Show biz’s hardest-working man’s estate left with little to show

Lawyers: James Brown legal battle appears nearing an end
Katrina A. Goggins, Associated Press Writer
August 21, 2008
USA Today
http://www.usatoday.com/life/people/2008-08-20-james-brown_N.htm
COLUMBIA, S.C. — James Brown’s children, the woman who says she’s his last wife, and the state of South Carolina are nearing a settlement over the late soul singer’s estate, attorneys involved with the case said Wednesday.

The agreement also appears to include an inheritance for 6-year-old James Brown II, whose connection to the music legend had been questioned by trustees of the singer’s estate, said a lawyer for the boy, who took a DNA test in April.

“We’re pleased,” said attorney Peter Shahid. “It answers any questions we have as to whether or not he will receive anything and what share he should receive.”

He said the settlement is “a very positive agreement” for his client and everyone else involved.

The issues at stake include the singer’s trust fund for poor children, his estate, the legality of his last marriage and splitting up his possessions, including his lavish Beech Island home. Major factors also include the rights to the music and image of Brown, who died on Christmas Day 2006. The total value of Brown’s assets has not been made public.

Tortured Soul
James Brown’s heirs are locked in a drag-out fight over his estate—even though there’s not much there.
Mary Bridges
August 2008 Issue
Condé Nast Portfolio
http://www.portfolio.com/culture-lifestyle/culture-inc/arts/2008/07/16/Fighting-Among-James-Browns-Heirs?print=true
As fodder for a James Brown song, it would be hard to beat the unfolding legal battle over the singer’s estate.

Sex and greed are players, as are missed opportunities and longing. At a recent court hearing, a judge asked to see the lead counsel in his chambers and 21 lawyers stood up. There are six children named in his will, and five are now challenging it. There’s also a disputed fourth wife—a onetime Janis Joplin impersonator—with another child she claims is Brown’s. Meanwhile, the three men Brown chose to oversee his trust are being sued for allegedly siphoning off nearly $14 million. And the lawyer he hired to put the will together is serving 30 years in a South Carolina prison for murdering a strip-club manager.

The only thing missing right now: something concrete to fight over.

Though Brown earned as much as $80 million a year during his heyday, he left behind few assets—the most valuable of which is potentially his reputation. But instead of marketing the singer’s name, Brown’s many would-be beneficiaries have spent the year and a half since his death locked in a drag-out fight. While Elvis Presley’s estate took in about $49 million last year and John Lennon’s about $44 million, the biggest deal going for Brown’s family is a Christie’s sale set for July 17—and the estimated proceeds from that, about $2 million, will go mostly to pay legal bills. There had been a contract with a toymaker to manufacture James Brown dolls, but the deal expired after a year. There was once talk of turning Brown’s former home, in Beech Island, South Carolina, into a Graceland-like attraction. But when the auction strips the house of Brown’s effects—the domed dryer in the hair salon, the 1974 Mercedes coupe in the garage, and the 42 jumpsuits in his closet—the place will be a shell that’s two and a half hours from the nearest major airport, in Atlanta.

How did the hardest-working man in show business leave behind so little to so many? Mostly because of a ridiculously complicated estate. In August 2000, Brown signed a will that left “personal and household effects” to his six children. He also created the I Feel Good trust to educate poor kids in South Carolina and Georgia. Around the same time, Brown married his fourth wife—in a union that was later contested—and his will was never altered to include her or the son she says she had with Brown. What’s more, he left behind multiple personal complications, from mistresses to a mounting number of grandchildren, each of whom could stake a claim on Brown’s potential fortune.

In another wrinkle, the singer, back in 1999, mortgaged the royalties to most of his songs in a so-called Bowie Bond, named for the singer David Bowie, who was the first to benefit from one. The deal gave Brown $26 million up front, while the purchaser, TIAA-CREF, the financial-services company best known for managing teachers’ pensions, got royalties to hits like “Get Up (I Feel Like Being a) Sex Machine.” Today, while Brown’s songbook generates roughly $5 million a year (putting him ahead of James Dean and Bob Marley on Forbes’ list of top-earning dead celebrities), all of the revenue goes to TIAA-CREF. Depending on album sales and the success of other moneymakers like ring tones and single downloads, it could be another five to 10 years before the $15 million balance is paid off, says David Pullman, the financier who structured the bond.

