Seven O’Malley siblings sued the McCarthy Duffy law firm and its attorney Frank K. Neidhart and Thomas J. Montgomery; the Law Offices of Kovitz Shifrin & Nesbit and its attorney Michael P. Rhoades; and the CPA firms FGMK and Smart & Associates, and their member/partner CPA Con Murphy, in Cook County Court.
“Seven of the children of Eileen O’Malley bring this action to recover millions of dollars looted from her estate by defendants,” the complaint states.
Mrs. O’Malley suffered a stroke in 1997, and had difficulty seeing and hearing, making “her extremely dependent on others, and particularly the defendants, for managing her assets and even reading and/or understanding important transactional documents,” the O’Malleys say.
While her physical and mental capabilities were declining, “defendants, many of whom were fiduciaries of Mrs. O’Malley, employed an arsenal of artifices to defraud Mrs. O’Malley, including forged documents, unauthorized checks, improper transfers of real property, and threats to Mrs. O’Malley. In less than 10 years, defendants’ actions depleted the Estate by no less than $50 million. Most, if not all of that money went into, or through, the pockets of the defendants,” the complaint states.
Three of the children are accused of “acting in concert with” the defendants, but the siblings are not named as defendants.
“Only after the named defendants were cross-examined under oath before a jury in March of 2012, was defendants’ scheme fully revealed,” the complaint stats. “William O’Malley, Thomas O’Malley and Joan Gross – acting in concert with, inter alia, accountant con Murphy and attorneys Frank Neidhart, Thomas Montgomery, Michael Rhoades and principals of Marquette Bank – conspired over several years until 2009 to literally loot and pillage the estate of the deceased mother of eleven (11) children Mrs. Eileen A. O’Malley.”
The seven siblings claim that a jury in March 2012 found their mother’s 2009 Will and Trust “invalid based on undue influence. The verdict cast aside the attempt to cover up the defendants’ scheme and confirms the validity of the claims set out below.”
The children’s father died in October 2000, their mother on Feb. 27, 2009.
After their mother died, Bill and Thomas O’Malley and their sister Joan Gross conspired with attorney Neidhart to take “the bulk of” the estate, the seven O’Malley claim.
The complaint states: “Bill has admitted aspects of the scheme in an affidavit, the originals of which he contemptuously destroyed after verifying their authenticity during the March 2012 trial. Bill admits in his affidavit that he acted in concert with Tom, Joan, and Neidhart to ‘take the bulk of [Mrs. O’Malley’s] estate for ourselves.’ Bill also admits that Marquette joined the conspiracy later one-at the urging of Montgomery and Neidhart-by agreeing to be named and act as trustee under Mrs. O’Malley’s 2009 Trust.” (Citation to affidavit omitted; brackets in complaint.)
The siblings claim that the “ruse to gain unfettered control over Mrs. O’Malley trusts is made evident” by a March 30, 2001 document, a first amendment to their mother’s 2000 trust, in which the successor trustees to mother Elaine: Tom, Bill, the Rev. Tim and Joan, was amended to make Bill the “sole successor trustee.”
They then “began a process of systematically transferring Mrs. O’Malley’s property out of Founders Bank land trusts and into Marquette Bank land trusts. After Mr. O’Malley’s death, Mrs. O’Malley, at the direction of Neidhart and Bill, opened a series of land trusts with Marquette Bank that thereafter received the bulk of Mrs. O’Malley’s real property,” the complaint states.
It continues: “Another-particularly crude-example of the defendants’ usurpation of Rev. Tim’s trusteeship is found in the application for Founders Bank land trust No. 5743, where Rev. Tim’s name is simply crossed out.”
Rev. Tim is one of the seven plaintiffs.
“Having assumed control over Mrs. O’Malley’s land trust,” the complaint continues, “Bill, Tom, and Neidhart began a process of systematically transferring Mrs. O’Malley’s property out of Founders Bank land trusts and into Marquette Bank land trusts. After Mr. O’Malley’s death, Mrs. O’Malley’s, at the direction of Neidhart and Bill, opened a series of land trusts with Marquette Bank that thereafter received the bulk of Mrs. O’Malley’s real property.
