2012 Lydia Couri Complaint v Robbins (and Couri)

UNITED STAtt5;~T~~i,NqtzniSOUTHERN DISTRICT OF NEW YORK

J 2

LYDIA ALEXANDRA COURl,

Plaintiff,

- against-

McLAUGHLIN & STERN, LLP, andJON PAUL ROBBINS, ESQ.,

. Defendants.

COMPLAINT

FOLKENFLIK & MCGERITY1500 Broadway

21 st FloorNew York, New York 10036

Attorneys for Plaintif

cv 2220

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Case 1:12-cv-02220-TPG-FM Document 1 Filed 03/26/12 Page 1 of 75

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

LYDIA ALEXADRA COURl,

Plaintiff, Index No.

- against- COMPLAINT

McLAUGHLIN & STERN, LLP, andJON PAUL ROBBINS, ESQ.,

Defendants.

Plaintiff Lydia Alexandra couri, by her attorneys Folkenflik & McGerity, for her

Complaint against McLaughlin & Stern, LLP, and Jon Paul Robbins, Esq., alleges as follows:

INTRODUCTION AND SUMMARY OF CLAIMS

1. This is an action against Jon Paul Robbins ("Robbins"), the Trustee of the Lydia

Alexandra couri 1989 Trust (the "1989 Trust"), by the beneficiary of the 1989 Trust, Plaintiff

Lydia Alexandra coun ("Alex"). Robbins and his firm McLaughlin & Stern, LLP were also

attorneys for Alex and her father James couri ("James" or "Couri") (who sued on her behalf) in

a 1989 suit by Alex against her uncle John concerning Alex's family inheritance. The 1989

Trust was established to settle that case with the oversight and approval of the late Judge Charles

Brieant and the late Magistrate Judge Joel J. Tyler of the United States District Court of the

Southern District of New York. At the time, Alex was 11 years old and living with her father, a

twice convicted felon (securities fraud and bank fraud), who had repeatedly engaged in other

frauds, and had deceived, lied to and stolen money from business associates and his own family.

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That behavior was the cause of James' disinheritance by his family, which in essence was at the

core of Alex's suit.

2. In light of James Couri's disreputable background, the Court understandably

wanted the money in the 1989 Trust to be secure, and to be used for Alex's exclusive benefit,

and not for the benefit of James. The Court expressly required, and the parties and their counsel,

including Robbins, represented to the Court that the 1989 Trust would be so managed. At a

hearing before Magistrate Judge Tyler held on June 15, 1989, counsel read the stipulation

establishing the 1989 Trust as providing that "in no event shall James c. Couri receive any part

of the distribution of the principal or interest in the Trust." Tr. 6/15/89 at 4. A copy of the

transcript of the June 15, 1989 hearing is annexed hereto as Exhibit A. The Cour asked for and

received Robbins' express acknowledgement of those terms. ¡d. at 4-10.

3. At a later hearng on July 7, 1989, Magistrate Judge Tyler said to Robbins, "I'm

getting a little suspicious about your client (James Cour), I must say... That money is

safeguarded for this child. The only concern I have, and I am sure it is your concern as well, is

for this youngster, Alexandra couri and no one else. I want that money in there, in an interest

bearng account." Tr. 7/7/89 at 12-13. A copy of the transcript of the July 7, 1989 is annexed

hereto as Exhibit B. The Trust indenture for the 1989 Trust dated July 7, 1989 is anexed hereto

as Exhibit C.

4. However, Alex's interest was not Robbins' sole concern. Nor was it the sole

concern of Robbins' firm Alkalay Handler, Robbins & Herman ("AHRH") (hereinafter referred

to together with its successors, Alkalay Handler, Robbins &Korn, Nitkin Alkalay Handler, and

McLaughlin & Stern, LLP, as "McLaughlin & Stern "). Throughout the period of Robbins'

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service as Trustee, Robbins and McLaughlin & Stern were deeply conflcted in having to choose

between Robbins' fiduciar duty to Alex and the desire to please their client James Couri. James

was a current and potential future source of substantial litigation business. Among his other

attributes, James was a frequent and obsessive litigant, both on his own behalf and for numerous

entities which he established and/or controlled. Robbins and McLaughlin & Stem wanted to

profit off of James' obsession.

5. As a result, throughout the period in which Robbins was Trustee, Robbins and

McLaughlin & Stem consistently, indeed, uniformly, made the wrong choice and acted to benefit

James, and in some instances to benefit Robbins himself and McLaughlin & Stem, in disregard

of Robbins' fiduciar duties to Alex. Durng that time period Robbins and McLaughlin & Stern

acted as counsel for James, his wife, Marlene couri ("Marlene"), and numerous companies

controlled by James in no less than 15 law suits.

6. Although the 1989 Trust was designed to have its corpus invested for Alex's

benefit and distributed to her between the age of25 and 32, not one penny was ever invested in

anything other than a money market fund. Virtually all of the 1989 Trust was distributed by July

1992 as "loans" to James which were never repaid. $25,000 was deposited in McLaughlin &

Stern's escrow account, used to secure a litigation bond taken out by McLaughlin & Stem and

then distributed directly to James or otherwise for his benefit.

7. The 1989 Trust paid for James' Cadilac. The 1989 Trust paid for James'

msurance. The 1989 Trust paid for James' medical expenses. The 1989 Trust made payments

and loans to James' corporations. The 1989 Trust paid for James' vacations with his wife

(without Alex) in Vermont.

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8. A small minority of these payments have been argued by Robbins to have

benefited Alex (some payments to her schools, her summer camp, her doctors), but those were

also improper under the terms of the 1989 Trust and merely paid for expenses that James was

obligated and able to pay himself. Most of the payments do not even have that flimsy excuse,

and were flagrantly and exclusively for James' benefit or the benefit of Robbins and McLaughlin

& Stem.

9. Robbins and McLaughlin & Stem were well aware of their wrongful conduct.

They had James sign an agreement in 1993 that he would not assist Alex in any claims against

Robbins or McLaughlin & Stem concerning Robbins' breaches of duty as Trustee of the 1989

Trust. They paid Marlene $7,500 in return for that agreement and the settlement of claims James

brought against them.

10. By 1995, Robbins had disbursed over $225,000 from the Trust: $175,000

originally deposited approximately $35,000 paid in by James (then taken back out within a few

days); and all interest earned which amounted to approximately $15,000. The vast bulk of those

distributions occurred between February 1991 and July 1992. James agreed to repay every

penny and gave written promises, formal promissory notes, and assignments of collateral, which

included valuable ar which James directed Robbins to sell if repayment of the loans did not

occur by specified dates. The specified dates came and went, and Robbins made no effort to

obtain any repayment, or to sell the collateral (with one exception) or to enforce the promissory

note. The one exception was a 1994 attempt to sell one piece of collateral valued to be worth at

least $700.

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11. In 1998, however, James wanted his art back. Robbins knew that he could not

simply give away the collateral without repayment of the loan. On information and belief,

Robbins also knew that James did not want to repay the loan. Robbins also became aware of

James' continuing and expanding obsession with litigation. By approximately 1998 James had

filed over 22 lawsuits, pro se. Robbins knew that James could be persuaded to hire counsel for

some of those cases and he wanted that business for McLaughlin & Stem, which had no

relationship with James since 1993 when James had sued them. Robbins had an idea which

would get James the ar he wanted and in return McLaughlin & Stern would receive $50,000 and

could profit from the potential flood of business James could generate.