In the meantime, the legal mess has scared off other potential business partners. Imagine Entertainment, the production company behind A Beautiful Mind and The Da Vinci Code, paid $1 million over the course of a decade for options to make a James Brown bio­pic. It was widely reported that director Spike Lee co-wrote and circulated a script. But last summer, Imagine let its options lapse. “We’re going to wait until the family resolves its issues before we decide what we’re going to do,” says company president Michael Rosenberg.

Similarly, a reality-TV show, Who Will Be the Next Godfather of Soul? was in the works but has been dropped. There were also discussions with talent agency William Morris to use Brown’s name, image, and likeness in exchange for “tens of millions of dollars over the next several years,” says Toby Byron, a television producer who worked with the estate. Such deals would require approval of the court-appointed overseers, but the hearings in South Carolina have focused not on business opportunities but on alleged mismanagement of Brown’s affairs. The court-appointed trustees “are so busy with all the litigation, they don’t have time” to pursue other business, says Louis Levenson, the lawyer who is representing five of the six children named in Brown’s will.

Brown’s grandson Forlando Brown, a 22-year-old college senior, hasn’t made much headway with his family either. Having teamed up with Atlanta consultant Terry Cox, Forlando has visions of creating everything from a signature James Brown golf course to a line of children’s books. He has left it to Cox, a former vice president of the restaurant chain Fuddruckers, to offer $80 million to $100 million to buy Brown’s assets and rights to his name and works. Cox says the trustees have not responded to his overtures.

The only possible upside to the continued family battles is keeping Brown’s name in the headlines and potentially propping up his music sales. Already, since Brown’s death on Christmas Day, 2006, sales of his albums have more than doubled, to 376,000, according to Nielsen SoundScan. “The more controversy, the better,” says Pullman. “But that doesn’t mean this is maximizing assets.”

Stewards of James Brown Estate Sue Morgan Stanley
Lynnley Browning
April 24, 2008
The New York Times
http://www.nytimes.com/2008/04/24/business/24brown.html
A dispute over the estate of the legendary soul singer James Brown has reached a bitter new pitch — on Wall Street.
The estate’s guardians are accusing Morgan Stanley, the investment bank, of failing to prevent the estate’s previous manager, David G. Cannon, from draining millions of dollars held for Mr. Brown at the bank.

The money, which was to be used to finance Mr. Brown’s lavish personal lifestyle, came from the 1999 sale of $26 million of “Pullman bonds” that were tied to Mr. Brown’s future royalty income.

The Brown estate’s guardians have already sued Mr. Cannon and two other former business managers, contending that the three men defrauded Mr. Brown, the “Godfather of Soul,” over many years. On Monday the guardians, who are court-appointed trustees, filed a separate civil lawsuit against Morgan Stanley in Federal District Court in South Carolina. Both lawsuits seek to recover the lost money as well as damages.

It is unclear how much is left of Mr. Brown’s estate, though his songs, including classic soul hits like “I Got You (I Feel Good),” continue to produce royalties. Some of his heirs want to turn his home in Beech Island, S.C., into a Graceland-style attraction for fans.

After Mr. Brown, the self-proclaimed “hardest-working man in show business,” died on Dec. 25, 2006, a welter of lawsuits emerged involving his children and grandchildren, people who claim to be his children, his wives, and women who claim to be his wives, each seeking a piece of the singer’s estate. His latest will was drawn up around 2000 by H. Dewain Herring, a Columbia, S.C., lawyer who is serving 30 years in prison for the 2006 murder of a strip club employee.

In a statement Wednesday, Morgan Stanley said that the newest lawsuit “is without merit and we will contest it vigorously.” The bank said it had documentation authorizing Mr. Cannon to manage the funds in question.

