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Darren Malloy Hekking & Shaun Egan Hekking v. Hekking

United States District Court, D. Rhode Island

June 1, 2016

DARREN MALLOY HEKKING & SHAUN EGAN HEKKING, on behalf of himself and on behalf of C.H. and B.H., Plaintiffs,
v.
CRAIG ANTONY HEKKING & MOLLY DURANT HEKKING, Defendants.

          DECISION AND ORDER

          MARY M. LISI, Senior District Judge.

         The plaintiffs in this longstanding inheritance dispute, Darren Malloy Hekking ("Darren")[1] and his brother Shaun Egan Hekking ("Shaun", bringing claims on his own behalf and that of his two minor children and, together with Darren, the "Plaintiffs"), have alleged that their older brother, Craig Antony Hekking ("Craig"), has systematically depleted and converted their late father's (Laurie Vonderwind Hekking, "Laurie") and stepmother's (Renate Danhardt Hekking, "Renate") estate (the "Estate"), which was to be equally shared by the three brothers. By the terms of Laurie's and Renate's wills, Craig was appointed as the executor of the Estate; he also functioned as the trustee of the Cego Foundation (the "Foundation"), a separate trust[2] established by Laurie for the benefit of Craig's four and Shaun's two children to assist in their education. The Plaintiffs have further alleged that Craig's wife, Molly Durant Hekking ("Molly, " together with Craig, the "Defendants"), has assisted her husband in his schemes and that she, too, has converted Estate property rightfully belonging to the Plaintiffs. After a contentious discovery period that was frequently drawn out by Craig's delaying tactics and outright refusals to provide necessary information, the case culminated in a seven-day bench trial. The case is now ready for a decision.

         I. Procedural History[3]

         This case began on June 27, 2014, four years after the deaths[4] of Laurie and Renate, when Shaun and Darren brought a seven-count complaint (the "Complaint") against Craig and Molly (Dkt. No. 1). The first two claims against Craig allege breach of fiduciary duty as personal representative (Count I) and as trustee (Count II) under Florida state law, Fla. Stat. §§ 733.609 and 736.0706 et. seq . Two further claims assert breach of fiduciary duty (Count III) and fraud (Count IV) under Common Law. Claims of conversion (Count V) and civil theft (Count VI) are leveled against both Craig and Molly. Finally, the Complaint includes a claim of aiding and abetting as to Molly (Count VII).

         In essence, the Plaintiffs allege that their older brother Craig - who was appointed as executor of the Estate and functioned as the trustee of the Foundation after the death of their father and his wife - concealed, misrepresented, and misappropriated assets that rightfully belonged to all three brothers or that were intended to benefit Craig's four and Shaun's two minor children. With respect to Molly, the Plaintiffs allege that she knew of her husband's fraudulent conduct and that she provided him with substantial assistance by concealing property Craig had converted from the Estate and Foundation.

         The Plaintiffs sought compensatory damages of no less than $2 million, punitive damages, an injunction against Craig to enjoin him from acting as personal representative or trustee, a complete accounting of the Estate and Foundation assets, as well as attorneys' fees and costs.

         After receiving no response to their Complaint, the Plaintiffs filed a motion for entry of default (Dkt. No. 6) on July 25, 2014. Shortly thereafter, the Plaintiffs sought an order to expedite discovery and disclosure of the Estate and Foundation assets, alleging that Craig had concealed the existence of the Trust and other valuables in order to misappropriate them. (Dkt. No. 12). That request having been granted by the Court, the Defendants were required, inter alia, to provide complete financial statements; to allow the Plaintiffs access to records and documents; and to authorize the Plaintiffs to obtain documents from third parties concerning the Estate assets (Dkt. No. 12-1).

         Default against the Defendants was entered on August 15, 2014 (Dkt. No. 18). The Defendants, however, promptly sought to remove the default, asserting - notwithstanding the affidavits of service filed with the Court, which had both been signed by Craig - that they had never been served with the Complaint (Dkt. No. 14). In support of their motion to remove the default, the Defendants also submitted a sworn affidavit executed and signed by Craig, in which he reiterated that denial.