12. Pursuant to this plan, in a transaction conceived of by Robbins in 1998 and

apparently engineered by Robbins beginning in 1999 and consummated in 2000, Robbins agreed

to transfer the art and other collateral to James' wife Marlene, and transfer of most ofthe

remaining assets of the 1989 Trust to the exclusive control of James as Trustee of a new Trust

ostensibly for the benefit of Alex, but in reality for the benefit of James ("the 1998 Trust"). This

transaction effectively made James a successor Trustee for assets in the control ofthe 1989

Trust, a result which is specifically prohibited by Section 4.A.2. of the 1989 Trust, and which

was, by itself, a breach of Robbins' fiduciary duties to the Trust and to Alex. James also agreed

to contribute assets to the 1998 Trust, but as show below, the assets were worth little or nothing,

and known by Robbins to be worth little or nothing. However, in return, James did make a

payment of cash to McLaughlin & Stern of $50,000 (ostensibly for the payment of past, but

apparently undocumented, fees due to McLaughlin & Stem), and an additional payment of

$25,000 as retainer for legal services to be provided and for the retention of McLaughlin & Stern

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as counsel for James, a variety entities controlled by James, and for a charitable foundation

James was establishing. Charity, however, did not begin at home. Nothing was paid back to the

1989 Trust. On information and belief no cash was ever received by the 1998 Trust either.

McLaughlin & Stem got paid, but Alex never received a penny from either Trust.

13. The 1989 Trust continued until at least November 2010. In November 2010, Alex

turned 32 and by its terms the 1989 Trust terminated. At that time James thought he would

shortly be dying from cancer. James had been diagnosed with Stage IV Melanoma. James

confessed Robbins' wrongdoings to Alex. At first Alex was confused. She protested to her

father, in words or substance, "but you got the money." He replied, "It's not your fault your

father is a charlatan." Alex said that Robbins would surely sue James. He replied that it was his

problem, not hers.

14. Alex was well aware of her father's frequent involvement in lawsuits. She was

reluctant to star a suit against Robbins unless it was clear that he acted wrongfully. Alex sought

a full accounting from Robbins, and consulted an attorney. Her attorney received a box of

documents, incomplete copies of checks, deposit slips and invoices as well as some letters and

notes. There were no accounting records. However, what was retained reveals wholesale

improper conduct by Robbins as Trustee and by McLaughlin and Stem, and forms the basis of

the allegations in this Complaint. As a result, Alex has commenced this action.

JURISDICTION AND VENUE

15. This Court has jurisdiction pursuant to 28 U.S.C. §1332(a)(2) based on diversity

of citizenship and amount. Plaintiff Lydia Alexandra Couri is a citizen of the State of California.

Defendant Robbins is a citizen of the State of New York. Defendant McLaughlin & Stem is a

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limited liability parnership under the laws of the State of New York and with its principal place

of business in New York. The matter in controversy exceeds the sum or value of$75,000,

exclusive of interest and costs.

16. In addition, this Court has jurisdiction because this action arses out of the

settlement of the action Couri v. Couri, 88 Civ. 6985 (GLG), resolved by Stipulation and

Consent Judgment # 89,0133 WP, dated July 18, 1989, "with jurisdiction retained by this Court

if necessary to reopen in order to enforce the settlement. . ."

17. The Southern District of New York is proper venue under 28 U.S.C. §1391(a)(2)

and 28 U.S.c.A. §1391(a)(3). A substantial part ofthe events or omissions giving rise to the

claims in this action took place in the City and State of New York.

THE PARTIES AND OTHER SIGNIFICANT INDIVIDUALS AND ENTITIES

18. Plaintiff Lydia Alexandra Couri ("Alex") is 33 years old, and at the time of the

establishment of the 1989 Trust in question, was 11 years old. The 1989 Trust's assets were

almost fully depleted when Alex was 13 years old. Alex received a Bachelor of Arts Degree

from Washington University in St. Louis and a Masters Degree in Art History from Stony Brook

University in New York. She is currently employed in and lives in Los Angeles, CA.

19. Defendant Jon Paul Robbins ("Robbins") has been a member of the Bar of New

York since 1974. He specializes in civil litigation and claims to have special expertise in trust

and estate litigation. Robbins was a founding partner of the firm Nitkin Alkalay Handler &

Robbins, later known as Alkalay Handler, Robbins & Korn, and Alkalay, Handler, Robbins &

Herman which merged into defendant McLaughlin & Stem LLP in 1992. McLaughlin & Stern,

and the predecessor Robbins firms are herein referred to collectively as "McLaughlin & Stern."

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Robbins was a personal friend of James Couri. Robbins and McLaughlin & Stern represented

James Couri in a wide variety oflegal actions over the years, before and during the periods in

which Robbins breached his fiduciar duties to the 1989 Trust and Alex.

20. Defendant McLaughlin & Stem is a long-established New York firm, currently

with over 80 attorneys, with specialties in a wide variety of legal practice areas including, in

particular, litigation and trusts and estates.

21. James Couri (sometimes referred to herein as "James" or "Couri") is Alex's

father. James is currently 72 years old and apparently judgment proof, a state which he has

sought to maintain for decades. James has a long history of dishonesty and deceit, including two

federal felony convictions, and numerous disputes and suits where his veracity and integrity have

been found wanting.

FACTS RELEVANT TO ALL CLAIMS

22. Although this action arises out of a Trust established in 1989, in order to

understand the genesis ofthe 1989 Trust, the intent of the Trust's creator, and the extreme

departures from his fiduciary duty by Robbins acting as Trustee, it is important to understand the

type of man one is dealing with when one deals with James Couri. James has a long and sorry

background of deception and criminal conduct. Even as a teenager, James would find ways to

swindle his relatives out of money. As a young man, in his earliest employment, he forged his

father's name in order to gamble on a $30,000 bond purchase and lost. He borrowed money

from his family which he repaid with a fraudulent check on a closed account. He stole money

from his family business.

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23. On information and belief, from 1975 through early 1976, Couri was involved in

a stock manipulation scheme in the stock of Conrac Corporation, which led to his indictment on

securities fraud. Prior to that time and thereafter, he had owned an art auction house called

Plazagal International Corp. ("Plazagal") which had been sued for $ 1.8 million in demand

promissory notes by Manufacturers and Traders Trust Co. ("M&TT"). While operating

Plazagal, James was alleged to have lied to consignees of art with respect to the sale price of that

ar and money due to the consignees. James created false financial records to secure a loan from

M&TT.

24. Based on the misconduct with respect to Conrac and Plazagal, James was indicted

in 1980 and 1981 in two separate criminal informations. The first charged him with violating

federal securities laws with an attempt to manipulate the market for Conrac which had a

maximum penalty of $ 1 0,000 fine and 5 years imprisonment. The second felony involved

making false statements to a federally-insured bank, M&TT, for the purpose of inducing a loan.

