A longtime philanthropist and widow of the co-founder of a home building partnership is suing her former financial advisers, alleging they made “big gambles” with millions of dollars of her assets to promote their own financial gain.
Plaintiff Glorya Kaufman brought the complaint Wednesday in Los Angeles Superior Court against Michael Rosenfeld, CPA Harvey Bookstein and Armanino LLP, of which Bookstein is a partner.
Representatives for Rosenfeld and Bookstein could not be immediately reached for comment on Kaufman’s suit, which alleges fraud, elder abuse, negligence and that the defendants put their interests ahead of hers.
The plaintiff is seeking unspecified damages.
Kaufman, now in her 80s, married Donald Bruce Kaufman, a building contractor, in the 1950s and they had four children. While working as a bookkeeper for a medical clinic, she sold her own car and some jewelry to help her husband buy land lots as the beginning of what would eventually become Kaufman & Broad, a Fortune 500 home building company he co-founded with Eli Broad that was later renamed KB Home.
After Donald Kaufman was killed in the crash of an experimental bi-plane in 1983, she started the Glorya Kaufman Dance Foundation, later known as The Glorya Kaufman Foundation, and funded the restoration of the dance building at UCLA that is now named Glorya Kaufman Hall.
She also made a substantial donation to the Juilliard School in New York City to create a largely glass-enclosed dance studio, and made a historic grant to USC to build The Glorya Kaufman School of Dance, which was opened in 2016.
Kaufman also funded the remodeling of the Los Angeles Public Library branch in Brentwood, which was renamed after her spouse, and is a founding member of the Los Angeles Museum of Contemporary Art, a patron of the Los Angeles County Museum of Art and sits on the board of the Geffen Theatre.
According to her court papers, Rosenfeld and Bookstein knew that Kaufman relied on them to protect her estate so that the charities she supports would receive gifts she desired them to have.
“Instead of protecting that legacy, however, (Rosenfeld and Bookstein) engaged in a self-dealing scheme to enrich themselves at the expense of Mrs. Kaufman and the charities that she supports,” the suit alleges.
The two men used their close relationships with Kaufman to put her at ease and she relied on their advice and guidance for years, telling her that her money and investments were in “safe hands,” the suit states.
Unbeknownst to the plaintiff, the pair created risky, self-dealing transactions where they used assets to make “big gambles” to promote their own financial gain, the suit alleges. Kaufman also alleges they ran transactions through a series of entities that they owned and controlled.
Kaufman, who “had no role in setting the terms of the financial transactions at issue and was generally unaware of their specifics,” learned only last year that Rosenfeld and Bookstein “violated her trust and confidence in connection with these transactions and “failed to provide (her) with full and complete books and records regarding the transactions at issue,” the suit alleges.
Kaufman believes the defendants wanted to “conceal material facts … and cover up their conflicts, self-dealing and other wrongdoing,” according to the complaint.
The two men occasionally had Kaufman sign documents without going over them with her and to this day have not provided vital information regarding the investments which they structured and control, the suit alleges.
In one deal, they directed Kaufman to invested $27.7 million in the Hotel Californian in Santa Barbara, but to date she “has not received any distributions of any kind on this large investment” and has not been provided any books and records despite her repeated requests, the suit alleges.
In another transaction, Rosenfeld and Bookstein induced Kaufman, through the Glorya Kaufman Trust, to make a $3.3 million loan to Castaic Development Partners in 2013 to build 150 homes in Lake Castaic, the suit states. But after seven years, Rosenfeld, as the manager of the project, and Bookstein, as the accountant, have not built any of the promised homes, nor have they provided any accounting or distributions to Kaufman, even though they have collected management and accounting fees, the suit alleges.
The two men also convinced Kaufman to sign a $40 million guaranty to permit a company owned and controlled by financier Leonard Ross to obtain a commercial loan in late 2015, but last July they told her Ross had defaulted on his obligations and that she could lose more than the $40 million on the personal guaranty that they had her sign, the suit alleges.
Kaufman alleges that the pair have delayed providing all the books and records relating to the transactions to cover up their wrongdoing.
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