Ellen Aguiar v. William Natbony, et al

Filing 3

AFFIDAVIT of SIGRID STONE McCAWLEY. Document filed by Ellen Aguiar. (arc) (Additional attachment(s) added on 8/18/2011: # 1 Ex 1, # 2 Ex 2, # 3 Ex 3 Part 1, # 4 Ex 3 Part 2, # 5 Ex 3 Part 3, # 6 Ex 3 Part 4, # 7 Ex 3 Part 5, # 8 Ex 3 Part 6, # 9 Ex 3 part 7, # 10 Ex 4, # 11 Ex 5, # 12 Ex 6, # 13 ex 7) (arc).

Accordingly, it was improper for the Kaplans to direct or influence Natbony's administration of
the Trusts and treatment of plaintiff Aguiar and her issue and Natbony acted in bad faith by
allowing them to do so.
21.

Irrespective of the powers granted to Natbony under the Trusts, he still was

subject to an unwavering duty of undivided loyalty to the trust beneficiaries and was thus
required to exercise reasonable care, diligence and prudence with respect to plaintiff Aguiar.
Natbony abused his discretion and acted in bad faith in violating his fiduciary duties to plaintiff
Aguiar. Plaintiff is entitled to a court order removing Natbony as trustee and a decree
invalidating the January 7, 2009 Amendments which removed plaintiff as a beneficiary.
D.

Natbony's Subservience to Kaplan and Conflict of Interest.

22.

Despite his obligation to be a disinterested trustee, Natbony was anything but a

truly disinterested trustee. Indeed, Natbony depends on Kaplan for his livelihood, a conflict of
interest that caused him to abuse his discretion, to breach his fiduciary duties, and to act in bad
faith.
23.

Not only was Natbony not a disinterested trustee, he also was a "subordinate" of

Kaplan within the meaning Internal Revenue Code Section 672. Consequently, Natbony is
presumed to be subservient to Kaplan in the exercise (or non-exercise) of his duties as trustee.
24.

Natbony's financial dependence on Kaplan is clear. In May 2007, Natbony

stepped down as partner at Katten Muchin and began working exclusively for Kaplan and his
companies. Kaplan appointed defendant Natbony the CEO of his company Tigris. In addition to
a salary as CEO of Tigris and as trustee ofthe Trusts, Natbony received payments from Pardus
LLC, a minority owner of Leor, including a payment of2.75 million dollars. In 2008, Natbony
received a payment of3.5 million dollars from Jaguar-Portland Holdings, another Kaplan related

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entity. Natbony's positions and holdings in the various companies owned and/or controlled by
Kaplan created an irreconcilable conflict of interest for Natbony, and caused him to abuse his
discretion and act in bad faith and otherwise interfered with his proper administration of the
Trusts.

E.

The Kaplans' Wrongful Conduct.

25.

Kaplan and his wife knowingly and improperly caused Natbony's conflict of

interest and used this power to induce and participate in Natbony's wrongful conduct, including
his breaches of fiduciary duty. The Kaplans knew that they controlled Natbony's actions as
trustee due to Natbony's dependence on them for his livelihood. The Kaplans also knew that
whenever they directed him to act in breach of his fiduciary duty, Natbony's conflict would cause
him to comply. The Kaplans, with Natbony's consent and participation, essentially managed the
Trusts, investing and using the assets of the Trusts for their own benefit.
26.

For example, at the direction ofthe Kaplans, and in order to favor them to the

detriment ofthe other beneficiaries, in 2006 and 2007 Natbony made elections pursuant to Estate
Powers and Trust Laws of the State of New York Section 11-2.4 (the "Unitrust Election").
These elections allowed Natbony to make larger distributions to the Kaplans, as Settlors of the
Trusts, than were provided for when the Trusts were created. Essentially the Unitrust Election
defined the annual income of each Trust as four percent (4%) of such Trust's value (calculated
annually) without regard to the traditional definition of income. Thus, for example, because the
initial value of Danfa's Trust was $5,000,000.00, prior to the election, the amount of income
available for Natbony to distribute to Dafua annually after the payment ofthe annuity amount

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would be minimal compared to the over $30,000,000 of income available to Natbony to
distribute to Dafna after the election. 5
27.

In order to mislead plaintiff Aguiar about the implications of the Unitrust

Election, Natbony sent her (and her issue) a one-page letter and a separate Consent and requested
that she execute the Consent to the Unitrust Elections. The letter failed to fully advise plaintiff
Aguiar about the consequences of the Election. In an effort by Natbony to avoid seeking the
Court's appointment of guardians to protect the interests of the minor and unborn children who
were beneficiaries of the Trusts, the letter and the Consent further requested that plaintiff Aguiar
sign on behalf of her minor children.
28.

Natbony abused his discretion and acted in bad faith by making the Unitrust

Elections, by failing to provide plaintiff Aguiar with full and appropriate information concerning
the election, by failing to advise plaintiff Aguiar to seek independent counsel and by failing to
ask the Court to appoint guardians for plaintiff Aguiar's minor issue. If plaintiff Aguiar had
known the consequences ofthe Unitrust Election (Natbony never rendered any accounting or
provided any other financial information), she would not have consented to the Unitrust
Elections.
29.

Natbony, with the Kaplan's knowing direction and participation, further violated

his duties to the beneficiaries because, rather than exercising his discretion in making
investments that would be in the best interest of the Trusts and their beneficiaries, Natbony made
investments that were directed by, and for the benefit of, the Kaplans while damaging the
interests of the other beneficiaries, including plaintiff Aguiar.

5 Natbony as trustee represented to the New York Surrogate Court in 200612007 that the Dafna Trust was worth
approximately $800,000,000.00.

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30.

Natbony allowed the Kaplans to dictate the activities of the Trusts. For example,

the Kaplans directed Natbony to purchase real property that benefited the Kaplans and their
interests, and Natbony did so without regard to whether the investments were sound or
productive. Natbony, at the direction of Kaplan, purchased non-income-earning land in the
Brazilian Pantanal for charitable use by Kaplan's Panthera Project. In addition, at Kaplan's
direction, Natbony caused the Trusts to purchase millions of dollars worth of art to be used,
among other things, for Kaplan's personal use and aggrandizement. Dafna Kaplan also directed
charitable donations to be made out of the Trusts to satisfy her personal charitable commitments.
Natbony's actions were not based on an exercise of his independent discretion as disinterested
trustee but, rather, were instead taken upon the direction ofthe Kaplans. These investments at
the Kaplans' direction were in violation of Natbony's fiduciary duty to conserve the assets of the
Trusts, and resulted in the dissipation of Trust assets.
31.

In addition to his breaches of duty, abuses of discretion and bad faith toward

plaintiff Aguiar, Natbony's open hostility toward them is evidenced by his use of his other·
positions with Kaplan and his companies to fight Kaplan's dispute against Gurna. For example,
as discussed above, Natbony (at Kaplan's direction) caused Leor to file a specious spite suit
against plaintiff Aguiar's daughter, Angelika Aguiar (another beneficiary of the Trusts), and her
husband for improper purposes of harassment and retaliation.
CAUSES OF ACTION
Count I
(Breach of Fiduciary Duty - Removal of Plaintiff
Aguiar and Her Issue as Beneficiaries)
32.

Plaintiff incorporates by reference the allegations contained in paragraphs 1 - 31.

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