Those charges carried a maximum penalty of $5,000 fine and 2 years imprisonment.

25. James was convicted of both offenses in a plea bargain and testified at trial

against his accomplices. In summation at one of those trials, he was described as "a con man, he

is a hustler, he is a liar, and he is a cheat and a very devious person. . ." Counsel also described

how James had lied in sworn statements. "He should be disbelieved in everything he said. . ."

These comments were publicly reported in a judicial opinion in United States v. Gilbert, 1981

U.S. Dist. LEXIS 14098 (S.D.N.Y July 23,1981).

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26. After his convictions, James worked through investment management companies

Poseidon Capital Corp. ("Poseidon") and Tandem Trading Corp. ("Tandem"). At that time

James had a substantial negative net worth and judgments filed against him. His corporations

appeared to have no assets, but he was able to convince business men to invest with him. When

they did, the investors invariably ended up suing James for fraud.

27. On information and belief, in 1983, James became involved with Herbert Scharer

who was a principal of Federated Graphics Companies, Inc. ("Federated"). James, acting

individually and on behalf of Tandem, entered into investment agreements with Scharer and the

Federated pension funds, which led to the loss of all funds invested by Scharer and the pension

funds. Scharer and the pension funds claimed that James had misappropriated the pension fund

assets and Scherer assets, and sued in an action captioned Scharer v. Couri 007664/1984 which

was commenced in New York Supreme Court in 1984.

28. On information and belief Robbins was a personal friend of James' who lived

near to James' home in Rye, New York. James hired Robbins and his firm McLaughlin & Stern

(then Alkalay Handler) to represent him in the Scharer action and to file a counter-suit, Couri v.

Scharer, 008421/1984, later that year.

29. In 1985, James, through Poseidon, agreed to provide investment and management

services to a company called Braintech, Inc. ("Braintech") in return for, among other things,

compensation, 300,000 Braintech shares, and certain potential payments and warrants. That

relationship led to a series oflawsuits among Poseidon, Braintech and others starting in 1985.

Couri, Poseidon and the Couri-related entities were represented by Steve Axinn, one of the top

(and most expensive) parners at Skadden, Arps, Slate, Meagher & Flom.

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30. In a published opinion in 1986, District Judge Haight of the Southern District of

New York, described Poseidon as having no office address other than c/o Howard Krantz

("Krantz," a Cour attorney), no telephone number, payroll, financial statements or any tax

returns filed. He described Couri as having "a checkered past," including two felony

convictions, no personal assets, a negative net worth, and judgments against him. Judge Haight

found Couri's sworn testimony to be untrue and his claimed services greatly exaggerated.

Drobin v. Nicolette, 631 F.Supp. 860. (S.D.N.Y. 1986). On information and belief Robbins read

and was aware of Judge Haight's factual findings.

31. In 1987, James' mother, Katby T. Couri, prepared a will disinheriting James

together with a lengthy affidavit describing James' lifelong misconduct. In concluding, she

stated,

"I am sorr to say that my son James is a liar, cheat and a ruthless person whothinks only about himself. He has no morals and has maintained his lifestyle bycheating others. When people find out about him, they are willing to lose moneyjust to get away from him."

A copy of Katby T. Couri's affidavit submitted in connection with her will is submitted anexed

hereto as Exhibit D.

32. Prior to his death in 1978, James' father, Aleer J. Couri had established a Trust for

the benefit of family members other than James, and had left James out of his will excluding him

because of, among other things, James' theft of money from the family business.

33. In 1988, Robbins and his firm acted as counsel for James in filing the action that

led to the creation of the 1989 Trust, Alexandra Couri, by her guardian, James Couri v. John

Couri ("Couri v. Couri "), 88-civ-6985.

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34. James' suit against his family was not out of desperation. He was financially

doing well at the time, and said so in front of Robbins. He lived very well. He had a taste for

acquiring ar and antiques, and once owned and ran an antique auction house. James lived in

relatively posh surroundings in the Westchester County Club. He claimed to have spent

hundreds of thousands of dollars redecorating it. That seemed possible. The walls were covered

with expensive fabric. The apartment stuffed with what appeared to be original art, antiques, and

numerous other possessions. James wore expensive Ralph Lauren custom-made suits and had

perhaps 50 of them. He wore custom-made shirts. He dined at expensive restaurants and clubs

frequently, where he was known to the staff by name. He purchased a new Cadillac in 1988.

35. James' fourth and present wife Marlene, whom he maried in about 1988, had a

modeling business in California which she sold her interest in and brought her assets, hundreds

of thousands of dollars, to the mariage. James gave Marlene luxurious gifts, furs, and jewelry,

and the two of them were active in the New York social scene.

36. Robbins was apparently a personal and social friend of James'. Robbins lived

nearby the Westchester Country Club. He knew about James' lifestyle and, on information and

belief, he had visited James' home and was aware, at least generally, of James' spending habits.

37. Couri v. Couri proceeded to trial in June 1989, and, after several days of trial,

resulted in a settlement among the parties. Under the terms ofthe settlement, John Couri, James'

brother, contributed $175,000 to a Trust for the benefit of Alex.

38. Given James Couri's checkered history and his estrangement from his family,

unsurprisingly, James was excluded completely from the supervision of the 1989 Trust. The

1989 Trust's proceeds were expressly agreed not to benefit James Couri. A stipulation by the

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parties read in open court stated: "in no event shall James C. Couri receive any par of the

distribution of the principal or interest of this Trust." Ex. A at 4

39. However there was a problem finding a Trustee for the Trust. On information and

belief, neither John nor his attorneys wanted to be Trustee. John wanted nothing to do with his

brother, and he was concerned that even any involvement in the 1989 Trust for his niece would

embroil him with his brother, or lead to suits from his brother. James and his attorneys were

wiling to have Robbins as Trustee, but Robbins was reluctant, as he too knew what kind of man

James was.

40. At the time the 1989 Trust was created, Robbins was well aware of James Couri's

criminal background and well acquainted with James Couri's history of misconduct involving his

family and others. On the other hand on information and belief, Robbins and McLaughlin &

Stern saw James as not only an existing client, but also a client with a potential for creating

substantial and lucrative future business. Although James concealed his assets and for all

appearances was judgment proof, he had lots of money to hire expensive counsel, as he had in

the Braintech cases. In his criminal proceeding, his counsel had been the respected, and

expensive, Washington firm of Wiliams & Connelly.

41. On information and belief, in a pattern which would repeat itself later, to

overcome Robbins' reluctance, James offered to give McLaughlin & Stern further litigation

business. Robbins agreed to serve as Trustee, and at or about that time on June 28, 1989,

Robbins filed the first of what ultimately became four suits on behalf of James against the

Westchester County Club ("WCC") where James and his family lived.

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42. On July 7, 1989, a stipulation and consent judgment was entered into, a copy of

which is annexed hereto as Exhibit E. On the stipulation and consent judgment, Judge Brieant,

by hand, wrote an obligation for the Trustee to report annually with respect to the conduct of the

Trust. On August 18, 1989 the Trust was funded with the first payment of$87,500.

