DATELINE: December 3, 2007, Chicago
On November 29, 2007, the IRS issued a private letter ruling to the Maddox Foundation Trust blessing the transfer of $55 million from the Maddox Foundation, a Mississippi nonprofit corporation, to the trust. Specifically, the IRS ruled that the distribution would not...
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Dateline, May 19, 2007, Chicago
This past Friday, the Maddox Foundation litigation settled. Tennessee Attorney General Robert E. Cooper, Jr. and Nashville District Attorney General Tory Johnson have made a serious mistake in agreeing to this settlement, which takes place on the eve of a trial...
Dateline: May 16, 2007, Chicago
Richard Lawson of the Nashville Post reported yesterday that the battle over the Maddox Foundation assets may be headed toward a settlement. Maddox Foundation Legal Battle Could Be Near Settlement, May 15, 2007. According to Lawson, the costs of litigation have caused everyone to consider whether seeking a definitive court resolution of the dispute is worth the additional cost, particularly when there are likely to be appeals from any verdict. Lawson reports that the parties may agree to a division of the assets, with some presumably returning to Tennessee and others staying in Mississippi.
Settlement is of course always an option in any litigation. Normally, we would not object to a settlement, but in this case will object strongly. This is not simply a dispute between two parties to a business transaction. There are serious allegations of misuse of charitable assets.
Particularly troubling is the fact that millions of dollars have apparently been spent over the last several years by both sides to prepare the case for trial. With a trial finally in sight, settlement makes little sense to us--yes, we know about sunk costs. Those costs were foreseeable two years ago. Consequently, there is little or no excuse for a decision to settle on the eve of a trial.
Dateline, April 12, 2007, Chicago
In recent years, a number of foundations have been subject to allegations of inappropriate insider self-dealing. Both the Bielfeldt and Maddox foundations come to mind. Woody Woodruff, the Nashville attorney representing the State of Tennessee in the Maddox proceedings, has slyly played his hand, taking on the appearance of a Venus-fly trap. Woodruff knew that the Maddox Foundation’s president, in her capacity as a co-executrix of the Maddox estates and a fiduciary, would have to return to the Tennessee courts and account for her activities in those capacities. Based on its most recent ruling—that Maddox Foundation President Robin Costa appear in court and show why she is not in contempt of the court order limiting transfers of Maddox Foundation assets—sets the stage for Woodruff’s enticing jaws to snap shut during an August trial that has been scheduled to resolve the dispute. The Massachusetts court system also sent a signal, refusing to release funds to the Maddox Foundation held in a managed investment account.
The Bielfeldt Foundation case has been off the radar screen for some time, seemingly lost deep in the Illinois court system, at least from the public’s viewpoint. That may be about to change. Last month, Mike Ramsey of the Copley News Service reported that Attorney General Lisa Madigan would be amending her original complaint. Lawsuit Pursued Against Bielfeldts, March 17, 2007. That was taken as an indication that parties have not been able to reach a settlement over the conduct of certain family members vis-a-vis the foundation. Madigan is seeking to recover $9 million in commissions and fees, as well as $32 million in depleted charitable assets from Bielfeldt family members.
Both the Maddox and Bielfeldt cases have moved at a glacial pace (at least before global warming became an issue), but both have received media attention, particularly the Maddox Foundation Not so with Santa Barbara’s Schlinger Foundation. There has not been a peep...
The DeSoto Times (January 27, 2005) reported that the Mississippi Attorney General would speak at a special meeting of the DeSoto County Board of Supervisors to discuss the Maddox Foundation litigation. According to this press account, the meeting would not be public because it would involve ongoing litigation. According to the Sun-Herald (February 4, 2005), the meeting took place as scheduled. The Sun-Herald article does not indicate...
The states of Tennessee and Mississippi continue to wrestle over the Maddox Foundation assets, with Mississippi forgetting that there are two fundamental questions at issue in this case. The first and far more important question is whether the assets are being protected from mismanagement. The second question focuses on which of these two states will ultimately have jurisdiction over the assets. The parties should be careful not to lose sight of the first question as the legal wrangling takes on a life of its own. In fact, there may be a need for King...
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Things are heating up in the battle between Mississippi and Tennessee over control of the Maddox Foundation and its assets. This isn’t a question of law, it is a question of...
Litigation has now commenced over whether the Maddox Foundation’s assets have been diverted from their charitable purposes. The State of Tennessee (represented by the Davidson County, Tennessee District Attorney) is asserting that there has been a breach of duties, that the Foundation’s assets should have never left the state of Tennessee, and that those assets have been mismanaged. One of the two trustee/directors has given an Affidavit dated August 30, 2004 (the “Affidavit”) in the lawsuit commenced by the State of Tennessee against the other trustee/director. Our copy of the Affidavit is unsigned. We also have an unsigned copy of the Complaint, which is based on the same factual allegations set out in the Affidavit. As is often the case in these disputes, the facts and allegations could serve as the basis for a soap opera....
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