TWENTIETH JUDICIAL CrRCUIT OF VirGINIA Fon, Jermuay W. Pansen, Resoevr Juocr Hox. Burke F MeCasms, Juno avguuen Coury Cncurt Court ‘Hon. Stara B. Smosvace,JuDoe 40 Cuusren SraceT Tambae Ese Hox. Juanerre A. Teny, Jobo ‘WasaenTox, VinoiNin 20186 eens Case Hon. Doveias L. Fursanc, Jr, dunce ‘Wir. xangumERcoUNTy.cov 540.422.8100 March 16, 2017 Robin C. Gulick, Esq. 70 Main Street Warrenton, VA 20186 Christopher T. Whelan, Esq. 31 Garrett Street Warrenton, VA 20186 Re: STEPHEN S. ROSZEL, VII and PER BANG-JENSEN, Co-Executors of The Last Will and Testament of Stephen S. Roszel VI, etal Circuit Court of Fauquier County Case No: CLO9-670 Dear Counsel: This matter comes before the Court for decision subsequently to the ore tenus hearing held on February 22-25, 2017. SUMMARY OF THE EVIDENCE The case was initially filed in 2009 by Stephen S. Roszel VI ("Steve") as Trustee, Grantor, and Testator of a Revocable Living Trust ("Revocable Trust”) executed on September 22, 2000, and also as. Testator of an irrevocable Trust Agreement (“Irrevocable Trust “), as Testator of a Durable Power of Attorney and testator of a holographic wil. Philip Jay Fetner, the Defendant (“Fetner”) was the Trustee, attorney in fact and executor of those respective documents. Susan Roszel Hartz was a Co-Plaintiff and daughter of Steve. Steve died while the suit was pending in November of 2016. A son, Stephen Roszel, Vit (“Bo”), a Substitute Executor, and Per Bang-lansen, an Executor of Steve's estate, were substituted as Plaintiffs for Steve. Steve was in his 90's at the time of his death. He had accumulated some wealth, the exact amount of which is unclear but estimated between three and four million dollars, much of tin relatively liquid form.Steve lived in the Hunt County of Fauquier County, Virginia and in the late 1990s met the Defendant, Fetner, who was a neighbor. Fetner is a highly educated man with degrees from Yale, (Cambridge and Harvard, where he served as editor in chief of the Harvard Law Review. After his schooling, he was employed as General Counsel to several different firms, before starting his own company (an African business development group). He authored a hardcover book published in 1987 con how to organize a safari and successfully photograph African wildlife. Eventually Fetner relocated to Fauquier, where he did some consulting work on securing federal contracts. Fetner and Steve were involved in a garden association and attended fund raising events together, and became friends for reasons that were not completely clear. Steve had a serious fall during ‘Thanksgiving of 2008, and after conversations between the two at a subsequent Christmas party, discussions occurred in January of 2009 about Steve's estate. Fetner testified that he told Steve he was generally cognizant of estate planning law, but denied claiming any ‘expertise’. Steve apparently asked Fetner (or Fetner invited the request) to assist him in managing his personal affairs and estate planning, and to become Trustee, attorney-in-fact and executor on his personal legal documents. " At that time Steve had in force the Revocable Living Trust, executed in September of 2000. Under Article VI of the document, son, “Bo” was to receive 50% of the residuary of the Trust assets and his other two children, Susan Roszel Hartz and Thomas Lathrop Roszel were to divide the other half. Steve named himself Trustee. On February 4, 2009, Steve executed an Amendment to the Revocable Trust removing Bo as successor trustee and naming his “close friend and neighbor” Philip Fetner, successor trustee. (Plaintiff's Ex.1(Q)). Article VI was repealed. Among the estate changes, Steve's real estate located in Warrenton and Hume, Virginia, was to be transferred to an irrevocable charitable remainder trust for the benefit of (the charity) Verdun ‘Adventure Bound. Further, an irrevocable trust was to be established on behalf of Susan Roszel Hartz, with Fetner named as trustee. (The intent was to equalize the distributions between the children by establishing a fund for his daughter of “comparable benefit’ to the real estate assets already transferred to his sons.) The trustee was to receive "such fees and compensations as is customary in Virginia” and set “such fees at his sole discretion.” Also on February 4, 2009, Steve executed a detailed Durable Power of Attorney (Plaintiff's Ex. 5(0)) with Fetner named as Attorney in Fact On February 10, 2009, Steve executed an Irrevocable Trust Agreement in favor of Susan Roszel Hartz, with Fetner as “original trustee.” The Trustee was given “the broadest possible authority to act and exercise his sole discretion.” (Pl. Ex. 24]. Fetner executed the Hartz Irrevocable Trust pursuant to ‘the Durable General Power and as Trustee of the Revocable Living Trust. Steve did not sign the Irrevocable Trust. The Hartz Irrevocable Trust further provided that Fetner could not be removed as trustee, * Steve's first born son, Dabney E. Calish was to receive one-third of the one-half, but this provision was struck at some unknown time. * By amendment, 80 was given 20+ acres of real