43. Although the 1989 Trust contemplates that the funds would be invested on

Alexandra's behalf, Robbins made no effort to invest the fuds and just let them sit in a money

market account when substantially higher returns were available. There is no evidence that he

ever sought investment advice for the 1989 Trust, as the 1989 Trust expressly contemplated and

allowed. There is no evidence Robbins himself had sufficient investment management expertise

to prudently manage the fuds. For the first eight months Robbins did nothing.

44. Finally, in three separate transactions in April of 1990, Robbins disbursed

$2,238.00 to James Couri apparently for payment of James' taxes and some payments to

Greenwich Academy where Alex was in schooL. There was then no claim of need or justification

for those payments. Those withdrawals were all loans to James Couri and he promised to pay

them back promptly. Shortly after James received that money, Robbins and his firm, acting as

James' counsel, filed the second suit against The Westchester Country Club.

45. In July of 1990, the second payment of $87,500.00 was deposited into the 1989

Trust account. On August 16, 1990, Robbins issued his first report to John Couri in accordance

with the Court's order and advised him of$2,238.00 disbursed to James Couri and James Couri's

promise to repay it. The implication from that report was that the prior payments were

exceptional and short term events. Those payments instead tured out to be the opening wedge

to the wholesale distribution of Trust assets to James.

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46. Less than two weeks later, Robbins issued a further check to Greenwich Academy

to pay for Alex's private school expenses which James Couri had himself been paying for years.

On this occasion, James wrote Robbins a vague claim of short term need for the trust to "advance

the tuition" for half of the school year "due to certain financial reversals and expenses" which

James allegedly had experienced. James promised to make repayment "as soon as I can." On

information and belief, without any further inquiry or investigation, Robbins issued a check to

the school for nearly $5,000.

47. The loan to James was imprudent, unjustified, undocumented, and without clear

repayment terms. James was a man who had proven repeatedly that his word could not be

trusted. Other alternatives surely existed. Private schools are often understanding when parents

ru into short term trouble (especially after a many year relationship). Financing often can be

arranged. Yet, on information and belief, Robbins did nothing to verify James' need or protect

the 1989 Trust. He simply made the loan, and it still has not been repaid.

48. The next transaction with James was more troubling still. Just two weeks later,

James wrote to Robbins, "I have advised you that I expect a large sum of money at or about end

of Sept. 1990. Presently I must pay certain bills that Alexandra is directly or beneficially

concerned with. As you also know she is the 80% owner of JCC Capital Corp. which is pursuing

a large claim against (Geminex) Industries." If Robbins knew anything about the Geminex

claim, he knew it was a legal morass-a wild goose chase that would consume James' money

and produce nothing. Ifhe knew anything about JCC Capital Corp., ("JCC"), he knew that

Alex never saw any benefit from the 80% interest she allegedly owned and that Alex's

"ownership" was a ruse to hide James' assets from creditors. JCC filed for Chapter 7 liquidation

15


in 1992. In all events, James had talked an accountant, Albert Leon, into being responsible for

Geminex litigation expenses.

49. Although Geminex was the stated excuse for the need for money, James did not

ask Robbins for Geminex or JCC expense money. He asked Robbins to pay James' Blue Cross

Insurance, James' American Express bill, James' telephone charges and a "misc." $500 just to

round things up to $6,500. James ended his plea stating: "I hereby unequivocally commit to

return these fuds by no later than Sept 25, 1990." On information and belief, without further

inquiry, Robbins wrote the check to James out of the 1989 Trust. September 25 came and went

and Robbins did nothing to obtain repayment, although, James did assign $100,000 of the

"reward recovery" James claimed to be entitled to for allegedly reporting Scharer to the IRS. On

information and belief, there never was a "reward recovery" paid and the $ 1 00,000 claim appears

to be an outright fantasy. Robbins never received information other than James' claims that

there was any right to any bounty. There was a tax case which on information and belief was for

sums too small to justify any such bounty which, on information and belief, Robbins was aware

of and Scharer ultimately won.

50. However, the fact that James would make such an assignment in such great excess

of his debt at that point or that Robbins would accept it, strongly suggests that Robbins was

counseling James to make a paper record that Robbins could use ifhe were ever sued for breach

of his duties as the Trustee of the 1989 Trust. Subsequent events support the conclusion that

Robbins was seeking to paper over the file to cover himself.

16


51. On December 13, 1990, Couri again wrote Robbins requesting funds, saying that

he was short of cash because he "spent large sums on T &E regarding the (Geminex litigation)."

Why, indeed, whether, Robbins thought it was proper to use Trust funds to subsidize James'

travel and entertainment expenses, even as a loan, is unclear. However, Robbins immediately

disbursed $1,600.00 of Trust funds to James Couri.

52. Starting in February 1991, requests came in at an accelerated pace. On or about

February 1, James wrote to Robbins a letter with a pro-forma claim of need for cash to pay for

Alex's orthodontics, stating: "I can not afford the down payment of $1700. Please advance same

from the Trust + I will pay it back as soon as possible." On information and belief, without

further inquiry into James' claimed need, any effort to determine when and how repayment

would be made, or any terms of repayment, Robbins wrote a check of$I,700.00 to the

orthodontist.

53. As of March 6,1991, Robbins had made loans of$16,993.05 from the 1989 Trust,

some clearly for the benefit of James, some ostensibly for Alex's benefit, but nonetheless

benefiting James who had, and had acknowledged, the obligation to make those payments as

Alex's father and to repay the 1989 Trust. None of these loans were proper, prudent, or in

compliance with Robbins' fiduciary duty to the 1989 Trust.

54. Far worse, on information and belief, there was never effort by Robbins to obtain

repayment, even when James had made specific commitments to repay on or by specific dates.

That, combined with the lack of any discussion or negotiation of payment terms, proves that

Robbins was egregiously failing in his fiduciary duties to the 1989 Trust. Rather than improve,

matters got dramatically worse from that point forward.

17


55. On March 6, 1991, James wrote to Robbins: "I expect to have money by April

(mid). I must pay Alexandra's deposit at school $1050 - and $373. 26 in disbursements at

bookstore - I possibly might need an additional advance for Alexandra's medical insurance.

Hopefully this is the last advance I will need until I get my money that I expected. I will

immediately repay the trust for all these advances + all previous advances." Later in March,

James obliquely explained his "cash crunch" as being somehow related to the Geminex dispute.

Effectively, the 1989 Trust was being asked to fund, albeit indirectly, that dispute.

56. It is unclear what money James was expecting in mid-April, and the expenses

James requested payment for raised many questions. Some were ostensibly for Alex's benefit.

Some were clearly for James's benefit, like the payment of James' doctor bills or his medical

insurance bill (which may have been a family plan, but in that event insured James and Marlene

as well). Some were clearly not the sort of discretionary expenses a man with a short term cash

crunch should make, like going shopping for nearly $2,000 in "food and clothes" (assuming that

the claimed expense was actually made). Some of the claimed expenses were supported by an

invoice over a year old. On information and belief, Robbins did not ask any questions about the

expenses or the repayment. He just wrote checks. For the month of March 1991, they totaled

$6,279.61. Another $1,000 was paid in the first eight days of ApriL.

