A judge has stopped the partners in a controversial sale of a widow’s estate from pocketing the profits meant for “crippled children” — at least for now.
The move by Probate Judge Jack Keyes Monday is the latest twist in a saga about how lawyers handle estates, how insiders get deals on property, and whether a community foundation and a fund for “crippled children” was shortchanged by a group of deal-makers including former city official Sal Brancati.
The action took place at a crowded hearing before Judge Keyes — with so many lawyers present that the hearing had to be moved from Keyes’ first-floor courtroom at 200 Orange St. to a basement hearing room. The crowd included Attorney General Richard Blumenthal.
The crowd was drawn by a controversy — first reported here—over the handling of the estate of the late Margaret Amrich of 18 Cottage St. Amrich’s will dictated the the proceeds of her estate go toward a “crippled children’s” fund at the Community Foundation of Greater New Haven. Her estate’s executor, Attorney Gabriel Cusanelli, sold the property to his own business partners for only $250,000. His partners turned around and resold the house for $368,000 — a $118,000 profit.
Questioning whether the fund was shortchanged up to $129,000 by the deal, Attorney General Richard Blumenthal (pictured above at rear) pushed out Cusanelli as the estate’s executor. Blumenthal Monday indicated he may file a lawsuit in Superior Court to seek additional assets.
At the heart of the debate: Was the fund shortchanged when Attorney Cusanelli, whom Amrich appointed as executor of the estate, sold it for a price that the city calls “not honest” to two former business partners, including Brancati, to whom he’d been joined through a business partnership called PCB Ventures, LLC? (Click here, or scroll to the bottom of the story, for background on the case).
Brancati and business partner Mark Perez bought 18 Cottage St. for the $250,000 price on April 12, 2006. They now have a contract to resell the home for about $368,000.
Freezing the Bounty
At the request of Blumenthal, the state’s defender of charities, Keyes (pictured) allowed Brancati and Perez to resell the home, but stopped them from getting access to their profits until the pending probate court case has been settled. Keyes ordered the money from the sale of the home to be put in an escrow account under the supervision of the estate’s new executor — Irving Schloss of Tyler Cooper, representing the Community Foundation.
“It’s certainly a step in the right direction — we’re preserving all the assets so they can be satisfied in the case that Mr. Cusanelli or anyone else should be held accountable, which I think they will,” remarked Blumenthal.
On To Higher Court?
After motions filed by Blumenthal and the foundation asking for the removal of Cusanelli as executor of Amrich’s will, the Branford-and-New Haven-based attorney (pictured) submitted his resignation Monday.
“This is not to be construed as an admission of wrongdoing,” said Cusanelli’s lawyer, Eugene Riccio.
As an “act of good faith,” Cusanelli also gave back a check he said represented all money he’d made as executor; his lawyer says he had taken only $6,500 of the $20,000 he allotted himself in the final accounting. Cusanelli handed over the assets of the estate to Schloss in a check summing $298,696.
Blumenthal welcomed Cusanelli’s resignation, but questioned the tallying of the interest accrued on the widow’s assets. If an agreement is not made between the parties involved, Blumenthal suggested an action in Superior Court would be in order to seek additional assets due to the Community Foundation.
After the home was sold, the money should’ve been either disbursed to the foundation or put in an account where it would accrue interest, said foundation attorney David Schneider. Neither was done. Cusanelli performed a calculation of what interest would’ve been made — an estimated $6,188, delivered in a check. Schneider suggested his estimate was low.
A Partnership Dissolves
Comments made in the hearing room Monday revealed the fraying of an alliance: Cusanelli was once linked to Brancati and Perez through PCB Ventures, LLC. Between the time Cusanelli got a bid from Brancati and Perez to buy the home, and the time they actually bought it eight months later, that partnership was dissolved.
From the looks of things Monday, the former PCB Ventures alliance met a messy end.
After eight months went by and Brancati and Perez still had not closed on the home, Cusanelli made motions to evict them, according to his lawyer, Riccio (pictured at right). As Brancati and Perez began work fixing up the home, but had not yet paid for it eight months after putting down a deposit and promising to do so, Cusanelli filed two “motions to quit,” a notice of intent to pursue eviction, according to Riccio. Riccio said the notices were filed in March and April of 2006. The home was finally sold on April 12 2006.
Brancati and Perez appear no more content with their former ally. Deliberating over whether to accept the hold-up of funds his clients stand to gain from fixing up and flipping the Cottage street home, attorney Mitchell Cohen (pictured at left) returned from a phone conference with Brancati and Perez to report back to the room of lawyers. He said would not fight the temporary freezing of funds in Probate Court, though they may appeal the matter in Superior Court.
Then he added a request — that the court take into consideration the likelihood of a malpractice suit against Cusanelli.
Malpractice? “My client has been cast in an unnecessarily unfortunate light,” Cusanelli’s lawyer, Riccio, later responded to the allegations of wrongdoing. “When the facts come out, he will be exonerated.”
Lingering Questions
“Did the lawyer make the proper effort to sell the house for the appropriate price?” Schneider, the foundation’s attorney, still wants to know. He said he’s received an appraisal claiming the house was worth $200,000 — a value lower than what it sold for — but the city and neighbors have testified it could’ve sold for much more.
Blumenthal said his office is still investigating several “areas where the administration of this estate seems to have been glaringly deficient.” Those areas include the timing of the closing on the sale — why an eight-month delay? — and the price the home sold for.
A host of witnesses have been subpoenaed in the case. Schneider (pictured at center) asked for their testimony to be delayed until the next hearing while he examines financial documents. He said the case has opened up bigger questions, too.
“What troubles me is that the ability for someone to do something like this without someone finding out about it,” said Schneider. When a woman dies and leaves no heirs, “Who’s really watching what the executor does? Executors have a lot of power. If nobody calls them to account, no one knows what is going on.”
Read previous Independent coverage of the Cottage Street sale here:
‚Ä¢ “‘Crippled Children’ Shortchanged?”
‚Ä¢ “AG Investigating Cottage St. Deal”
‚Ä¢ “City: Deal Was ‘Not Honest’”
‚Ä¢ “No Permits On File For 18 Cottage St.”
‚Ä¢ “Insiders Paid $250K; He Would Have Paid $350K”
‚Ä¢ “Ginsberg: We Never OK’d Insider Sale”
‚Ä¢ “Blumenthal Objects to Cottage St. Ledger”