(CN) - Nearly half of a trust fund that a fugitive created to manage lucrative real estate as the minister of a "charitable society" will go to his children, a federal judge ruled.
The dispute stems from a vow of poverty John Gill took 15 years ago so as to avoid aggressive property taxes on - but maintain control over - his substantial real estate holdings.
Gill transferred each of his properties into the Gill Family Cornerstone Trust to benefit his children and the Healing Water Ministries Integrated Auxiliary of the Order of the International Academy of Lymphology.
When Gill was convicted of a felony in Florida in 2009, however, he fled the country shortly before he was supposed to report to prison.
Gill tried to manage the trusts and real estate as a fugitive, but his former business associates and trustees, Kevin Hartshorn and Daniel Van Gasken, took over. The fugitive's brother Loren also failed to assume control.
Hartshorn established the Compassionate Order of Service of the Church of Compassionate Service and designated it as a beneficiary of the Cornerstone Trust.
To gain control of the trusts, Gill's children, Lauren and the minor K.G., ultimately filed suit in Columbus, Ga., against their father's former business partners and his brother Loren.
Wallace Whitten, Steve Thomas and Gill's other brother, Michael, intervened for control of the trust last year, asserting breach of trust claims against Hartshorn and Van Gasken.
U.S. District Judge Clay Land ruled
in January that Gill's children - not their uncle Loren - are the beneficiaries of the trust, and that said trust is irrevocable.
The children then settled with Hartshorn and Van Gasken so that a separate trust for the children's benefit would acquire 40 percent of the trust assets.
The other 60 percent of assets would no longer be available to Gill's children.
Loren and his company, Elm Leasing LLC, objected on the basis that approving the settlement would strip the court of subject-matter jurisdiction.
Judge Land approved the settlement April 14, finding that it does not amount to "impermissible self-dealing," and is in the beneficiaries' best interest.
"Plaintiffs will clearly benefit from the settlement," Land wrote. "They are provided with substantial trust assets that will be used for their sole benefit, and plaintiffs will be extricated from the Cornerstone Trust and its two other (dubious) beneficiaries: The Compassionate Order of Service of the Church of Compassionate Service and the Healing Water Ministries Integrated Auxiliary of the Order of the International Academy of Lymphology. Even if Healing Water and the Church of Compassionate Service are legitimate, plaintiffs will benefit because their interests are potentially in conflict with those other beneficiaries; under the settlement, plaintiffs will no longer be subject to the Cornerstone Trust's 'sprinkling provision' that permits all of the distributions to be given to the other beneficiaries and none to plaintiffs. The settlement also makes adequate provision for the interests of the other beneficiaries by leaving 60 percent of the assets for their benefit. And the court notes the Hartshorn defendants are closely identified with these other beneficiaries and have concluded that the settlement is also in their best interest. The court finds that the settlement is clearly in the best interest of all beneficiaries and is consistent with the trust settlor's intent." (Parentheses in original).
Though Loren must face claims that he violated federal anti-racketeering law, Hartshorn and Van Gasken may answer the intervenor complaint out of time, the ruling states. Land said the relief sought in the intervenor complaint is "largely identical" to Loren's cross-claim, which the partners did answer.
"In sum, as intervenors acknowledge, the parties have litigated this case as though the Hartshorn defendants answered the intervenor complaint and denied its allegations," Land wrote.
Hartshorn and Van Gasken must file their answer by Friday, according to the ruling.