Turow v. Glazier
| Decision Date | 30 August 2022 |
| Docket Number | 21 C 5756 |
| Parties | ADRIANE GLAZIER TUROW, individually and as beneficiary of the AJJ Investment Trust and Adriane S. Homer Descendant's Trust, Plaintiff, v. JOSHUA M. GLAZIER, individually and as trustee of AJJ Investment Trust and the Adriane S. Homer Descendant's Trust, DANIEL J. ABDO, and GLAZIER CORPORATION, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiff Adriane Glazier Turow brings this lawsuit individually and as beneficiary of the AJJ Investment Trust (the “AJJ Trust”) and the Adriane S. Homer Descendant's Trust (the “Adriane Trust”) against her brother, Joshua Glazier, individually and as Trustee of the AJJ Trust and the Adriane Trust (collectively, the “Trusts”) Daniel Abdo, Joshua's business associate; and Glazier Corporation, a real estate development company operated by Joshua as President and CEO since 1998. Adriane alleges that Joshua defrauded the Trusts of money and property with Abdo's assistance. Specifically, Adriane brings the following claims: breach of fiduciary duty against Joshua (Count I); participation in Joshua's breach of fiduciary duty against Abdo (Count II); common law fraud against Joshua (Count III); violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C § 1961 et seq., against Joshua (Counts IV and V); and unjust enrichment against both Abdo (Count VI) and Glazier Corp. (Count VII). Defendants now move to dismiss Adriane's complaint. Because the complaint fails to allege that Joshua engaged in a pattern of racketeering activity, the Court dismisses Adriane's RICO claims. However, Adriane has sufficiently alleged the remainder of her claims, and the complaint does not set forth everything necessary to demonstrate that the claims are untimely. So, the Court denies Defendants' motions with respect to the remainder of Adriane's claims.
BACKGROUND[1]
Adriane and Joshua's father, Bob Glazier, a real estate developer, founded Glazier Corp. In 1997, Bob established the AJJ Trust “to hold real estate and other assets [that] he intended to gift equally to three of his children:” Adriane, Joshua, and Jordan Glazier. Doc. No. 1 ¶ 2. To provide Adriane, Joshua, and Jordan with “continual financial support,” Bob created multiple limited partnerships for real estate investments, naming Glazier Corp. as their general partner and the AJJ Trust as a limited partner. Id. ¶ 38. Specifically, the AJJ Trust held an interest in the following limited partnerships: (1) Hutchinson; (2) GlazCo; and (3) Blue Jay, Condor, Dove, Eagle, Sandpiper, and Sparrow (collectively, the “Birds”). Joshua's personal trust (the “JMG Trust”) is also a limited partner in Hutchinson, GlazCo, and the Birds (collectively, the “HGB Partnerships”), while Abdo is a limited partner in only the Birds. When Bob died in 1998, Joshua became President and CEO of Glazier Corp., a position he holds today and through which he controls Glazier Corp.'s operations, finances, and business strategy. Abdo, a real estate professional, has worked for Glazier Corp. from about 1998 to the present.
The Bird partnership agreements provide that each partner will receive distributions equal to their “proportionate share from any property that [the] Bird[s] owned, including rental income and/or proceeds from the sale of the properties.” Id. ¶ 37. These agreements also indicate that the AJJ Trust will be “a partner in all of Glazier Corp.'s future real estate developments.” Id. ¶ 38. The Bird partnership agreements further provide that Glazier Corp., the JMG Trust, Abdo, and the AJJ Trust “would use the Birds as the vehicle to ‘pursue all real estate projects of the Partners and their respective affiliates' so long as Abdo devoted his full business attention to projects Glazier Corp. pursued.” Id. ¶ 39. The agreements also state that Glazier Corp. “‘will not be entitled to any administrative or management fees with respect to the operation of Partnership properties,' unless Abdo ceased to provide full time services to Partnership projects.” Id. ¶ 42(b).