Though held in the name of James Brown Enterprises, the Morgan Stanley investment account was set up to produce $1.1 million a year for Mr. Brown’s personal use.

The estate trustees, Adele J. Pope and Robert L. Buchanan Jr., who are both lawyers, accuse Mr. Cannon of improperly engineering $6.7 million in withdrawals from 2000 to 2002 to James Brown Enterprises, which was controlled by Mr. Cannon and which, with Mr. Brown’s trust, controlled the bulk of Mr. Brown’s estate. Mr. Cannon then transferred $4.2 million to himself, the new lawsuit contends. The entire $10 million account was depleted by 2002.

Joseph Lizzio, the Morgan Stanley financial adviser who oversaw the account, said in a 2007 deposition that “it was just understood” that the account was for Mr. Brown’s personal use, not for Mr. Cannon or for business enterprises.

Mr. Lizzio said that he questioned Mr. Cannon about the transfers and received cursory replies, and even tried to call Mr. Brown once but could not reach him. Mr. Lizzio said he was worried about offending Mr. Brown by calling him too much.

While it is not atypical for estate lawyers or court-appointed trustees to sue former business managers, it is unusual for them to sue the banks that managed the accounts overseen by the former managers, said Alan F. Rothschild Jr., an estates lawyer who is a senior member of the section of the American Bar Association that focuses on estates and trust law. Such disputes are typically handled through arbitration.

Lawyers for the estate have argued that Mr. Brown never signed any documents agreeing to arbitration. Nevertheless, the trustees have filed arbitration proceedings over some of the transfers.

In 2002, Mr. Cannon transferred the assets of James Brown Enterprises to Seventh Decade Productions, an entity he exclusively owned and controlled, which opened its own account at Morgan Stanley. Mr. Lizzio, who also oversaw the Seventh Decade account, said in his deposition that had he known that Mr. Brown had no ownership in or control over Seventh Decade, he would have devised a new investment strategy for Mr. Brown.

Suit Tangles Issue of James Brown’s Estate
Lynnley Browning
February 8, 2008
The New York Times
http://www.nytimes.com/2008/02/08/business/08estate.html
He called himself the “hardest-working man in show business,” and now, even in death, there is little peace for James Brown.

Mr. Brown’s estate was already the subject of a raft of lawsuits and squabbling involving his children, grandchildren, children whose paternity has been asserted but not yet proved, three wives and a companion who says she was his fourth wife.

Now, a lawsuit filed Tuesday by two court-appointed trustees of his estate accuses his longtime business managers, including a retired judge, of stealing millions of dollars from Mr. Brown. The suit, filed in South Carolina state court, also accuses the law firm of Greenberg Traurig, one of its lawyers, and a South Carolina bank of breach of fiduciary duty, negligence and conspiracy to defraud the legendary soul singer.

Full of drama, the legal wrangling could be straight out of Mr. Brown’s turbulent life, reflected in songs that revolved around women, alcohol and the blues. He sold millions of records in a career that began in the 1950s and included hits like “I Got You (I Feel Good),” “Papa’s Got a Brand New Bag” and “Hot Pants.”

With his trademark pompadour, flashy suits and fancy footwork, he maintained a constant touring schedule up until his death on Christmas Day in 2006. He spent lavishly on cars and clothes. But with royalties and other income from his many songs, he left an estate that may have been worth tens of millions of dollars, though the current value is unclear.

The lawsuit is seeking to recover the lost money as well as damages.

The lawsuit filed by the two trustees of Mr. Brown’s estate, Adele J. Pope and Robert L. Buchanan Jr., both lawyers, focuses on one of the three former managers, David G. Cannon, accusing him of siphoning at least $10 million since 1999.

The complaint also states that Mr. Cannon may have forged Mr. Brown’s signature to obtain a 40 percent interest in royalties from the James Brown dancing doll, an interest worth $95,000.

