Lawsuit Claims Citibank Deprived 104-Year-Old Heiress of $80M

Lawsuit claims Citibank deprived 104-year-old heiress of $80M
The New York Post by Dan Mangan - September 6, 2010

A stunning lawsuit accuses Citibank of costing a 104-year-old Manhattan heiress’s trust fund up to $80 million by failing to invest its money properly, The Post has learned. More than 70 years after a $3 million fund was established for reclusive, eccentric Huguette Clark in 1926, "the trust’s value was still only $3 million" because it was never invested in stocks and bonds as it should have been for at least part of that time, claim explosive documents filed by two former Citibank trust officers. The money had apparently been parked completely in bonds for decades, generating some income for Clark to live on but little or no growth for the fund balance, the court papers claim. Citibank’s handling of the fund "needs to be independently investigated because the liability is now about $80 million which [the bank] owes to [Clark’s] trust," according the lawsuit filed by former Citibank trust officers John Cullen and Veronica Juliano. The two former trust officers are soon set to meet with the DA’s office, which is probing possible mismanagement of Clark’s $500 million fortune by her lawyer, Wallace Bock, and accountant, Irving Kamsler. In addition to the bank’s alleged mishandling of Clark's so-called charitable remainder trust, the trust officers' lawsuit charges that Bock knew about Citibank’s screw-up at least as far back as 1998. But the legal papers say Bock dropped his threatened lawsuit against the bank after it hired him for $10,000 to represent it during an accounting of the trust. "I asked, ‘Isn’t that a conflict of interest, since [Bock] wants to sue us,’¤" Cullen wrote in court documents. He said his manager told him that that’s what the bank’s legal department had instructed. Clark's trust fund was set up by the heiress’s mother, Anna, the year after Clark’s father, US Sen. William Clark of Montana, died. Huguette Clark spent her life obsessively collecting dolls and shunning visitors, marrying once — briefly — and having no children. She has lived for the past two decades in Manhattan hospitals. Her story only came to light recently after the media reported that Bock has kept her few, distant relatives from visiting her and not objected to a convicted sex offender, Kamsler, serving as her accountant. Meanwhile, Bock and Kamsler have sold off her $23 million Renoir painting and $6 million Stradivarius violin, supposedly with her blessing, as her two massive mansions have stood vacant for nearly 60 years, costing her millions in upkeep. Under the terms of the trust that Citibank was managing, Clark received income from the fund's investments, but whatever balance is left when the now-feeble heiress will go to the famed Corcoran Gallery of Art in Washington DC, where there is wing named after her father, who donated 800 works to it upon his death. Cullen, 68, filed a lawsuit against Citibank alleging the trust-fund mismanagement in 2008, after the bank fired him earlier that year. Juliano, who also was terminated, later joined the action, which is pending in White Plains federal court. At his Westchester County home Friday, when asked if he believed he was fired because of his concerns about Clark’s trust fund, Cullen replied, "I don’t believe it, I know it." A spokesman for Citibank’s corporate parent, Citi, said "Citi has acted appropriately in carrying out our fiduciary responsibilities in this matter and the allegations first made several years ago by a former employee are entirely baseless." Bock’s spokesman, Michael McKeon, the lawyer "has and continues to act in the best interests of Ms. Clark. Any allegation to the contrary is without support." According to the lawsuit, another alleged debacle involving also occurred involving the theft of some of Huguette Clark’s jewelry, which was kept in a bank safety-deposit box. At one point, Bock told Citibank that "[its] trust department forgot to pay [Clark’s] safe-deposit-box fees," the suit says. "After a few years, the branch drilled open the box, took an inventory and took [Clark’s] jewelry into a cardboard box, sealed it, and sent it down to its main vault for storage. "A vault attendant slit open the box from the bottom, and took the jewelry. The jewelry was put into a Sotheby’s catalog, recognized and recovered," the suit says. dan.mangan@nypost.com