57. At that point, whether because the 1989 Trust already had loaned James over

$24,000, or because James was now asking that the 1989 Trust star to directly fund James'

corporations, or, because the WCC case was going badly and McLaughlin & Stern was accruing

unpaid legal fees, Robbins apparently decided he needed to paper over his file.

18


58. On or about April 9, 1991, Robbins, as Trustee, and James entered into a written

agreement (the "April 9 Agreement"). Despite repeated requests for that agreement in the

informal accounting process, Robbins has thus far refused to produce it. However some of the

terms of the April 9 Agreement are evident from other documents. Apparently, as part of the

April 9 Agreement, Robbins, as Trustee, agreed to loan 1989 Trust fuds to James and his

companies up to an amount of approximately $ 1 00,000 to 110,000. On information and belief,

as part of the transaction, James delivered a promissory note to the Trust for $110,000. Despite

demand, Robbins has thus far refused to produce that promissory note.

59. Contemporaneously with the April 9 Agreement, James wrote to Robbins:

"Pursuant to the documentation + agreement we entered into today please makethe following payments.

a $6500 - to Calmar Productions Inc.

a $5000 - to Almax Enterprises Inc.

"These sums are being used to pay critical expenses that are due & owing IE:American Express, Telephone, Nynex, Dr. Bills, Disability Insurance Premium etc.As you are aware I am in a serious desperate cash crunch. I also have advised thatin total I wil need approx. $14,600 -15,000 to satisfy these past due obligations.These disbursements all inure to the benefit of Alexandra as without the aboveservices & credit we are paralyzed. This letter & instructions are intended to bepart of the agreements made on 4/9/91"

60. In effect James was arguing, and Robbins had apparently accepted the argument,

that what is good for James is good for Alex. Robbins thereby turned the 1989 Trust for the

exclusive benefit of Alex into a trust for the benefit of James. That interpretation of the 1989

Trust not only violated Robbins' duties as Trustee, but it was in contemptuous disregard ofthe

representations Robbins had made, acting as a partner for McLaughlin & Stem, as counsel for

James and Alex Couri in the Couri v. Couri action.

19


61. In an effort to make it appear that Robbins was protecting the interest of the 1989

Trust, Robbins accepted an assignment of "collateraL." The collateral supposed "bounties" for

turning Scharer and affiliated entities in to the IRS, and ar which James was allowed to keep in

his apartment with a purported value of $100,000. James promised to repay the 1989 Trust for

all advances by August 1, 1991, or "sell the ar so that the cash can go to the trust by August 1."

On information and belief, neither James nor Robbins ever intended that promise to be kept and

it was not. The 1 989 Trust was never repaid. The August 1 date was ignored. The art was never

sold by the 1989 Trust or for its benefit.

62. In addition, James donated to the 1989 Trust as a "bonus," "because you + the

Trust have helped me out of a tough spot recently," a painting by Saito, estimated to be worth

$50-$75,000. James promised: "When we move or sooner I will arrange for the painting to be

delivered to the trust for ultimate sale either at auction or elsewhere." On information and belief,

neither James nor Robbins ever intended that promise to be kept and it was not. The painting

was never sold by the 1989 Trust or for its benefit.

63. Robbins simply started to pour out money to James and his companies and, in a

minority of cases, made direct payments to Alex's camp or school or other payments for which

James was obligated. Robbins made ongoing disbursements from the 1989 Trust of$19,082.44

in April 1991, and $7,000 in May 1991.

64. In June 1991, pursuant to a court order in the WCC case, James was required to

post a bond for $25,000 in favor of the wcc. McLaughlin & Stem arranged for the bond with a

bonding agency, and then, to cover itself from any liability to the bonding company, Robbins

took $25,000 from the Trust and had it deposited in the McLaughlin & Stem attorney's escrow

20


account. Ultimately that money was used in part to pay James Couri's obligation to WCC, and

in part Robbins apparently made a payment to James directly from the McLaughlin & Stern

escrow account. Additional payments of $17,731.24 were made from the 1989 Trust in June,

mostly to persons not identified and where checks were not maintained. These payments were

all in violation of Robbins' duties as Trustee and the use of Trust funds was improper on behalf

of McLaughlin & Stern.

65. James kept promising that he would quickly repay amounts borrowed against the

1989 Trust, but no amounts were ever paid other than small deposits which were simply taken

back out. James kept justifying his requests saying they were for Alex's benefit, but Robbins

would pay credit card bills including charges that were exclusively for James' benefit. Robbins

paid for James' car lease payments, for his insurance, for meals out with his wife, for meals that

James claimed that Alex had attended when Robbins knew for a fact that she had not, such as

when he knew she was away at summer camp and the meals were in New York City or Vermont,

hundreds of miles from where Alex was then living.

66. Robbins knew that James' claims of financial need were false. James had assets

he could have sold, but refused to selL. James had access to money from his wife, although he

continued to pay expenses for Marlene and Marlene'sfather using funds from the Trust with

Robbins' approval. Instead of meeting his family's needs and rather than make re-payment to

the Trust, Couri chose to spend his money on litigation, including litigation in which Robbins

was appearing as counsel and, on information and belief, Robbins knew or should have known

was unlikely to produce results which would justify the expense.

21


67. Robbins continued to strip money out of the 1989 Trust for James' benefit, and

the benefit of his companies. By the end of 1991, $162,865.76 had been taken out and nothing

had been repaid. In the first half of 1992, there were some "repayments" by James which were

almost immediately withdrawn. On or about April 1992, Robbins, as counsel, filed the third suit

by James against the Westchester Country Club. By July of 1992, Robbins as Trustee had paid

James, or for James' benefit, $210,443.21.

68. Robbins made a few desultory inquiries about selling some of the art "collateral,"

and a 1948 "Flamingo Road" script was offered at auction and not sold when it failed to reach

the $700 reserve. Some of the art was sent to storage, on information and belief, for the

convenience of James, and Robbins had the 1989 Trust pay moving and storage costs. No other

efforts were made to liquidate the collateral for the benefit of the 1989 Trust or to collect on the

debts from James to the 1989 Trust.

69. Throughout 1991and 1992, Robbins and McLaughlin & Stem continued to be

James' counsel and Marlene's counsel in the various WCC actions and appeals, including a

fourth suit against WCC filed in November 1992, as well as Tandem's counsel in the various

Scharer actions. Robbins and McLaughlin & Stern were counsel in a new action filed in August

1991 representing James, Marlene and several Couri companies in a suit against the New York

Athletic Club.

70. On information and belief, by early 1993, ifnot sooner, James had accrued a

substantial debt to McLaughlin & Stern for attorneys fees on his various cases. On February 3,

1993, James, Marlene, McLaughlin & Stern, and Robbins entered into a formal "Settlement

Agreement," which Robbins has refused to produce. Despite that agreement, on or about March

22


15, 1993, James commenced an action by summons with notice against Robbins, McLaughlin &

Stem (naming AHRH despite the prior merger of AHRH and McLaughlin & Stem), and all of its

parners. Apparently a complaint was served, but not publically filed.

71. On information and belief, in the Complaint and in letters sent by him, James

accused the defendants of fraud, malpractice, and conversion, among other things. James also

wrote letters accusing Robbins of "wasting and looting" the 1989 Trust.