         To resolve the apparent discrepancy and to determine the Defendants' motion to set aside the default, the Court conducted an evidentiary hearing on September 4, 2014. Craig took the stand and, under oath, categorically denied that he had ever been served, insisting that he and his family had been out of town on the date when the Plaintiffs maintained service was effected. Molly elected not to attend the hearing. On their part, the Plaintiffs offered (1) detailed and highly credible testimony by Constable James Sylvester of how he had personally served Craig, and (2) the well-supported conclusion by Document Examiner Jeffrey Luber that the signatures on the affidavits of service belonged to Craig.

         In light of the unrefuted evidence presented by the Plaintiffs, the Court concluded that Craig's representations, both in his testimony before the Court and in two sworn affidavits, were blatantly untruthful and perjurious. Memorandum and Order at 15 (Dkt. No. 28). Nevertheless, because there appeared to be no real legal prejudice to the Plaintiffs so early in the litigation, the case was allowed to proceed. As the Court noted, there was no evidence at that time that the Defendants had tried to gain an advantage by delaying the retention of counsel and their failure to provide a responsive pleading. However, the Court expressed its misgivings about the willfulness of the default and the apparent lack of good faith displayed by Craig. Accordingly, the Plaintiffs were advised that if it were to be determined that the delays orchestrated by Defendants were shown to have resulted in a litigation or practical advantage, the Court would reinstate the default. In addition, the Court required Craig to pay counsel fees and other costs incurred by the Plaintiffs in connection with the removal of the default. Id. at 18. On October 2, 2014, the Court ordered the payment of $30, 777 in counsel fees to the Plaintiffs by October 10, 2014 cautioning that no Estate or Trust funds were to be used therefor (Dkt. No. 34)[5].

         In the interim, upon the Plaintiffs' motion to compel discovery and for sanctions (Dkt. No. 25), Magistrate Judge Sullivan issued a detailed order (Dkt. No. 32) on September 25, 2014, in which she required the Defendants to provide certain discovery materials. On September 29, 2014, the parties submitted a consent order that allowed the Defendants - who had not been gainfully employed for some time - to use up to $9, 000/month for their living expenses. To show that such sums did not come from the Estate or Trust assets, the Defendants agreed to submit monthly financial statements. (Dkt. No. 33).

         Subsequently, the Plaintiffs submitted two reports (Dkt. Nos. 36, 41) advising the Court that the Defendants continued to violate Court orders; failed to comply with discovery requests; and continued to dissipate Estate property. The Plaintiffs, who were forced to obtain discovery documents through third parties, discovered that the Defendants had withdrawn more than $400, 000 since Craig had learned that his brothers had begun an investigation into his activities, and that the Defendants had spent or withdrawn $195, 000 from the Estate during the four months since the litigation began. In addition, the $30, 777 in counsel fees awarded to the Defendants was nearly a month overdue at that time.

         On November 12, 2014, Craig advised the Court that he agreed to be removed as trustee/executor. At that time, the Defendants were separately represented by newly engaged counsel, and Craig had begun to invoke his rights under the Fifth Amendment in the course of his deposition. In two detailed and well-supported R&R's (Dkt. Nos. 50, 85), the Magistrate Judge recommended, inter alia, that the default be reinstated against Craig, but not as to Molly. With respect to the latter, the Magistrate Judge based her recommendation on the finding that much of Molly's failure to comply with Court orders was due to inability. R&R at 28 (Dkt. No. 85). The Magistrate Judge noted, however, that the findings in her R&R did not relate to the merits of Plaintiffs' claims against Molly and that "some of [Molly's] glaring ignorance of her own affairs is hard to swallow." Id. at 5.

         In the interim, the Defendants filed a number of motions designed to put a stop to the litigation (Dkt. Nos. 51, 52, 53, 54, 55), including two motions to dismiss the Complaint, in which the Defendants suggested that their children should be included as plaintiffs because their interests were not represented (Dkt. Nos. 53, 54). Craig also objected to the R&R recommending his default; but he waived any substantive arguments by failing to address his noncompliance with Court orders or with the September 29, 2014 consent order. (Dkt. No. 58).