Mr. Cannon, who was Mr. Brown’s accountant and business manager beginning around 1991, worked with Albert H. Dallas, Mr. Brown’s personal lawyer since around 1984, and Alfred A. Bradley, a former South Carolina magistrate judge. Mr. Bradley became a trustee of Mr. Brown’s will, shared power of attorney over his affairs and wrote liner notes to at least one of his albums. Both Mr. Dallas and Mr. Bradley, who along with Mr. Cannon were trustees of Mr. Brown’s estate until late last year, were named as defendants in the suit.

Mr. Bradley’s involvement with Mr. Brown apparently began in 1990, when he served as Mr. Brown’s prison work-release program “sponsor.” Mr. Brown had spent 15 months in a South Carolina jail and 10 months on a work-release program after a 1988 run-in with the police that culminated in a car chase across two states.

Mr. Cannon resigned in August 2007 as a trustee of Mr. Brown’s will after complaints of mismanagement from Mr. Brown’s heirs. Last November, a South Carolina state judge ordered him to repay around $350,000 to the estate, which he did. Calls to Mr. Cannon, in Barnwell, S.C., were not returned.

In November, after renewed complaints, a South Carolina state judge removed Mr. Bradley and Mr. Dallas as trustees, and appointed Ms. Pope and Mr. Buchanan in their place.

Calls to Mr. Dallas, in Thomson, Ga., and to Mr. Bradley, in Aiken, S.C., were not returned.

The lawsuit also accuses Enterprise Bank of failing to prevent the former business managers from mismanaging funds through accounts held there. Also, the suit says that Greenberg Traurig and one of its lawyers, Joel A. Katz, worked with the three to rake in excessive fees and commissions.

An official at Enterprise Bank said the bank had not seen the complaint and declined to comment.

Mr. Brown earned gross revenues of around $5 million a year from concerts and touring, the complaint said. His latest will was drawn up around 2000 by H. Dewain Herring, a Columbia, S.C., lawyer who is now serving 30 years for the 2006 murder of a strip club employee.

Some of Mr. Brown’s heirs hope to turn his estate in Beech Island, S.C., into a lucrative Graceland-style tourist mecca. His songs also continue to produce royalties.

The bulk of Mr. Brown’s estate was held in a trust and in James Brown Enterprises, which was controlled by Mr. Cannon, according to the lawsuit.

The complaint says that Mr. Cannon received an “exorbitant” fee of $4.9 million for helping Mr. Brown sell $26 million worth of “Pullman” bonds in 1999 that were based on his future royalty income. The bonds are named for a New York financier, David Pullman, who pioneered them for entertainers like David Bowie and Marvin Gaye.

About $10 million of the proceeds were invested in an account at Morgan Stanley that was controlled by Mr. Cannon.

That money is now largely gone, the complaint said, because Mr. Cannon siphoned it off to himself, to entities he controlled and to his fellow trustees.

Lawyers for the two current trustees who sued the former business managers declined to comment on Thursday.

The complaint also says that the three former business managers worked with Mr. Katz, who was Mr. Brown’s lawyer at Greenberg Traurig for about three decades, to try to refinance the bonds in 2005 through a loan from the Royal Bank of Scotland.

The deal would have generated fees of at least $2.7 million for the managers and lawyer — who charged Mr. Brown from $800 to $900 an hour — but would ultimately have cost Mr. Brown around $5 million, the suit says, and was not advantageous to him. The proposal fell apart in 2006 after a lawsuit against the managers.

In a written statement, Jill Perry, a spokeswoman for Greenberg Traurig, said: “James Brown never indicated to Joel Katz that he was unhappy with any legal services that Joel or our firm provided. We are confident that, when the true facts are presented, it will be clear that the plaintiffs’ claims are without merit.”

Greenberg Traurig has been in the news before. From 2001 through early 2004, the law firm employed Jack Abramoff as a top Republican lobbyist and power broker in its Washington office. Mr. Abramoff is serving six years in a prison after his conviction in 2006 on fraud charges stemming from a corruption scandal.

In separate legal proceedings, Tomi Rae Hynie, a former backup singer who says that she was Mr. Brown’s fourth wife when he died and is the mother of his young child, James J. Brown II, is making a claim to half of Mr. Brown’s estate.

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