What happens when, upon a parent's death, the trust you've been counting on comes up empty, leaving you zilch? Such is the situation in which the children of Pennsylvania billionaire Richard Mellon Scaife have found themselves. Jennie and David Scaife are now set for a court battle to find out where that money went and whether they can successfully challenge the remainder of their father's vast estate for the purposes of recovery.
The elder Scaife, a philanthropist and well-known donor to conservative causes, bequeathed his $1.2 billion estate to two charities: the Allegheny Foundation and the Sarah Scaife Foundation. No mention was made in the will of Jennie and David. A separate trust, however, had been set up in 1935 by Sarah Mellon Scaife for the "welfare" of her son Richard and his "issue," i.e., his children, though it wasn't under his direct control. In 2005 the 1935 trust was calculated at $210 million, yet nine years later it been drained of all funds. All that money, Jennie and David Scaife contend, was dumped into Scaife's pet project, the Pittsburgh Tribune-Review newspaper.
According to sources of the Pittsburgh Post-Gazette, the Tribune-Review had operated for two decades at a $700 million loss recouped from Scaife's ample fortune. And now it seems that a good portion of those funds derived from the 1935 trust, which kept dwindling over the past ten years until it finally dipped to zero. In addition, the administrators of the 1935 trust even sought and obtained a legal waiver from Scaife due to possible violations of its original intent. As attorney Frederick N. Frank explains, such a waiver "would occur where [trustees] had some concerns about the actions that they were taking, and that they were concerned about a possible surcharge or [legal] action for what they were doing."
Now the two Scaife children have taken the matter to court, initially demanding an accounting for the $210 million in principal that disappeared from the trust, and the state attorney general's office is sitting in to ensure the designated charities get what they were promised. Irresponsibly burning through hundreds of millions of money that's not quite yours makes it easy to set off a firestorm of litigation. [embed]https://www.youtube.com/watch?v=svKq044qrYU[/embed]