         Following an April 30, 2015 hearing on the Defendants' various motions and their objections to the two R&R's issued by the Magistrate Judge, the Court accepted the Magistrate Judge's recommendation that the default not be reinstated against Molly. The Court noted that the recommendation was based on a credibility determination made by the Magistrate Judge after she observed Molly testify, reviewed the transcripts of Molly's deposition testimony, and considered Molly's efforts to comply with Court orders. The Court also denied Craig's motion to dismiss the case based on the so-called "probate exception" (Dkt. No. 52). The Defendants' remaining motions and Craig's objection to the R&R recommending reinstatement of the default against him were taken under consideration.

         On June 11, 2015, this Court issued a Memorandum and Order in which it denied the remainder of the Defendants' motions. Hekking v. Hekking, C.A. No. 14-295-ML, 2015 WL 3650062 (D.R.I. Jun. 11, 2015.

         In light of Craig's conduct in the course of this litigation, which included, inter alia, deliberate and repeated violations of Court orders; a complete failure to provide discovery materials or to execute necessary documents as he had repeatedly promised; the provision of incomplete and false responses; and Craig's refusal to participate in his deposition after initially agreeing to it, all the while continuing to dissipate the assets of the Estate and spending money on non-essential items, the Court deemed it appropriate to reenter the default against Craig. Id. at *7-8. Craig was ordered to provide a complete and full accounting; he was enjoined from acting as executor or trustee; and he was ordered to execute all necessary documents to remove him from those positions. Id. at *8. The Court scheduled a further hearing on July 16, 2015 to ensure Craig's compliance with the Court's orders. Id. at *9.

         At the July 16, 2015 hearing, Craig was given a further opportunity to provide a complete and accurate accounting in connection with his fiduciary duties by July 23, 2015. Shortly thereafter, both Defendants' counsel[6] sought to withdraw from representing Craig and Molly (Dkt. Nos 97, 100). Following a hearing on August 17, 2015, counsels' motions to withdraw were granted and the Defendants were advised that they had to represent themselves unless and until they engaged successor counsel. Two days later, the Plaintiffs filed a motion[7] to adjudge in contempt (Dkt. No. 115), in which they detailed the numerous deficiencies in the accounting information provided by Craig, particularly with respect to the whereabouts of large sums of cash that Craig admitted to having withdrawn from Estate and/or Foundation accounts.

         After both parties filed their respective pre-trial memoranda (Dkt. Nos. 123, 126), together with a flurry of motions in limine (Dkt. Nos. 128, 129, 130, 131, 132, 133), the parties agreed to proceed to trial without a jury (Docket Entry 09/29/15). On October 5, 2015, one day before the bench trial was scheduled to begin, the Defendants, pro se, filed a "Motion for Sanctions of Dismissal with Prejudice and Award of Attorney's Fees and Costs against Plaintiff's [sic] and their Counsel for Fraud on the Court" (Dkt. No. 144), denying all allegations made against them and suggesting that they had been the target of "false claims and vexatious litigation stemming from a family dispute." Defs.' Mot. at 2. In light of the findings and rulings made herein, that motion is denied.

         Beginning on October 6, 2015, the Court conducted a seven-day trial without a jury. The Plaintiffs offered the testimony of (1) Shaun, (2) Darren, (3) Molly, (4) Alexandra Hekking ("Alexandra"), who has been married to Shaun for twenty years and who is the mother of the two minor plaintiffs, and (5) Plaintiffs' expert witness Joseph DeCusati, a CPA and Certified Fraud Examiner. With the exception of Molly, who also testified in the Defendants' case, each of the Plaintiffs' witnesses was subjected to rigorous cross-examination by Craig and/or Molly.

         After the Plaintiffs rested their case, Molly testified on the Defendants' behalf. Because the Defendants had not succeeded in engaging new counsel, this took the form of Molly posing and answering her own questions. The testimony of Craig, who had been instructed not to testify on any subject to which he had previously invoked his right under the Fifth Amendment, was successfully objected to by the Plaintiffs and/or stricken from the record. At that point, the Defendants rested as well.