estate.On February 4, 2009, the same day the new trust documents, power of attorney, and holographic will were executed, Fetner established the Susan Hartz Roszel fund account at Suntrust ‘bank, with himself as sole signatory, the ostensible purpose of which was to collect monies for use in establishing the Hartz Irrevocable Trust. Starting in February of 2009, Fetner began to transfer large ‘sums of money from Steve's account into Fetner’s personal accounts {titled Golden Zebra, Coachman Farms, and PJ Fetner}, also at Suntrust bank. On February 6, 2009, Fetner transferred $300,000 from Steve's Revocable Living Trust Wachovia Securities account to the Hartz Roszel fund account at Suntrust. On February 18, 2009, Fetner liquidated Steve's Northwestern Mutual Investment Services securities account, allegedly at Steve's request, and transferred those funds ($131,391.28) to the Hartz Roszel funds account. From July through August of 2009, in a series of separate transfers in varying amounts, Fetner moved a total of $253,616.79 from the Hartz Roszel fund into his 3 personal accounts. (PL’s Ex. 26), In April of 2009, Fetner acting as “attorney” for Steve (and purportedly at his direction) executed real estate closing documents, selling Steve's real estate in Florida. The proceeds from that sale, $159,692.33, were also deposited in the Hartz Roszel fund. Funds were again moved from t fund to Fetner’s personal “Coachman” farm account, of which $87,000 was used to pay Fetner’s Personal expenses (Pl’s Ex 28-8), including groceries, gym membership, polo fees, property taxes, fencing, landscaping, credit line payments, horse supplies and veterinary care, etc. Fetner claimed that all of his actions were authorized, although not necessarily by Steve expressly, and further that Steve intended for him to have broad discretion to invest those funds (for the benefit of Steve's daughter) in one of two “projects”, although he had not made up his mind which one. One of the projects was a second edition of his safari book using new digital photos. The other project, was a film treatment of a screenplay Fetner had written sometime before, called "Kaabong”, based loosely on his experience with a foreign aid project. (Def’s Ex.2), Fetner testified the option to choose one project over the other was at his discretion, and there was to be a “venture capital” return within 5 yrs. Fetner was unable to respond when asked how far either project had gone, and no evidence was presented that any money had been invested. ‘Steve's adult children became concerned over the progress of the estate document preparation in July of 2009. On August 28, 2009 son “Bo” testified that he visited his dad’s residence, and discovered the February 4" Amendment to the trust, and new Power of Attorney. Apparently, Steve became Unhappy also, as on August 31, 2009, Steve removed Fetner as trustee of the Revocable Living Trust. Also on August 31, 2008, Steve terminated the Revocable Living trust. On September 4, 2009 Steve revoked the power of attorney, removing Fetner as his attorney in fact. Fetner suggested that Steve was an 87 year old “alpha male”, virile and independent, who was “furious” with son Bo for trying to manipulate him and control his business and financial affairs. Testimony confirmed that Steve was an old World War Il fighter pilot, in the U.S. Army Air Corp., who went on to start his own company in the rough and tumble world of oil and gas drilling in Malaysia, eventually selling out and moving to Fauquier where his family roots are. While Steve was still energetic and competent in his late eighties, he was subject to being influenced, according to family. Steve's daughter testified that she saw Steve showing the first signs of dementia in early 2009,The Court concludes from the evidence that Steve, while still legally competent, was vulnerable to being manipulated by someone with impressive professional credentials, who played to his ego. Fetner had a negative bank balance during the time the estate documents were produced, but had a somewhat lavish lifestyle, and no other credible sources of income. Steve presented an ‘opportunity to separate him from his money. Steve initially showed signs of being threatened by a son ‘who was trying to take charge of his life, as Steve was became more forgetful. Although Steve was initially excited about the prospect of a film project set in Africa, or an updated publication of the safari book, once he was made aware of the withdrawals from the Hartz-Roszel account he Intended to and in fact did stop funding the trust, and terminated his relationship with Fetnert There was no credible evidence presented rebutting the inference of fraud concerning the insider dealing by Fetner. Fetner did execute an unsecured $700,000 Promissory Note® on February 28, 2009, bearing simple interest, as a result of "borrowing certain sums from the Susan S. Hartz Irrevocable Trust”, allegedly to finance Fetner’s projects. Although he testified that this note was “purely a ‘temporary place holder until the project was launched’, no time was set