Estate of publisher Frank Pearl sued by Bank of America, et al.

From yesterday’s Publishers Marketplace:

The estate of financier and Perseus Books founder Frank Pearl, who died in May 2012, is being sued by Bank of America, TD Bank, Eagle Bank and even Perseus Funds for more than $50 million, according to the Washington Post, alleging he “sought to avoid payment to creditors by fraudulently moving $59 million in life insurance proceeds and other assets from his estate into Perseus Trust, which he had created for his wife” after being diagnosed with terminal cancer in November 2011. Bank of America seeks $22 million; TD Bank and Eagle Bank are asking for more than $16 million and $11 million, respectively.

Pearl had attested to TD Bank and Eagle Bank that his net worth exceeded $400 million, but a court filing by his widow claims the estate has almost no assets (outside of the trust). Filings by his own firm stated Pearl “was insolvent, or he became insolvent as a result of the changes” to his life insurance benefits — and they assert those changes were fraudulent, “an attempt to keep the death benefits out of reach of his creditors, including Perseus and the Perseus funds.”¬†As tax lawyer Edward Weidenfeld said to the paper: “There are some unanswered question here as to why Pearl would go to such extraordinary lengths to avoid what are clearly legitimate debts.”

The Perseus investment firm has moved out of Washington, DC, to offices in Bethesda. ” According to a recent SEC filing, Perseus and its funds have received clean audits by PriceWaterhouseCooper, although the firm has noted it will need between $6 million and $7 million ‘to meet its contractual obligations to clients through mid-2016.’

Oh boy. Given the general credo “follow the money,” this case will produce a mammoth amount of discovery but I’ll bet it’ll take the plaintiffs quite a while to get it.

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