An attorney for Regions Bank requested on Monday that Montgomery County Circuit Judge Greg Griffin reconsider a recent appointment of a special fiduciary to audit and oversee the Mabel Amos Trust Fund.
Griffin recently appointed James White, a certified public accountant (CPA), as a temporary special fiduciary to audit and investigate the finances of the Mabel Amos Trust Fund on Thursday.
The appointment was the latest development in an ongoing lawsuit alleging self-dealing among trustees overseeing a scholarship fund for needy children created by former Alabama Secretary of State Mabel Amos. The Mabel Amos Trust Fund is worth about $8.2 million, mostly due to oil and gas wells on its property in South Alabama. Amos was Alabama Secretary of State from 1967 to 1975 and died in 1999.
Allen Dodd, an appointed Deputy Alabama Attorney General, said in a July hearing in Montgomery County Circuit Court that the state, the fund's board members, and the trust fund's trustee, Regions Bank, recently settled the case. The fund's board members are John Bell, Drew McNeese, and Alabama Ethics Commission executive director Tom Albritton.
However, Griffin must still approve the settlement for the litigation to conclude. In a filing on August 8, Griffin said he wanted to let White examine the fund’s finances over the next three months before deciding to approve the settlement.
Cynthia Lamar-Hart, an attorney representing Regions Bank, asked Griffin in a filing on Monday to vacate his order appointing the special fiduciary and “instead (1) issue an order dismissing the parties without standing and (2) set a hearing for consideration of the proposed settlement.”
Byron Mathews, an attorney representing Tyra Lindsey, a 10th-grade student at Hillcrest High School in Evergreen, and her mother, Denese Rankin, requested Griffin appoint a special fiduciary during the July hearing. Dodd and Lamar-Hart argue Mathews doesn’t have standing to be involved in the litigation.
“For example, Lindsey has the Court “find” that the distribution of Trust funds to universities to create endowed scholarship funds was “a violation of the explicit terms of the Trust.” This is an error both of fact and of law. The Regions Parties submit to the contrary that such distributions were expressly authorized by paragraph F of Article V of the Will, which states that “[t]he Trustee at the direction of the Board shall make distributions at such time and in such manner as to not subject the Trust to tax under Section 4942 of the Code.” As a tax-exempt private foundation, the Trust is required to distribute at least 5% of the corpus each year in order to avoid tax under I.R.C. § 4942, such that both federal law and the Will allow for distributions to public charities to ensure that this minimum distribution threshold is met,” Lamar-Hart said in a filing on Monday. “Thus, should this issue be considered at a hearing in the future (as opposed to Lindsey’s premature “finding” prior to any hearing), the Regions Parties will submit authorities establishing the propriety of these distributions to Alabama colleges and universities as entirely in keeping with both paragraph F of Article V of the Will and the Internal Revenue Code.”
Lamar-Hart continued, “Lindsey also has the Court “find” that Lindsey has “specifically and credibly alleged” improper distributions from the Trust to certain unnamed scholarship recipients whose parents may have been known to certain of the Scholarship Board members or who may have been related to a judge known to certain of the Scholarship Board members or who may have had less financial need than other applicants.”
“Again, there have been no evidentiary hearings in this case to test the credibility of these unsupported allegations, nor has Lindsey provided any authority for her contention that, even if true, such unidentified scholarship recipients would have been disqualified persons under applicable law. In addition, this Court has not held a hearing or received briefing on the issue of whether, of the four criteria that Mabel Amos instructed the Scholarship Board to consider in selecting scholarship recipients, financial need is to be given more weight than any other criterion,” Lamar-Hart said. “Certainly, the Court as yet has no basis for making any finding in that regard. In addition, Lindsey has the Court suggest that Regions’ fees are inflated or otherwise are improper and are calculated on an hourly basis. To the contrary, Regions does not charge fees for its services based on hours worked, but rather fees are based on Regions’ published fee schedules (or fees negotiated based on those published schedules), as are applicable to the type of account and the type of assets held therein. Once again, this Court has not held a hearing or received briefing on this issue; certainly, the Court as yet has no basis for making any finding or suggested conclusion in that regard.”
Griffin said in his order appointing a special fiduciary on August 8, “There are several bases for this decision. First, it is impossible to determine at this point the extent of the trustees’ breaches of duty, as only the tip of an apparent iceberg of impropriety can be seen.”
“Further, the Attorney General and trustees previously announced to the court a proposed settlement “in principle,” but no terms of any proposed final settlement have been filed with or otherwise tendered to the court. A determination by a Special Fiduciary of the extent of the trustees’ breaches of duty would help inform the court’s decision whether to approve any proposed settlement or order other relief, as well as prevent any additional breaches in the interim,” Griffin said.
Griffin also noted that the trust fund’s board engaged in self-dealing by approving scholarships to family members, which violated the trust's terms.
“The information contained in the Trust’s tax filings disclose that the Trust distributed $135,000 in scholarship funds to the children of Thomas Albritton, a trustee of the Trust. These disbursements clearly violated the Trust’s prohibition on private inurement and self-dealing on the part of the trustees, set forth in Article V, part E of the Trust. The tax filings also reveal that the trustees distributed Trust funds directly to third parties that were not 'young men and women of the State' as required by the Trust. The tax filings indicate that in some cases these distributions were not for scholarships, but 'general purposes'; in other cases, where the disbursements went to universities and foundations to create scholarship funds at their respective institutions, the scholarship recipients would be chosen by individuals other than the Board Members of the Trust, a violation of the explicit terms of the Trust,” Griffin said. ”In addition to the improper scholarship awards to non-individuals, it has been specifically and credibly alleged that the Trust awarded scholarships to individuals who were explicitly identified by Petitioner Lindsey as being the children and grandchildren of staff members of the trustees’ law firm, to the child of a former partner and judge before whom the trustees practiced law, and to the children of wealthy clients of their law firm. These scholarships would have served to benefit personally the trustees and would constitute a violation of the private inurement provisions of Article V, part E of the Trust. The extent of these improper disbursements is not currently ascertainable as, unlike the scholarship awards to Thomas Albritton’s children and to the third-party entities, they have not been disclosed in the Trust’s tax filing.”
He added, “The Trust’s tax filings also indicate that after the Trust became wealthy from oil revenue in 2010, Regions Bank greatly increased its charges to the Trust for its administrative services although it spent the same amount of time working on Trust matters both before and after the Trust became wealthy.”
Gewv0cmmak4mbretg1f1rnub 4ff6a756 6256 4853 b0ba a7ba59d91a89 by Caleb Taylor on Scribd
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