72. Robbins and McLaughlin & Stem entered into a second formal settlement

agreement with James dated as of May 6, 1993, (the "May 6, 1993 Settement"). A true copy of

the May 6, 1993 Settlement is annexed hereto as Exhibit F. As consideration for the May 6,

1993 Settlement McLaughlin & Stem agreed, among other things, to pay to Marlene $7,500 "in

fees previously paid by James and/or Marlene." In return, among other things, James and

Marlene gave general releases and also entered into a "covenant not to sue (and not directly, or

indirectly cause or assist any other person or entity to sue or in suing)" the firm or any of its

partners, associates or employees, on any matter, known or unkown, arising prior to May 6,

1993. The May 6, 1993 Settlement also provided that it must be kept strictly confidential and

not disclosed to anyone other than the parties.

73. On information and belief, the "gag provisions" in the May 6, 1993 settlement

were designed by Robbins with the purpose and effect of stopping James from assisting Alex in

any suit against Robbins for breaches of Robbins' duties as Trustee of the 1989 Trust.

McLaughlin & Stem withdrew as counsel from all of the James actions and agreed to try to settle

the wee actions.

23


74. After the May 6, 1993 Settlement, for a period of years, even though the 1989

Trust was nearly empty of cash assets, Robbins continued as Trustee. Small disbursements were

made, for example, for the storage costs of some of the assigned art. Trust taxes were paid on

the small income earned. Ban charges were paid. Those activities continued until the end of

1996. The 1989 Trust was then out of cash assets, but the written promises, promissory notes

and collateral remained.

75. On a number of occasions in late 1993, Robbins allowed James to wash certain

payments concerning Alex through the 1989 Trust ($3,200 would be deposited in the Trust and

immediately paid out for Alex's tuition). It is unlikely that James engaged in that activity for a

legitimate purpose, or that Robbins believed James' purpose was legitimate or that the

transaction was something that was proper for the 1989 Trust.

76. In May of 1997, Robbins started giving James control of Trust property that had

been held by the 1989 Trust. In June of 1997, Robbins allowed Marlene to take over the storage

unit lease provided that James agree (in an agreement Robbins could never police or enforce) not

to remove the 1989 Trust pieces that remained in storage. In December of 1997, Robbins

returned the "Flamingo Road" script to James "for display" and received an (unenforceable)

agreement not to sell that Trust property without the 1989 Trust's permission. Also in December

1997, Robbins confirmed that if James died and the existing life insurance policy on James' life

paid the Trust $500,000, or if James repaid his debt to the 1989 Trust, then the art would be

assigned to Marlene. On information and belief, that life insurance policy had been cancelled in

1995 and Robbins knew it.

24


77. However, that was not good enough. James wanted to get back the rights to all of

the ar that was the 1989 Trust's property without having to pay the 1989 Trust. On information

and belief, James asked Robbins to figure out a way to do so. By letter dated July 2, 1998,

Robbins replied that if James established a new Trust, "by a trust instrument satisfactory to me,

and said new Trust is vested with assets having an actual value of not less than $250,000," then

Robbins as Trustee would assign to Marlene the art James had assigned to the 1989 Trust as

collateraL.

78. For James that was a perfect solution. He could establish a trust, fund it with

bogus property, and keep full control to do whatever he wanted with the Trust. James would get

his art back while giving the 1989 Trust, and Alex, nothing. That is precisely what he did.

79. For Robbins it was also a perfect solution, since he could create a false paper

record that he could try to use to defeat any claim by Alex if she ever found out Robbins had

breached his duties to the 1989 Trust. Robbins also solved the problem of having to deal with

the ar. He just gave it away. But there was more in the deal for Robbins and McLaughlin &

Stern. On information and belief, Robbins insisted that McLaughlin & Stem be paid $50,000

cash, and that they also be given future legal work.

80. In talking to James, Robbins found out that James' litigation obsession had

reached epidemic proportions. James had filed nearly 30 actions pro se in New York Supreme

Cour. He also had filed in the Federal District Courts. A number of cases both by him and

against him were moving forward. James needed legal help and he had money to fund his

litigation obsession. Robbins wanted to reestablish an attorney/client relationship between James

and McLa & Ste so that Robbins and McLa & Ste could profit from James' obsession.

25


81. In December 1998, James created a new Trust, (the "1998 Trust"). A true copy of

the Trust indenture is anexed as Exhibit G. The 1998 Trust was funded with $10 cash. (Exhibit

G, Schedule). Part of the entire 1998 Trust scheme involved a $500,000 life insurance policy

held by the 1989 Trust, which was taken out by James to fund his obligations to the 1989 Trust

in the event of James' death. James had let that policy lapse, but agreed to take out a new policy

for the 1989 Trust, and Robbins agreed in tum that the proceeds of the life insurance policy

would be paid over to the 1998 Trust. The terms of the 1998 Trust, that ensured that Alex would

never see the proceeds of that policy.

82. The 1998 Trust appointed James as Trustee with sole and unreviewable

discretion. It limits Alex's rights to demand withdrawal to "up to $5,000/5% of Trust's total

assets (whichever is greater)," except in respect to any amounts "made or deemed to be made by

payments of premiums on any group term insurance policy." Otherwise, the 1998 Trust

provided that certain specified portions of income eared by the 1998 Trust (on a sliding scale

based on amount), would be "pa(id) over or appl(ied)" for the benefit of Alex. There were two

glaring problems with that payment provision: James had made it clear that anything which

benefits him personally is considered by him to be a benefit to Alex; none of the assets produced

mcome.

83. Robbins agreed that most of the assets of the 1989 Trust would be given to the

1998 Trust, and certain art/antique assets of the 1989 Trust would be relinquished to Marlene

because of the existence of the 1998 Trust. Robbins either drafted or assisted in drafting the

1998 Trust, reviewed it and approved its terms, or never bothered to review it at alL. Any of

those acts was a violation of Robbins' fiduciary duties to the 1989 Trust.

26


84. Although the 1998 Trust had been formed with assets of only 10 dollars, Robbins

sent a letter to James on December 28, 1998, stating that the James had "represented that the

Lydia Alexandra Couri 1998 Trust ("the "1998 Trust") has been vested with assets having an

actual value of approximately $250,000. Furher, the 1989 Trust has assigned ownership of the

term Insurance Policy numbered CL 5007052 issued by Companion Life Insurance Company to

the 1998 Trust and you have caused the conversion of that policy to a Universal permanent life

insurance policy.. .so that at your death the benefits will be paid to the 1998 Trust, the successor

trustees of which are Marlene Couri and myself. Based on the foregoing the 1989 Trust hereby

relinquishes its right in the objects d'art previously assigned to the 1989 Trust." A copy of that

letter is annexed as Exhibit H.

85. Robbins relinquished 1989 Trust assets based on representations which were

clearly untrue. The 1998 Trust had $ 1 0 in assets, not $250,000. The Companion Life Insurance

Policy had been terminated for non-payment in 1995, as Robbins knew. Robbins was not a

successor Trustee to the 1998 Trust.

