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June 27, 2010

Courtney Love Goes To Court, Cobain Trust Fund Missing Millions

Courtney Love Frances Bean Cobain

Courtney Love with Frances Bean Cobain at the American Idol Season 4 Finale Arrivals, Kodak Theater May 25th 2005

Frances Bean Cobain, the sole child of Kurt and Courtney Love Cobain, is at the center of a mother- daughter conflict involving millions of dollars in lost trust fund money, violence, private meetings and “super lawyers” from both California and Washington states.

Love lost legal custody of her 17-year-old daughter on Dec. 11 for undisclosed reasons.  Since then, Frances has been under the co-guardianship of Kurt’s mother, Wendy O’Connor, and his sister, Kimberly Dawn Cobain.  In January, in a separate matter from the guardianship, the trustee over Frances’ trust fund, filed to remove Love from her daughter’s trust fund and replace her with O’Connor .

The trust fund litigation is separate from the Los Angeles-based guardianship proceeding.  The trust fund was created in Seattle, King County, Wash. in 1997 after Frances’ father Kurt, the former lead singer, guitarist and songwriter of Nirvana died in April 1994 without a will. 

Frances is the trust’s sole beneficiary but Love has a responsibility to review expenses and disbursements before they are paid out by the trustee of the Frances Bean Cobain Irrevocable Trust Fund.  She also has the right to review financial statements and to act as an adviser regarding the management of the trust, but after statements revealed that the trustee, Laird Norton Tyee Trust Company, lost $8 million of Frances’ money in 2008, Love stopped receiving financial statements, her attorneys say.     

Laird Norton, a Seattle wealth and investment management firm, is the fiduciary meaning primary trustee over Frances’ money with investment and financial distribution power.  Love filed in February to remove Laird Norton as trustee after her attorneys discovered what they say is the extent of prolonged misconduct, wholesale breaches of duty and concealment thereof.  In addition to withholding financial information, they say Laird has and/or plans to use trust funds for improper purposes such as retaining and paying for legal counsel for O’Connor.

“The last statements which it provided before deciding to proceed in secret reveal that in calendar year 2008, LNTCC (Laird) lost over $8,000,000 in trust assets.  It is ironic that LNTCC now asserts that it must keep further disclosure of its activities from Ms. Love, as Advisory Trustee, in order to prevent her from supposedly ‘depleting the trust,’” say Love’s lawyers from Pryor Cashman and the Seattle-based firm of Danielson Harrigan Leyh & Tollefson.

In May 2009, Barbara Potter, executive vice president and managing director of fiduciary services at Laird Norton, conducted a meeting without Love being present:  Participants included Karen Boxx, guardian ad litem;  O’Connor, the grandmother and a then 16-year-old Frances.  During that time,  Potter declares, she discussed “the support that the trust provides as well as other matters” with Frances.

“In that meeting Frances expressed concern about her mother’s access to the trust.  She was concerned that her mother’s actions were depleting the trust.  At that time, Frances asked that her mother not have any control over, or information regarding, her trust,” says Potter.

The guardian ad litem adds, “During that meeting, Frances indicated to me that she did not want the trustee sending statements to her mother, Courtney Love.  Frances expressed concern about safeguarding her trust assets from her mother.”

However, Love hasn’t been entitled to act on behalf of the trust or to dispose of trust assets since 2006 when the parties reached a revised agreement on their respective roles.  Further, any discretionary expenses submitted to the trust in excess of $5,000 would have been approved by the guardian ad litem.

Who wins financial control now may rest on findings regarding the lost $8 million, the financial details of the trust’s health to date, and whether a judge agrees that Laird violated the terms of the trust agreement.  Meanwhile, lawyers for Laird Norton refuse to share any financial details with Love. 

In January 2010, Love’s attorney William Charron of Pryor Cashman, contacted Matt Harrington of Stokes Lawrence, lawyers for Laird Norton, and asked him to provide the financial reports that Love was entitled to see under the revised 2006 agreement.

Though Harrington indicated he would send them, he never did so.  Therefore, James Janowitz, who is also with Pryor Cashman, contacted Scott Johnson, another lawyer at Stokes Lawrence associated with Laird.  Johnson told him that no such statements would be provided.  He informed Janowitz that they had sent statements through February or March 2009, but then there was “considerable uncertainty and instability in who serves as the business manager” and “the trustee had not had an address for Ms. Love.” 

Pryor Cashman says that as per the declaration of Potter, Laird Norton had met Frances in May 2009 and maintained communications with O’Connor, Frances’ grandmother and Kimberly Dawn, Frances’ aunt; therefore, they could have asked Frances or her grandmother at any time what address Frances lived at with her mother in New York.  Pryor Cashman also asserts that Laird knew and communicated with Steven Pines whom Love appointed as her business manager in June 2009.

The financial records may be telling and further investigation, if supported by the court, may reveal  who lost the money from Frances’ account, and who if anyone should be removed from her trust fund.

“The money is never missing, not really.  You just have to find it,” says Seattle attorney Scott Henrie.  “The thing you need to trace money is the bank records, although financial statements help.  It is much harder to falsify bank records.  Checks get negotiated through the banking system and flow through other parties.”

