Plaintiff's Expert: Buchalter Lawyer Hid Misrepresentations

By Meghann M. Cuniff
Daily Journal Staff Writer

August 30, 2018

SANTA ANA -- Two attorneys who worked on a multimillion estate plan for a dairy fortune engaged in obvious "self-dealing" they tried to conceal through repeated misrepresentations that could constitute fraud, a plaintiff's expert testified Wednesday. 

"No lawyer should be involved in such transactions, let alone assist the trustee in these transactions," Bruce S. Ross, consulting counsel for Holland & Knight LLP, said of former Buchalter APC partner J. Wayne Allen's work with sole practitioner Raymond "Ran" Novell. 

Novell was the trustee for the Stueve family, founders of Alta-Dena Dairy. "He and his firm appear to be assisting in either the cover-up and/or the commission of these acts of self dealing," Ross continued.

Ross's testimony in a jury trial before Orange County Superior Court Judge William D. Claster followed similar testimony from three plaintiffs' witnesses who detailed a barrage of problems in a complex estate plan at the heart of the family's fraud claims against Buchalter. 

Novell is a longtime family friend of the Stueves who introduced the family to Allen as a tax lawyer capable of managing the estate. Allen worked at Berger Kahn before joining Buchalter. Buchalter is the lone defendant in the 8-year-old case after Novell and Allen settled days before trial, as did Berger Kahn.

Plaintiff's attorney Robert E. Barnes of Barnes Law LLP is trying to persuade jurors that Buchalter conspired with Allen and Novell to defraud the Stueves through a series of circular transactions and self-dealing that included life insurance policies and millions of dollars in land sold without the family's knowledge. Stueve et al. v. Novell et al., 10-00411651 (Orange Super. Ct., filed Sept. 24, 2010).

Meanwhile, Alan A. Greenberg and his partner, Wayne R. Gross of Greenberg Gross LLP, are attempting to separate Buchalter from Novell and Allen's work while also trying to show jurors many of the transactions now in question were explained to and approved of by the family. 

The estate plan was based on claims from Novell that the family faced huge tax burdens if they didn't restructure their finances. Barnes has been walking jurors through Novell's claims by questioning expert witnesses and Stueve family members about the estate.

One witness, real estate lawyer Craig P. Cherney of Canterbury Law Group in Scottsdale, Arizona, testified that Novell's work on the estate, for which he was paid $465,000 annually, "is one of the most brazen failures" of a trustee's duties "that I've seen in my career."

Another witness, William F. Wolf, a certified public accountant with Squar Milner LLP, said Novell's statements to the family that the estate plan would save nearly $15 million in income taxes and $12 million in estate taxes were "drastically overstated."

Wolf said the plan instead would cost the family $10 million because "the expenses of operating it were greater than the tax savings." 

"This is probably the most complicated one I've ever seen," he added.

Wolf's testimony last week preceded testimony from Jeffrey C. Jones, a CPA and managing partner of Frazer LLP, who testified an appraisal Novell attributed to his firm in 2001 was not conducted by his firm, though he was hired to work on the estate.

"Since it spells our name wrong, I do not believe that we had anything to do with this schedule," Jones said. Jones' brief testimony ended with him recounting how he warned Allen the plan was "overly complex."

"And after that meeting ... did you discover you'd been terminated from the Stueve Bros. Farms?" Barnes asked.

"That's correct," Jones answered.

Family members' testimony focused on Novell and Allen's promises to the family and Buchalter's reassuring presence.

Lea Stueve said she believed Allen was a trusted tax attorney and she was impressed by Buchalter's office in Irvine. She said she had no idea Novell and Allen were loaning themselves money from the estate, and no one at Buchalter informed the family during the 21/2 years Allen was a partner there. 

"Buchalter was a very prestigious law firm, and so I felt good about it because I felt, well, he's a really good trust attorney if he keeps moving up," Stueve said. "I felt, well, they're watching my back over Wayne Allen and Ran."

On cross-examination, Gross played a portion of Stueve's deposition in which she said she believed the meeting was at Berger Kahn. "I get the two confused," she said in the video. 

The trial continues next Tuesday. Upcoming plaintiff's witnesses include Buchalter Chief Financial Officer Pamela K. Webster, who's attended every day of the trial. Barnes said previously that Allen and Novell will testify, too, but his assistant said Wednesday that might not happen.

No lawyer should be involved in such transactions, let alone assist the trustee in these transactions,
— Bruce S. Ross, Consulting Counsel
Robert Barnes