for the payment of the note ‘and the obligation that it be converted into “equity” wes at Fetner’s sole discretion. No payments were ‘ever made on the note. Further, itis unclear when or if the note was ever delivered to Steve. ‘An accounting was ordered by the Court during the pendency of the suit (Ex. 28.) Thé ‘summary shows $591,083.17 in funds transferred into the Hartz Roszel Trust, $528,042.25 (disbursed for debt and expense ~ presumably by Fetner), $3,700 to beneficiaries and $2,841.46 (Ex. 28-8) of value assets on hand. In total, the Defendant, Fetner converted $647,042.25 to his personal use. (Ex. 28-8). LEGAL ANALYSIS ‘A fiduciary has a duty to keep trust funds separate from his own funds. Buckle v. Marshall, 176 Va. 139 (1940). The purpose of requiring a trustee to keep someone else's money separated from his ‘own is to secure the beneficiaries of the trust and to discourage the trustee from applying the trust funds to his own private purpose. Leake v. Leake, 75 Va. 792 (1881). Itis clear that this rule was repeatedly violated by Fetner. Fetner suggested that this comingling of funds was done with the full knowledge and permission of Steve Fetner. He further argues that the broad language of the testamentary documents give him this type of latitude, and that this was intended so as to grant him full artistic control of the projects. However, itis a flagrant breach of trust on the part ofthe trustee to apply the Trust funds of the trust in payment of his own debts. Jon v. Ard, 75 Va. 466 (1881). Fetner countered by presenting a “Memorandum of Understanding” (unsigned) which allegedly > At this time, Steve was having trouble with his checkbooks, and had forgotten that 80 owned the house in which Steve wes living, asa result of a conveyance sometime in 2006, “Even though Steve was deceased by the time of trial, the insider self-dealing was self-evident, Such insider dealing creates a rebuttable inference of fraud. William v. Vaughn, 214 Va. 307 (1973). * The Note is notin favor of any one person, but reads like memorandum of intent.he prepared to present as an “offering” to potential investors (or film companies) considering the “projects.” No potential investor testified to receiving it, or to actually making any investment as a result of Fetner’s overtures. Fetner further justified this self-payment by claiming he had spent 1,000 hrs. of time managing a ‘umber of other business, charitable, and family matters (Verdun, Terrabuit, tax problems, payment of Sally Wilson, some oil and gas investments in the gulf, etc.) for Steve. Although he undertook the estate planning matters on a pro bono status, Fetner testified other matters were to be charged at a rate of $150/hr. However, no time sheets or tangible record keeping of his time was presented In his own pleading, Fetner only claitned 700 hours of time spent on these activities. Whatever his expenditure of time, Fetner could provide nothing to show what was done with Steve's money, other than the use of it to pay his personal bills and living expenses. The preservation of the trust fund is the paramount duty of the trustee. Halsted v. Ingram, 163 Va. 223 (1934). Based upon the foregoing, the Court will award $647,042.25 for the conversion of these funds to the estate of Steve Roszel. As to the division of the funds between the claimants, the Court will need to receive further evidence in light of the termination of those trusts. A longstanding course of self-dealing has supported the award of attorneys’ fees. Carlson v.Wells, 281 Va. 173, 189 (2011). Va. Code 64.2-795, permits the Court to award attorneys’ fees in its discretion. This case clearly justifies the award of attorneys’ fees. The Court will award $75,000 in attorneys’ fees and costs to the Plaintiff to be divided pro rata (on their estate interest) between the parties, ‘The Defendant also alleged that he should receive the benefit of the presumption that failure to call a material witness creates a permissible inference that the testimony would be unfavorable to the Plaintiff. Williams v. Vaughn, 214 Va. 307, 310 (1973). While itis true that the Plaintiff could have preserved the testimony of Steve, the inference applies equally to both parties. The Defendant could have conducted a preservation deposition, ifin fact Steve had permitted Fetner the right to use his funds as claimed, but this was not done. Hence, the Court cannot attach any significance to t failure to take a deposition by either side. The Plaintiff also seeks termination of the non-charitable irrevocable trust. There is no reason to continue this trust and any assets remaining will be distributed pursuant to Va, Code §55-548.17. Fetner will be removed as Trustee on any remaining trusts pursuant to Va. Code §64.2-792(8), due to his, breach of fiduciary duty. As a result of Fetner's conversion of funds, self-dealing, and overall violation of fiduciary duty, the Plaintiffs will be awarded $75,000 in punitive damages. Mr. Gulick is requested to prepare the appropriate Order. Sincerely yours, feffrey W. Parker, Jufige Jwe/mkb Crea % Wipe te