“This systematic transfer was done because Marquette Bank – with which Neidhart and McCarthy Duffy had long-standing professional relationships spanning several decades – would not question any transaction, purported signature of Mrs. O’Malley, power of attorney, or other claim of surrogate authority for Mrs. O’Malley by Bill, Tom or Neidhart.”
As part of the scheme, the seven siblings say, Bill and Tom O’Malley took over management of the Palos Country Club (PCC) after their father’s death, and ran the club at a $9.5 million loss for the next eight years.
“No documentation exists to substantiate the ‘losses’ sustained by PCC from 2001 to 2008,” the complaint states. “Bill and Tom saw to it that virtually all of PCC’s relevant financial records were shredded. Upon information and belief, the ‘losses’ incurred by PCC were on account of Bill, Tom, Joan, and Neidhart’s theft of PCC’s funds.
“The $9 million in losses amassed by PCC from 2001 to 2008 (while Bill, Tom, Joan, and Neidhart ran PCC) were funded entirely and exclusively by Mrs. O’Malley. This was primarily achieved through ‘loans’ by Mrs. O’Malley to PCC, Inc.
“PCC, Inc.’s 2006 tax return reveals approximately $9 million in loans from Mrs. O’Malley to PCC, Inc.
“However, PCC, Inc.’s 2006 tax return states that no money is owned by PCC, Inc. to Mrs. O’Malley on account of any loan. Rather, the approximately $9 million in loans that was previously owed to Mrs. O’Malley was transformed into ‘additional paid-in capital.’ This was done at the direction of Bill, who told PCC, Inc.’s accountant that it was Mrs. O’Malley’s wish.
“Thus, approximately $9 million that Mrs. O’Malley had paid to fund losses at PCC simply vanished and would never need to be repaid to her.”
The seven siblings claim that “despite the egregious conduct of Bill, Neidhart, Joan and Tom, Marquette Bank has refused to take any action against them to recover the sums diverted from Mrs. O’Malley’s estate.
“Significantly, Marquette Bank has refused to file – or even investigate – a $14,000,000 theft loss tax return submitted by plaintiffs to Marquette Bank. … Donald Bonistalli, Marquette Bank’s senior vice president and trust officer, labeled Bill, Tom, and Joan as ‘cooperative siblings’ and others as ‘problem children’ in a conversation with those accountants. Mr. Bonistalli even issued a special warning regarding Rev. Tim that ‘The priest is the one to watch for. Wears the collar – but watch out for lightning strikes.’ This all occurring while Marquette Bank was supposed to be assuming a role of impartially administering Mrs. O’Malley’s estate.”
Their mother was admitted to the hospital on June 4, 2008, with a broken back, and her prognosis was “extremely poor,” the complaint states.
It continues: “On June 5, 2008, a document shredding service arrived at Palos County Club at the request of Bill and Tom and proceeded to shred the equivalent of fourteen (14) 55-gallon drums of financial records for Palos Country Club and Mrs. O’Malley.”
When their mother died, Bill O’Malley took possession of a log book kept by her nurses and caretakers, detailing her medical care, and “according to the defendant Joan Gross, Bill destroyed the log book containing crucial evidence regarding Mrs. O’Malley’s medical care and mental and physical capacity,” the complaint states.
Their mother’s 2007 will-not the one declared invalid-was admitted to probate after the March 2012 verdict, and this lawsuit was filed within 6 months, according to the complaint.
The O’Malleys seek $35 million in compensatory damages, and punitive damages for fraud, conspiracy, breach of fiduciary duty, aiding and abetting, and professional misfeasance and negligence.
The plaintiffs are Daniel O’Malley, Patrick O’Malley, Eileen O’Malley, Paul O’Malley, Mary Shannon, Rev. Timothy O’Malley and Terrence O’Malley.
They are represented by Victor Pioli with Johnson & Bell.
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