Scaife heirs file objections to trust fund expenditures (PA)

The son and daughter of the late publisher and billionaire Richard Mellon Scaife filed formal objections Wednesday to the depletion of a disputed trust fund, saying that $369.1 million in payouts, plus taxes and fees, were “abuses of discretion.”

David N. Scaife, 49, of Shadyside and Jennie Scaife, 51, of Florida filed the objections in Orphans Court, setting the stage for legal discovery and a trial.

The objections come about six weeks after three trustees — H. Yale Gutnick, James M. Walton and PNC Bank — disclosed 20 years of distributions, approaching $450 million, from an 80-year-old trust fund.

“The Trustees’ decision to fund past, on-going and future operating losses at the Tribune-Review Publishing Company and/or other related media companies from the principal of the 1935 Trust constitutes a waste of trust assets,” wrote attorneys William Pietragallo, Dennis A. Watson and James F. Mannion in the objections.

They also objected to payments of $84.4 million in taxes on the capital gains from the fund, $248,000 in legal fees and $1.9 million in compensation paid to the trustees, to the extent that those gains were related to distribution of assets for Mr. Scaife’s newspapers.

“They minimize the value of newspapers,” countered E.J. Strassburger, the attorney representing Mr. Gutnick. “Thomas Jefferson thought that newspapers were pretty important,” he said, citing the third president’s famous intimation that newspapers were more indispensable than government.

Mr. Pietragallo said the case isn’t about the value of newspapers, but rather “about the propriety and the integrity of the trustees” and whether they “properly administered the trust.”

The trust was created in 1935 by Sarah Mellon Scaife to support the welfare of her son, Richard Mellon Scaife. The remainder was to go, upon his death, to his children.

Hundreds of millions of dollars from the fund were dedicated to the Tribune-Review, and the last cents were spent in the months leading up to Mr. Scaife’s July death.

What’s next?

“We respond to it formally,” Mr. Strassburger said. “We’ll file something in the next few weeks.”

“We need to develop the facts, to prove the facts and prove the harm, just like any other case,” Mr. Pietragallo said. “The money value that was incorrectly given [from the fund] would be the value of the damages,” which could be charged to the trustees, he said.

Attribution:

Scaife heirs file objections to trust fund expenditures
Rich Lord
June 10, 2015
Pittsburgh Post-Gazette
http://www.post-gazette.com/local/east/2015/06/10/Scaife-heirs-file-objections-to-trust-fund-expenditures/stories/201506100243

Share
News