Henrie, an attorney with William Kastner of Seattle, has extensive experience in forensic accounting and trust litigation.  He says that the easiest way for someone to find where money went is to sue and get the financial statements.  Henrie, who is not assigned to the case, represents the creditors and trustee in the Michael R. Mastro case, one of the largest bankruptcy and fraud cases in Washington state history, involving millions of “lost” dollars.  He is currently in litigation and investigating a Seattle real estate developer for money laundering in the Mastro case. 

As for the lost $8 million and who might be at fault, Love doesn’t have direct access to the trust and submits bills and receipts for Frances’ health, support and education, through a third party.

Meanwhile, Laird claims that in 2006, Love, “desired a role, so the purely ceremonial role of ‘Advisory Trustee’ was created.” 

Love’s attorneys counter that Laird’s characterization of the role as “purely ceremonial” reflects its dismissal and significance, “or necessity of the advisory trustee’s oversight of its activities, which, as set forth, have cost the trust millions of dollars.” 

Laird Norton, toward its effort to replace Love as the advisory trustee with O’Connor to become the adviser and one to submit bills and receipts on behalf of Frances in an arrangement that could last until Frances turns 25, Laird has attempted to get at private, sealed documents from the Los Angeles guardianship case.

On Feb. 11, Laird’s attorneys produced a subpoena requesting “all pleadings and exhibits filed, including those under seal” and all documents produced to other parties by the guardians’ attorney, Geraldine Wyle,  Hoffman, Sabban & Watenmaker.  But Love’s lawyers in the family matter, Trope and Trope, object.

“The matters at issue in the guardianship case are of a very sensitive and private nature between a mother and a daughter,” says Trope and Trope. 

They add that the subpoena itself is “contrary to a minor child’s (Frances) wishes to have the records in her Los Angeles case sealed.” 

They also say the documents contain, “private, personal sensitive information” and that it would be a violation of Love and her daughter’s right to privacy.  A Los Angeles Superior Court judge will hear the matter on May 28. 

Meanwhile, the guardianship will terminate in August when Frances turns 18 and many in the blogosphere have wondered what happens then. 

“When Francis turns 18, she becomes legally competent to enter into contracts and can therefore manage her own money,” says Henrie.  “Someone under 18 needs a legal guardian because they can not enter into contracts on their own behalf.  The inability to contract makes it impossible to manage property.

“The issue of her turning 18, may be that at age 18 she will have capacity to sue her trustees for any breaches of fiduciary duty. There are also various provisions for replacing trustees,” he says. 

The trust itself is fairly standard, says Henrie.  Until Frances turns 25, she gets what the trustee(s) think is necessary for her health, support and education while taking into account her mother’s resources.  Frances is not supposed to receive any of the principal from the trust until then unless there is an emergency.  At 25 she will receive one quarter of the principal, one-third at age 30, one half at 35 and whatever is left of the principal when she turns 40 and the trust terminates.  

Love herself is not financially dependent on the trust funds for her independent support and maintenance as a court ruled in December 1996 that Kurt’s estate consisted of both separate and community property. 

Henrie explains, therefore, that the trust only holds half of Kurt’s separate property, while Love holds the other half and also holds everything that was formerly community property.  Frances basically has in trust half of what Kurt had at the time he married Love.  

“You could figure it out to some extent by looking at what Kurt had copyrighted at the time he married Courtney, basically anything he wrote, even if it was not released, at the time he married. Once music or a song is reduced to writing, it has a common law copyright. 

There is no need to take any formal action.  The daughter has half of that in trust.”

The initial assets of the trust included the rights relating to merchandising, image and likeness of her father, compositions owned by EMI/Virgin Music and an interest in Nirvana, LLC.  A 1998 court document from 1998 reveals that as to royalties from the music, Love gets 72.6 percent while the trust receives 27.4 percent.   As to the rights and interests related to Kurt’s image and likeness, Love receives 55 percent while the trust receives 45 percent. 

There have been previous conflicts between Love and Laird Norton over money and financial control.  In 1998, when Love and Laird were co-trustees of the trust, they created The End of Music LLC to receive and disburse royalties from Kurt’s estate to accounts such as to Frances’ trust fund. 

Ten years later, EOM opened an account at First Republic Bank in California.  When the bank attempted to close the account a year later they quickly became aware of a dispute between Laird and Love.  The bank froze the $1.2 million account in late summer 2009 and deposited the money with the court.  A judge dismissed the case on Nov. 6, 2009 after an undisclosed settlement was reached with no details as to where the funds were put.   

A jury trial is scheduled in current Love and Laird action for July 6, 2010 unless a settlement is reached or the case is otherwise dismissed.  Lawyers for Laird want the trial and all related documents to be sealed.  If successful, the public may never know who is responsible for the depleted funds.  However they may be thwarted in their quest for privacy and silence.

“As for sealing, Washington courts are loath to that,” says Henrie.  “But if it can be justified, say one of the reasons they are trying to ditch the mother is a health concern, then the court may find that sealing the record from the public is appropriate.  Sometimes there is a commercial reason, a trade secret or something similar.  It is very factually specific and the court must make specific factual findings to support sealing the record.”

Source: Puma Press

By: Carmela Kelly, May 2010

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Filed under: Mandi's Planet,Media Celebrity News by Mandi at 9:41 pm

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