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Mall Dynasty Heir Sues Neal Gerber for Investment Losses

Posted Aug 19, 2009 1:46 PM CDT
By Debra Cassens Weiss

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A mall dynasty heir claims in a lawsuit that Chicago law firm Neal, Gerber & Eisenberg is to blame for more than $300 million in her trusts’ investment losses.

The suit by Mary Bucksbaum Scanlan claims the law firm and two of its partners committed malpractice when managing her trusts, the Chicago Tribune reports. The trusts were heavily invested in General Growth Properties, the mall investment company created and partly owned by the Bucksbaum family.

The suit names as defendants partners Marshall Eisenberg and Earl Melamed, along with the law firm, the story says. Eisenberg and Melamed oversaw General Trust Co., a corporate trustee set up to manage the trusts of the Bucksbaum family, including those benefiting Scanlan, according to an account of the suit by Crain's Chicago Business.

General Growth’s stock lost 97 percent of its value in 2008, according to a Wall Street Journal (sub. req.) story published in December. It detailed findings of an internal investigation conducted by the Chicago law firm Winston & Strawn that found the Bucksbaum family trust had made private loans to two company officers and failed to inform the board.

Scanlan’s suit also makes allegations about private loans, according to the Tribune account. It alleges the lawyers used her trust to loan at least $90 million to two General Growth officers to allow them to satisfy margin calls connected to their purchases of company stock. The suit says Eisenberg and Melamed had conflicts of interest when they also represented the company and other family members.

The law firm denies the allegations and says it will be vindicated. “It is terribly disappointing that … Mary Bucksbaum Scanlan would attempt to hold the law firm responsible for investment losses that were caused by financial circumstances that the greatest financial minds of our time failed to foresee,” the firm said in a statement provided to the Tribune.

“There is simply no basis for Mary's attempt to shift the blame for the trusts' losses to the law firm. We are confident that when all the facts come to light, the firm and its members will be completely vindicated."

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