A Rockefeller heiress who is also a major donor to Gov. Andrew Cuomo is suing JPMorgan Chase claiming the big bank nearly wiped out her multimillion – dollar trust fund.
Sleepy Hollow psychiatrist Lucy Waletzky, 77, whose grandfather was Standard Oil founder John D. Rockefeller Jr., says that bankers who administered her trust sold off the family’s oil stocks to win fees from corporations like Boeing.
Her $2 million account would have topped $24 million had the bankers held on to her family’s stocks, she argues in Manhattan Supreme Court filings.
Instead they sold them off “to gain power and influence over corporations by buying significant equity positions, often gaining seats on these companies’ boards, and then using this influence to cause the corporations to transact business with the banks,” according to court papers.
JPMorgan swapped the family holdings for shares in Boeing, Texas Instruments and 19 other companies in the 1960s and ’70s even though Standard Oil stocks were surging at the time.
Following the purchases JPMorgan reaped fees from the corporations including through a revolving $200 million line of credit with Boeing, the suit says.
All the stocks were eventually sold at a loss. Waletzky didn’t learn about the depletion until the bank gave her an accounting of her trust in 2012.
“The trustee owed to the trust and Dr. Waletzky a fiduciary duty, including an undivided and undiluted loyalty that requires the trustee to avoid self-dealing,” the heiress says in court papers.
Waletzky, a philanthropist who serves on numerous boards including as chair of the state Council of Parks, showered Cuomo with $50,000 in contributions over the past two years.
She also single-handedly funded the governor’s Women’s Equality Party, according to Crain’s. The party got just over the 50,000 votes needed to stay as a ballot line for the next four years, Crain’s reported in January.
A judge ruled last week that Waletzky’s suit could proceed after JPMorgan lawyers claimed that all they could find to explain the decades of transactions were 88 pages in an old file room.
The bank offered another defense that didn’t seem to sway the judge. Waletzky “is also a beneficiary under a separate trust established in 1934 also by her grandfather John D. Rockefeller Jr., under which [she] and her daughter receive multi-million dollar distributions annually,” lawyers argued.
In her decision Judge Rita Mella said that JPMorgan must provide more information about its handling of the trust to determine whether the bank violated its “unwavering duty of complete loyalty” to Waletzky.
“A fiduciary’s actions motivated by an interest to benefit itself, even if indirectly, at the expense of the trust constitutes self-dealing,” she wrote.
If Waletzky wins the suit she could collect the estimated value of her trust had the bank kept her family’s stocks. The bankers would also have to return fees charged for administering her trust and cover her legal costs.
The heiress’s attorney, Thomas J. Wiegand, called the interim ruling “through and well reasoned.’
“We look forward to moving ahead with the litigation,” Wiegand said.
A JPMorgan spokesman declined to comment.
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