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Lawyer cleared of fraud in family assets battle

A three-member arbitration panel has rejected a dozen claims of fraud, self-dealing and other unethical conduct against an Alexandria attorney after a high-stakes family feud over years of complex financial transactions.

The arbitrators decided in favor of lawyer Bruce W. Henry on all 12 claims advanced by the daughter of an Alexandria businessman who died in 2012.

The disgruntled daughter — Jackie Bogle Meuse — contended Henry and a colleague exploited the family’s business entities for years. Meuse’s lawsuit demanded $48 million. Another daughter opposed Meuse’s lawsuit, and supported Henry’s handling of the family money.

The case featured multiple experts on each side, including law professors and attorneys. The arbitration panel was made up of retired Virginia Supreme Court Justice LeRoy F. Millette Jr., retired Arlington County Circuit Judge Paul F. Sheridan and University of Richmond law Prof. John G. Douglass, with The McCammon Group.

The panelists issued a report of their findings and conclusions July 7 (VLW 016-10-02).


Longstanding questions over management

Businessman Jack Bogle set up a group of corporations in 1980 so he could manage two commercial properties he owned while giving his three children an interest in those assets. A son plundered the family fortune through fraud, however, and Bogle took bankruptcy in 1991.

The bankruptcy court approved an irrevocable trust for Bogle’s properties and they later came to be managed by Henry and colleague Paul Macdonald. Henry gained additional control when a lender offered a badly needed refinance, contingent on a guarantee from someone other than “a Bogle.”

Evidence showed that, even though his management role was reduced in the 2003 refinance, Jack Bogle made a “conscious decision” to keep corporate control out of his daughters’ hands because he wisely feared it “could be a setup for a big fight someday,” the panel said.

After that 2003 restructuring, two of Jack Bogle’s children raised challenges to Henry’s management. Son Bob Bogle allegedly was paid to drop a demand for access to corporate records in 2004.

Meuse — one of the two Bogle daughters — demanded financial information from Henry for more than a decade. Her demands were often accompanied by accusations of self-dealing, according to facts recited in the 21-page report by the arbitration panel.

Henry hired lawyers and resisted Meuse’s claims of wrongdoing, which included a complaint to the Virginia State Bar.


New litigation

Meuse’s current lawsuit was filed in 2015. The claim was referred to arbitration based on a clause in the corporate documents. Meuse, represented by John and Michele Craddock of Richmond, had a long list of allegations.

“Macdonald and Henry have been unlawfully ‘milking’ the [Bogle] entities through fraud, breach of fiduciary duty and excessive fees,” Meuse claimed, according to the panel.

She claimed the pair had improperly seized corporate control, engaged in conversion and self-dealing, stonewalled requests for information and failed to properly wind up an irrevocable trust after Jack Bogle’s death.

After two weeks of testimony from a parade of experts, however, the arbitrators concluded Macdonald and Henry had managed the companies “in a largely successful effort to satisfy creditors, preserve the real estate assets and build the value of the companies.”

Henry was represented by McLean’s Stephen M. Sayers.


No wrongdoing found

Meuse had standing to pursue derivative claims on behalf of the business entities, the panel said, but the trio concluded that many of Meuse’s claims were barred by applicable statutes of limitations.

Addressing the surviving claims, the arbitrators found no proof of wrongdoing. Henry and Macdonald validly assumed control of the companies in 2003, the arbitrators said, under pressure from a lender that insisted on a non-family member as guarantor.

The evidence failed to prove fraud or theft of corporate money, the panel said. Henry and Macdonald’s compensation also was not excessive under the circumstances, the arbitrators concluded. The pair’s efforts “added value to a struggling corporation,” the report said.

Instead of finding a cover-up, as alleged, the arbitrators said Meuse had been “showered with documents.” Hiring a lawyer to respond to document requests also was appropriate, the report concluded.

“Facing continuous threats of litigation, it was not a breach of duty for Macdonald to seek and pay for counsel to respond to such requests. It would have been irresponsible to do otherwise,” the report said.


Issues still pending

The arbitrators’ report discloses an impressive list of experts on behalf of Meuse. Among the witnesses:

  • Washington & Lee University law Prof. Lyman P.Q. Johnson
  • W&L law Prof. Robert T. Danforth
  • Richmond attorney Wyatt B. Durrette Jr.
  • Richmond attorney Leslie A.T. Haley

The arbitrators’ report of “Findings and Conclusions” is not a final award, the document said. Another hearing is scheduled in August to address attorneys’ fees and a reported “poison pill” provision, designed to penalize a beneficiary who challenges the corporate governance.

The VSB has no record of any public discipline of Bruce Henry, according to the clerk of the bar’s disciplinary system.

Sayers and John Craddock declined to comment, citing the confidential nature of arbitration and the fact that the case has not been concluded.

VLW 016-10-02