Bloomberg News

Ex-Lehman CEO Sues Estranged Son-in-Law Over Apartment Loan (1)

June 19, 2013

Richard Fuld, the former chief executive officer of Lehman Brothers Holdings Inc., sued his estranged son-in-law over “deceptive conduct” related to a loan for the purchase and renovation of a Manhattan apartment.

Fuld sued Aaron Packles for “inducing plaintiff to advance significant sums for the purchase and renovation” of an apartment on the ninth floor of 79 East 79th Street by “falsely representing that defendant intended to repay that loan, failing to disclose his true intention to aver falsely that the apartment and renovations were a gift, and his failure to repay those funds to date.”

Packles and Fuld’s daughter Christine paid $9.75 million in cash for the apartment in 2007, shortly after they were married, the New York Times reported in March 2009. They put the apartment on the market in January 2009 for $12.95 million, and lowered the asking price to $9.8 million six weeks later, the Times said.

The 11-room apartment, with four bedrooms and four bathrooms, features a private elevator and a dining room with views of Central Park, according to a listing on the website of Corcoran Group Real Estate. It was sold for $9 million in April 2011 to Joseph and Erica Samuels, according to city property records.

Default Judgment

If Packles fails to appear to respond to Fuld’s allegations, the suit seeks a default judgment of $12.9 million, an equitable lien over the proceeds of the apartment sale, which are currently being held in escrow, and an order directing Packles to authorize the disbursement of the escrow, according to the filing.

Fuld’s daughter filed for divorce in April 2010 in New York State Supreme Court in Manhattan, and the case is still active, according to online court records. Divorce records aren’t available to the public under New York state law.

Fuld’s attorney, Judith L. Mogul, of Morvillo Abramowitz Grand Iason & Anello PC, declined to comment on the filing in a phone interview.

Packles, a managing director at Bank of America Corp.’s Merrill Lynch unit, didn’t immediately return a phone call to his office seeking comment. William Herman, an attorney for Packles in the divorce case, declined to comment on Fuld’s suit, and John Kornfeld, another Packles lawyer on the divorce, didn’t immediately return a phone message seeking comment on the filing. Bill Halldin, a spokesman for Bank of America, declined to comment.

Fuld was chief executive of New York-based Lehman when its collapse helped bring on the worst economic slump since the Great Depression. The company filed for bankruptcy in September 2008 with assets of $639 billion.

The case is Fuld v. Packles, 155573/2013, New York State Supreme Court, New York County (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court at 8969 or cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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