86. Robbins seems to have appreciated some of these problems and tried to further

paper things over in mid-1999. On or about May 21, 1999, James created an agreement among

himself as a debtor to Alex and the 1989 Trust, Alex, and the 1998 Trust (the "May 21, 1999

Agreement"). A copy of the May 21, 1999 Agreement is anexed as Exhibit 1. Robbins either

created the May 21, 1999 Agreement, assisted in its drafting, or read and approved it. Robbins

signed that agreement as Trustee of the 1989 Trust.

27


87. James signed for three parties: as himself for himself, as Trustee of the 1998

Trust, and as "guardian" for Alex. James either did not know, or did not care, that because Alex

was 20 she was oflegal age and James could no longer sign contracts for her.

88. In the May 21, 1999 Agreement James admits that he "borrowed" $200,000

given to Alex from her mother, Carla Couri, in 1981 when Alex was 2 that he "borrowed"

$50,000 gifted to Alex by both parents between 1978 and 1982 that he "borrowed" $175,000

from the 1989 Trust, and that "None of these sums has been repaid..." He gave the 1998 Trust a

$825,00 Promissory Note in favor of Alex to evidence the $400,000 borrowed, and interest.

James also gave the 1998 Trust 50 shares of Couri Acquisition Corporation which Alex

beneficially owned, but James held as her nominee, and another 75 shares of Couri Acquisition

Corporation which James allegedly purchased for $75,000, although he purchased that stock

from himself or Marlene since there were no other shareholders other than Alex. He claimed

(based on the sham purchase) that the "value" of the shares was $ 110,000 and that full amount

would be deducted from the $825,000 as partial repayment (even though $44,000, if the

valuations were to be believed, was Alex's own money).

89. James also agreed with himself to cancel the $825,000 Promissory Note, and

replace the 1998 Trust as the Secured party on all U.C.C statements in place of the 1989 Trust.

90. Substituting the 1998 Trust for the 1989 Trust as the Secured party on all U.C.C.

filings relinquished control of 1989 Trust assets in return for nothing. Yet Robbins agreed to this

charade and signed his consent to the agreement. It seems that at that point he, like James,

apparently was unaware that James' signature was insufficient to effectuate Alex's agreement.

When Robbins woke up to that fact, he engieered further steps to get Alex's apparent agreement.

28


91. But there was still the problem ofthe value contributed to the 1998 Trust. In

December 1998. Robbins as Trustee had relinquished control of 1989 Trust-held art to Marlene

based on the "representation" that assets had been contributed to the 1998 Trust with an "actual

value" of $250,000. Yet the May 21, 1999 Agreement indicated that there were no assets in the

Trust as of December 1998, and even in May 1999 the assets had at most (if James' sale value

were real, which, on information and belief, it was not) the total value of all assets was $ 110,000

in Couri Acquisition Corporation stock ($66,000, if Alex's own shares were not counted) and

$ 1 0 in cash. Robbins apparently did not focus on that failure until much later.

92. On information and belief, he did, however, focus on the problem of Alex's

consent in late December 1999. On information and belief, at Robbins' request, when Alex was

home from school, James handed her the May 21, 1999 Agreement and a power of attorney form

to sign. She signed the documents without reading them. This was not an unusual event. James

frequently gave his wives or Alex documents to sign, created trusts, gave stock, then took it

back, was involved in various corporate dealings and used his family members as nominal

owners rather than keeping things in his own name. In any event, the May 21, 1999 Agreement

did not seem like such a problem. On its face it seemed to acknowledge a huge debt from James

to Alex, and that he was putting property in Trust for her. He did not disclose the terms of the

1998 Trust, and other than the transfer of the U.C.C. interest, the documents did not disclose

Robbins' other transfers of assets of the 1989 Trust, including the art.

29


93. James was the one person in the world that the Grantor of the 1989 Trust and

Judges Brieant and Tyler had determined should not be in a position to control or benefit from

the 1989 Trust. Robbins had engineered a series of transactions which accomplished the exact

opposite result. Just days later, James paid Robbins and McLaughlin & Stem for what they had

done.

94. By letter dated January 7, 2000, a copy of which is annexed as Exhibit J,

McLaughlin & Stem "re-established" an attorney client relationship with James, Marlene and

James' companies (the "January 7 Payment and Retainer Agreement"). James agreed to pay the

firm $50,000 purportedly "in full satisfaction of all amounts due the firm from you as of the date

of this agreement." However, McLaughlin & Stern had settled all billing disputes with James in

1993.

95. It is not clear what, if any, work was done by the firm after 1993, other than

Robbins' wrongful transfer of Trust assets to Marlene and to James' control. Indeed, the January

7 Payment and Retainer Agreement provided that the $50,000 payment "is not subject to any

conditions, and it is specifically acknowledged that it is not based on any representations by us

with respect to past or future events." Even if work had been performed and the $50,000 was not

actually a bribe to violate duties to the 1989 Trust and to Alex, Robbins was nonetheless in a

deeply conflcted position when he acted as a Trustee while also hoping to obtain payment to

McLaughlin & Stem for past services.

96. The conflict ran far deeper than the $50,000. As part of the same agreement,

James agreed to retain McLaughlin & Stem as counsel and it was "anticipated that we

(McLaughlin & Stem) will perform services for you personally, for Marlene Couri, for the

30


Marlene Couri 1999 Trust, the Lydia Alexandra Couri 1998 Trust, and various corporations with

which you (James Couri) are affiliated, such as Couri Acquisition Corp., Goldfish Enterprises,

Ltd. and Kindervest Planning Corp. and other companies with which you are affiliated." James

paid an additional $25,000 as a retainer for future legal services.

97. Robbins continued to seek to paper over his file. The day before the January 7

Payment and Retainer Agreement, Robbins wrote a letter to Alex concerning the 1998 Trust.

Alex does not recall receiving the letter and, on information and belief, it was never actually sent

to her. In all events, much of the letter is false and misleading.

98. Robbins stated that Alex's father had "caused substantial assets to be placed in the

trust." That statement was either untrue (it is not clear that the Couri Acquisition Corporation

stock was worth anything) or completely misleading because the Couri Acquisition Corp. stock

was entirely illiquid and a significant portion of that stock was Alex's to begin with.

99. Robbins continued: "You also are aware, from the document you signed over the

Christmas holidays, that the 1989 trust has assigned the obligations owed to it by your father to

the new trust. Additionally, I want to advise you that the 1989 trust assigned the life insurance

policy it owned to the new trust, and that policy has been converted to a universal policy for the

purpose of building cash value." Actually the 1989 Trust retained the obligations on the

$110,000 promissory note. The fact that the "assigned" insurance policy had been terminated for

non-payment was concealed and certainly materiaL. Robbins also did not disclose the

limitations on withdrawal from the trust, which would prohibit Alex from withdrawing any life

insurance proceeds.

31


100. Robbins concluded: "Based on the foregoing, the 1989 trust has relinquished its

claim to the art works previously assigned to it." Actually, the relinquishment occurred before

those events had occurred.

101. At some point prior to April 2000, Robbins must have realized that he had no

record to support the fact, on which he allegedly relied, that James had contributed assets to the

1998 Trust with an "actual value" of $250,000. He obtained from Couri's accountants a

"Valuation Report" of the value of Couri Acquisition Corporation as of June 1999. A copy of

the Valuation Report is annexed as Exhibit K.

