Charitable Efforts Left Wanting?

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It turns out that another of L.A.’s big philanthropists got stung by the near collapse of insurance giant American International Group Inc.

Glorya Kaufman, widow of Donald Kaufman, the late co-founder of homebuilder Kaufman & Broad, is known for supporting the performing arts. But even as she gave $20 million in March to the Performing Arts Center of Los Angeles County – its second largest gift ever – she was smarting from some big-time losses.

Kaufman said her husband’s trusts lost more than $50 million when the government pumped billions into the insurer a year ago to stave off its failure, taking a huge equity stake that dropped existing AIG shares to a fraction of their former value.

Those losses put her in league with some of L.A. wealthiest residents, including aviation titan Steven Udvar-Hazy; father-and-son entrepreneurs Leslie and Louis Gonda; and fellow philanthropist Eli Broad, the other co-founder of Kaufman & Broad.

It’s unclear how deeply the AIG losses will hurt the trusts’ net worth, and an attorney for Kaufman declined to comment on how severely her philanthropic initiatives may be cut. But this much is clear: Kaufman, a beneficiary of the trusts, thinks the losses were unnecessary, and she is fighting mad.

She is waging a legal battle against co-trustees JPMorgan Chase and L.A. attorney Edward Landry, claiming in an L.A. probate court lawsuit that they should have taken steps to stop the losses by “swiftly moving to sell the AIG stock.” Kaufman also claims the trusts held “unreasonably large amounts of the stock.”

As might be expected, the defendants are disputing the allegations.

“If these trustees could have predicted the near collapse of AIG, they would be richer than God,” said Adam Streisand, a partner at Loeb & Loeb LLP, who is representing Landry.

However, Kaufman is so steamed over the losses that she is pursuing the lawsuit even though Los Angeles Superior Court Judge Mitchell Beckloff – the same judge overseeing Michael Jackson’s estate – ruled in July that he would be unable to guarantee Kaufman wouldn’t be disinherited if she continued to challenge the co-trustees.

Miles Feldman, one of Kaufman’s attorneys, said his client plans to pursue the case anyway and is appealing the judge’s order.

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