Fagelbaum & Heller, Representing the Sternlight Family Trust, Sues Prominent Beverly Hills Law Firm for Complicity in Largest Case of Financial Elder Abuse in Los Angeles County History.

LOS ANGELES -- Fagelbaum & Heller announced today that it is suing the prominent Los Angeles law firm of Hoffman, Sabban & Watenmaker (HSW) for alleged professional malpractice and having grossly failed in its fiduciary responsibilities in the largest case of financial elder abuse in Los Angeles County history. The trial begins September 1.

The big league trust and estate firm has a significant entertainment industry clientele and prides itself on having "one of the largest single office trust and estate practices in California, and one of the largest concentrations of members of the American College of Trust and Estate Counsel in the United States." It agreed to represent three members of the Sternlight family, ignoring conflict of interest concerns. The suit claims that HSW then proceeded to allow one of its three clients, Helen Fabe, to financially abuse another, her mother, Sara, a Holocaust survivor then in her seventies, and to plunder the Sternlight Family Trust and the estate of her father, Morris Sternlight, over a period of years.

Philip Heller, lead counsel for plaintiffs in the case, said, "This is far and away the most egregious, and also the most tragic, case of attorney malpractice I've ever seen. The dereliction of the most fundamental professional duties by the lawyers here is mind boggling."

Plaintiffs claim that, unbeknownst to her siblings, in March 1993, Helen Fabe asked HSW to "rewrite" her parents' estate plan to eliminate the inconvenient requirement of an independent, corporate trustee for the Sternlight Family Trust and to allow herself, her sister Eve and Sara to serve as co-trustees. To effectuate Helen's desires, HSW took Sara and Eve on as new clients, ignoring the numerous conflicts of interest this generated under the applicable professional standards. The suit alleges that HSW was well aware that the potential for such conflicts exists whenever a lawyer represents multiple clients in the same matter. HSW had explained the conflicts issue at length in a retainer agreement with Helen and her husband in connection with a prior representation. But HSW's retainer agreements with Helen, Sara and Eve for the administration of the Sternlight Family Trust and Morris's Estate omitted the standard section on conflicts. The suit further alleges that HSW and Helen affirmatively concealed from Sara and Eve the fact that Helen was already an HSW client.

Plaintiffs argue that Helen discovered $1.4 million in bonds owned by the Trust in a safe deposit box at a local bank and spirited them away to Switzerland, where they were sold and the proceeds deposited in an account from which Helen had authority to make withdrawals. Over the next several years, Helen allegedly stole over $1 million from the Swiss account, wiring money to California and stashing it in a matrix of over 70 bank accounts she opened in LA to conceal her thefts. The suit claims that HSW never bothered to perform inventories or appraisals of the Trust or Morris's estate, both perfectly standard procedures for trust and estate counsel, and Helen's thefts went unnoticed. HSW allegedly stumbled upon the existence of the bonds and their disappearance in 1994 after Morris died but failed to investigate and ultimately filed an estate tax return omitting all mention of the bonds.

Plaintiffs contend that HSW put Sara's house into a qualified personal residence trust, or QPRT, with Helen as the trustee and sole beneficiary, completely ignoring the egregious conflict this created between its two clients, Sara and Helen. HSW's QPRT enabled Helen to sell her mother's home of 28 years (telling the family that Sara was broke), to force Sara into a small apartment, and to pocket almost half a million dollars of the proceeds. Helen even took a $7,000 referral fee on the sale of her mother's home.

The suit further alleges that HSW stood passively by as Helen looted the Trust assets in LA. As of mid-1993, the Trust held $500,000 in cash and cash equivalents specifically earmarked to pay Sara's $5,000 monthly expenses. Early in 1995, HSW was told that more than half the money was gone and, three months later, learned that less than $50,000 was left. But the plaintiffs allege that HSW did nothing.

HSW helped Helen take out a $1 million life insurance policy on Sara, with Helen as the sole beneficiary and the Trust, i.e., Sara, paying the premiums. Plaintiffs argue that HSW again simply ignored the glaring conflict. Before Helen was finally found out -- by her siblings, not HSW -- Sara allegedly had been robbed of almost $100,000 paid to the insurance company.

In addition to the above, plaintiffs allege that Helen opened numerous credit card accounts by forging her mother's name, stole almost $200,000 in bearer bonds from Sara, stole every penny of Sara's monthly Social Security payments and emptied bank accounts the elder Sternlights had established for their grandchildren.

Helen then allegedly used her loot to finance massive shopping sprees, to take lavish vacations, to add a second story to her own house, to pay her daughters' tuition at the Marlborough School and send them to upscale summer camps, and to buy expensive baubles.

On April 30, 2004, after a bench trial in the Probate Department of the Los Angeles County Superior Court, the Honorable Thomas W. Stoever issued a $10.4 million judgment against Helen Fabe, finding that she had plundered the Sternlight Family Trust. Judge Stoever described Fabe's misdeeds as "physically and financially abusive conduct vis-a-vis her own mother Sara that was fraudulent, oppressive, malicious, immoral/amoral, shameful, sociopathic, egregious-in-the-extreme, avaricious and predatory." Because HSW had improperly failed to ensure that Helen was bonded, the Trust did not have the standard recourse to a surety typically available in cases of trustee misconduct.

On September 1, Philip Heller of Fagelbaum & Heller LLP will represent Eve Sternlight Cohen in an action by Helen's siblings to hold Hoffman, Sabban & Watenmaker accountable for its negligence and fiduciary breaches in allowing this gross financial elder abuse to take place. HSW's actions are unprecedented in trust and estate financial planning law.