102. The report relied exclusively on information supplied by James Couri and it

comes to a value of $950,000, from which one could, but the Valuation Report does not,

calculate the convenient value of approximately $258,000 for the 125 shares given to the 1998

Trust. However, the value of minority shares of a closely held iliquid corporation are almost

never valued at the pro rata share of the value of the Corporation as a whole. Indeed, James

Couri's own contemporaneous 1999 $110,000 estimate of value of that same 125 shares based a

purchase he made (albeit a sham purchase from himself or Marlene) would probably be closer to

accurate if the Corporation were actually worth $905,000, but the Valuation Report shows it was

not.

103. First, the valuation is essentially based on book value, but the balance sheet shows

book value is about one-half of$905,000 because of an unrecognized loss of$376,21O. The

Valuation Report states cryptically: "Although the Consolidated Balance Sheet reflects a

unrealized loss of $376,210, this position was corrected in the months following the valuation

date." Apparently it was "corrected" by James solely to inflate the valuation.

32


104. On the Balance Sheet there are also notes payable to the Couri Acquisition

Corporation from James, or entities controlled by him, for $627,758. Given James' well reported

and continual status as judgment proof, and his history of non-payment of his obligations to the

1989 Trust, no professional, and certainly not Robbins, could honestly value James' liability at

anything approaching the full amount of the debt. It was probably worth nothing.

105. The $376,260 loss and a write down of the James related receivables made the

value of Couri Acquisition Corporation less than zero. Robbins and McLaughlin & Stem, now

counsel for James and his companies, including Couri Acquisition Corporation, were satisfied.

The so-called "Valuation Report" was good enough for them. After the Valuation Report,

Robbins appears to have done nothing to assist the 1989 Trust or the 1998 Trust in collecting

anything to benefit Alex. However, he did not relinquish his position as Trustee and he and

filed tax returns for the 1989 Trust, with McLaughlin & Stem as tax return preparer, as late as

2010 (filed for 2009 taxes).

106. Alex was kept in the dark about the misconduct by Robbins with respect to the

Trust, as Robbins and McLaughlin & Stem intended. The 1989 Trust terminated by its terms in

November 2010. At that time, James believed he was likely to be dying shortly due to a

diagnosis of Stage iv Melanoma. He confessed to Alex what he and Robbins had done, and told

Alex to seek the facts from Robbins and to try to obtain redress from him. James currently has

very limited assets and no ability to remedy his part of the wrongdoing, even if he wished to do

so.

33


107. Alex wrote to Robbins and through counsel sought facts and documentary

evidence. Alex was all too aware, and had been throughout her life, that her father's statements

could not be relied on. The documentary record provided to her counsel established Robbins'

and McLaughlin & Sterns' wrongdoing. Accordingly, Alex has brought this action.

AS AND FOR A FIRST CAUSE OF ACTIONAGAINST BOTH DEFENDANTS

(Breach of Fiduciary Duty)

108. Plaintiffs repeat and re-allege each and every allegation of each of the prior

paragraphs with the same force and effect as if fully set forth herein.

109. As Trustee of the 1989 Trust, Robbins had fiduciary duties to the 1989 Trust and

to Plaintiff, its sole beneficiary. As a result of the above described acts, Robbins violated his

fiduciary duties as Trustee of the 1989 Trust to the 1989 Trust and to Alex as the sole beneficiary

of that Trust.

110. At all relevant times, Robbins was acting as a partner of McLaughlin & Stem and

for the benefit of McLaughlin & Stem, as well as for himself. On information and belief,

McLaughlin & Stem as a firm was a participant in many of the acts complained of, including but

not limited to, the drafting and review of documents used to accomplish the breaches of fiduciary

duty, and was aware ofthe conflict that existed for Robbins between acting as Trustee with his

sole loyalty to the Trust and its beneficiary, and Robbins desire to obtain money and work for his

law firm, McLaughlin & Stem. McLaughlin & Stem had the obligation to ensure that the

conflict did not compromise Robbins' acts as Trustee for the benefit of himself and McLaughlin

& Stern. On information and belief, McLaughlin & Stem had a policy of receiving for the firm

any Trustee commissions charged by partners who served as Trustees of any Trust, and had firm

34


policies concerning acts and practices of partners who were engaged as Trustees. McLaughlin &

Stern is primarily liable for Robbins' breaches of duties.

1 1 1. As a result of the foregoing, Plaintiff has been damaged in an amount to be

proven at trial, but no less than $1.3 million dollars.

AS AND FOR A SECOND CAUSE OF ACTIONAGAINST MCLAUGHLIN & STERN

(Aiding and Abetting Breach of Fiduciary Duties)

112. Plaintiffs repeat and re-allege each and every allegation of each of the prior


113. In the alternative, in engaging in the above described conduct, McLaughlin &

Stern was aware that Robbins was breaching his fiduciary duties to the 1989 Trust, or was

willfully blind or recklessly indifferent to whether such breaches were occurring.

114. In engaging in the acts specified above, including acts taken by Robbins in his

role as parner in McLaughlin & Stern, McLaughlin & Stem acted with the specific intent to

substantially assist Robbins as Trustee in his breaches of duty to the 1989 Trust and Plaintiff,

and did, in fact, substantially assist Robbins as Trustee in such breaches. McLaughlin & Stern

profited from such breaches in receiving the $75,000 in payments paid in Januar 2000, and the

business James Couri gave to McLaughlin & Stem. McLaughlin & Stern aided and abetted

Robbins' breaches of his fiduciary duties.

115. As a result of the foregoing, Plaintiff has been damaged in an amount to be

proven at trial, but no less than $1.3 million.

35


AS AND FOR A THIRD CAUSE OF ACTIONAGAINST BOTH DEFENDANTS

(Accounting)

116. Plaintiff repeats and re-alleges each and every allegation of each of the prior


117. As a result of the foregoing, Plaintiff demands an accounting by Robbins and

McLaughlin & Stems of all transactions in or with the 1989 Trust and the 1998 Trust and of all

fees, charges and other benefits they received directly or indirectly from the 1989 Trust and the

1998 Trust, James or Marlene Couri and/or any corporation or entity affiliated directly or

indirectly with James Couri.

WHEREFORE, Plaintiff demands judgment as follows:

(l) with respect to the First and Second Causes of Action, for damages in an amount to

be proven at trial but no less than $1.3 million,

(2) with respect to the Third Cause of Action for an accounting,

(3) with respect to the First, and Second causes of action, because Defendants' conduct

was wrongful, wanton, wilful, intentional and evidences criminal indifference to

their civil responsibilities, Plaintiff demands punitive damages in an amount to be

proven at trial but no less than $6.5 million,

(4) with respect to First and Second Causes of Action, for prejudgment interest,

and for costs and fees, and for such other and further relief as this Court deems just.

36


Dated: New York, New YorkMarch 26, 2012

FOLKENFLIK & MCGERITY

By:Max Fol enflik

1500 Broadway, 21st FloorNew York, New York 10036(212) 757-0400Attorneys for Plaintif

37


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Documents

2012 Lydia Couri Complaint v Robbins (and Couri)