The AJJ Trust Agreement dictates that the trust estate would “be retained in three separate trusts, one for each child” (“the Descendant's Trusts”) and named Joshua and Jonathan Mills as Co-Trustees of both the AJJ Trust and each of the Descendant's Trusts. Id. ¶ 25. As Trustee, Joshua owes fiduciary duties to the Trusts and their beneficiaries including a duty “to abide by the terms of the trust agreements, act with fidelity and good faith, serve the beneficiaries' interests with complete loyalty, and refrain from dealing with the trust property for his individual benefit.” Id. ¶ 133. Despite their designation as Co-Trustees, Joshua “did not consult with Mills on the vast majority of decisions relating to the AJJ Trust.” Id. ¶ 28. When Mills resigned from his position as Co-Trustee in or around 2004, Joshua did not inform Adriane, and the successor designated in the Agreement (Martin Weinstein) did not take Mills' place. Instead, Joshua designated his mother, Babette Glazier, as Co-Trustee. Babette does not have any business experience, relies on Joshua in all financial matters, and takes no active role in managing the AJJ Trust. As a result, Joshua “has acted as the de facto sole Trustee of the AJJ Trust and Descendant's Trusts at all times since Bob's death.” Id. ¶ 34. Abdo knew that Joshua “served as Trustee of the AJJ Trust, and as such owed fiduciary duties to the AJJ Trust and its beneficiaries, including the duty to act in the AJJ Trust's best interest and to avoid self-dealing.” Id. ¶ 140.
From 1998 through the present, the AJJ Trust and Glazier Corp. “operated in concert for the unlawful purpose of intentionally defrauding Adriane, as a beneficiary of the AJJ Trust and the Adriane Trust, of money and property” through multiple interrelated fraudulent schemes. Id. ¶ 161. In doing so, Joshua “committed multiple acts indictable as wire and mail fraud, transporting stolen goods in interstate commerce, conducting financial transactions in property derived from specified unlawful activity, and witness tampering.” Id. ¶ 164.
As Trustee, Joshua “was responsible for all financial aspects of the AJJ Trust and the Descendant's Trusts.” Id. ¶ 35. Joshua failed to “open[] individual accounts for any of the Descendant's Trusts.” Id. ¶ 74. And although he opened a bank account for the AJJ Trust (the “AJJ Account”) in 2001, he only deposited portions of the AJJ Trust's share of the proceeds from the HGB Partnerships within the account. Then, in 2009, Joshua stopped using the AJJ Account and began “depositing all of the AJJ Trust's income and earnings directly into Glazier Corp.'s accounts.” Id. ¶ 75. As President and CEO of Glazier Corp., the general partner of the HGB Partnerships, Joshua controlled the partnerships' distributions and diverted nearly all of the AJJ Trust's share of income from the HGB Partnerships to himself, Glazier Corp. or Abdo. From 1998 through 2018, the HGB Partnerships produced more than $30 million in revenue but the Adriane Trust only received approximately $560,000. Aside from this amount, “none of the annual rental or investment income [from the HGB Partnerships] has been paid to Adriane or the Adriane Trust.” Id. ¶ 71.
Soon after Bob died, Joshua attempted to “eliminate or drastically reduce the AJJ Trust's partnership interests in the Birds” and reallocate those interests to himself, Glazier Corp. or Abdo. Id. ¶ 78. For three of the Birds, Joshua did so by purporting to amend or restate the partnership agreements. Abdo signed one of these restated agreements. However, the Bird partnership agreements “expressly require the AJJ Trust to remain a partner through at least 2030.” Id. ¶ 84. Moreover, Joshua did not file the purportedly restated partnership agreements with the Illinois Secretary of State. Therefore, these changes “were legally ineffective,” id. ¶ 79, and the AJJ Trust “continues to own partnership interests in each of the Birds,” id. ¶ 93.
For the remaining three Birds, Joshua excluded the AJJ Trust from property sale proceeds “by reporting the AJJ Trust's interest in those partnerships as ‘0.00%' on their tax returns” whenever the partnership sold a property. Id. ¶ 95. For example, when Joshua sold a property owned by Condor on December 11, 2011, he reduced the AJJ Trust's interest by 49% and increased the JMG Trust's interest by 49% on Condor's 2011 tax return. On November 11, 2006, Joshua withdrew $129,000 from the AJJ Account, sent it via wire transfer to himself, and purchased a property for Eagle. At the time, the AJJ Trust was at least a 45% partner in Eagle but Joshua reported on Eagles' 2006 tax return that the AJJ Trust had a 0% interest, while increasing Abdo's interests by 20% and Joshua's by 30%.
Joshua distributed the Birds' earnings according to these false interests, thereby depriving the AJJ Trust of the earnings that the partnership agreements entitled it to and unlawfully increasing the earnings of himself and Abdo. By 2011, Joshua Id. ¶ 81. Abdo was aware of Joshua's actions and “affirmatively assisted and helped conceal” them by failing to inform Adriane. Id. ¶ 147.
As Trustee, Joshua filed the Trusts' tax returns using either U.S. mail or interstate wires. Joshua falsely reported on various HGB...
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