both lender and debtor, arranged for JGIC to lend JRI $218 million for an investment. The suit says that if Richard Jacobs were to allocate and distribute the note on the loan to JGIC's partners, they could contribute their shares to JRI in exchange for additional interest in JRI.

Such a move, according to the suit, would provide great benefit to the family trusts and David Jacobs Jr. Richard Jacobs, whose personal interest in JRI would be reduced by this move, has refused to do it.

Used his control of the marital trust to benefit himself and his children. The suit says Richard Jacobs invested a significant portion of marital trust funds with Goldman Sachs, an investment banking, securities and investment management firm, despite the objections of the David Jacobs family.

He also invested a small amount of his own children's trust funds and is believed to have received reduced fees for himself and his children's trusts because of the large investment from the marital trust.

Also named as a defendant is Western Fiduciary Corp., which is believed, according to the complaint, to be controlled by Richard Jacobs or his close associates.

It is believed, according to the complaint, that Western Fiduciary is co-trustee of the family trust benefiting the Jacobs children and that Richard Jacobs has named it or will name it successor trustee of the marital trust.

Besides seeking Richard Jacobs' removal as trustee of the family trusts, the suit asks the court to remove Western Fiduciary as co-trustee or successor trustee.

Note to Editors: The Jacobs brothers developed shopping malls in 13 states: Illinois, Indiana, Kentucky, Michigan, Missouri, Nebraska, North Carolina, Ohio, South Carolina, Tennessee, Texas, Washington and Wisconsin. Most of the shopping centers were sold to real estate investment trusts.) "

Source of Above Quote
http://findarticles.com/p/articles/mi_m0EIN/is_2004_Nov_9/ai_n6339630/

Sounds Like the Estate of Richard E. Jacobs is Some Pretty Dark and Dirty Money, odd and to think that Mark Sandercott, Husband of "Dick Jacobs" Daughter has "Denounced" himself from the Goldman Sachs Money but Don't mind sucking up.. Evil - Dark Money of the Richard E. Jacobs Estate and Well .. Much More That Later...

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