         Both parties were ordered to submit post-trial memoranda. As to the Plaintiffs, they were instructed to address Molly's liability for the claims made against her, particularly the aiding and abetting claim, and to support their claim for attorney fees as a matter of damages. TR VII 38:19-40:7. The Plaintiffs promptly submitted their post-trial memorandum on December 15, 2015 (Dkt. No. 163). The Defendants, after advising the Clerk on January 14, 2016, the day before their memorandum was due, that they were unable to deliver their brief to the Court and would "overnight" it, submitted their post-trial memorandum on January 21, 2016 (Dkt. No. 167). In response, the Plaintiffs submitted a 36-page reply memorandum (Dkt. No. 168).

         After presiding over this case for two years, having considered the testimony of all the witnesses at trial, and having reviewed the extensive records and materials admitted into evidence, the Court will now proceed to render a decision.

         II. Standard of Review

         Federal Rule 52(a)(1) provides that "[i]n an action tried on the facts without a jury... the court must find the facts specially and state its conclusions of law separately. The findings and conclusions... may appear in an opinion or a memorandum of decision filed by the court. Judgment must be entered under Rule 58." Fed.R.Civ.P. 52(a)(1).

         As explained by the First Circuit Court of Appeals, "Rule 52(a)(1) is designed to ensure not only that the parties are adequately apprised of the district court's findings and rationale but also that a reviewing court will thereafter be able to evaluate the bona fides of the district court's decision." Valsamis v. Gonzalez-Romero, 748 F.3d 61, 63 (1st Cir. 2014). The directive of Rule 52(a) "impose[s] on the trial court an obligation to ensure that its ratio decidendi is set forth with enough clarity to enable a reviewing court reliably to perform its function.'" Sierra Fria Corp. v. Donald J. Evans, P.C., 127 F.3d 175, 180 (1st Cir. 1997) (quoting Touch v. Master Unit Die Prods., Inc., 43 F.3d 754, 759 (1st Cir. 1995)).

         III. Findings of Fact

         The following constitutes the Court's findings of facts after considering all the testimony and evidence introduced by the parties in the course of the seven-day bench trial.

         A. Shaun Hekking

         Shaun, the youngest of the three Hekking sons, has been married to Alexandra for more than twenty years. They have two sons, one of whom has special educational needs for which he attends a private school. Trial Transcript 10/06/15 (TR I) at 17:9-16. Shaun's descriptions of Laurie and Renate Hekking, their personalties, lifestyle, and possessions were markedly consistent with those later provided by his wife Alexandra and his brother Darren.

         After Laurie's divorce from the mother of his three sons in 1983, he married Renate, a citizen of Germany, in 1986; the couple remained married for 24 years until they died within eight days of each other in June 2010. Trial Transcript 10/06/15 (TR I) at 15:1-5. Laurie and Renate first lived in Hamburg, Germany, and later moved to Erlenbach, Switzerland, just outside of Zurich. They also kept a separate residence in Naples, Florida. TR I at 16:1-3.

         Laurie had worked in the aerospace and defense business, primarily in the service of the government. Toward the end of his career, he founded several companies in Europe involving aerospace and engineering. TR at 15:12-22. As described by Shaun and echoed by his brother Darren, Laurie was a bon vivant who enjoyed the good life and who liked to display his financial success in his lifestyle. TR I at 16:9-21. At the same time, Laurie was a very generous man who loved his sons and who, together with his wife, doted on his grandchildren. TR I at 16:6-17:4.

         Shaun and his family would spend time with Laurie and Renate two or three times a year, usually visiting them in Florida. TR I at 17:21-18:1. In addition, Laurie and Renate would come to New York and Connecticut around Christmas and Shaun would see his father in between business trips. TR I at 18:8. The visits in Florida included dining out in fine restaurants, taking trips in Laurie's Corvettes, and enjoying Laurie's extensive wine collection. TR I at 19:1-15.

         When Laurie and Renate visited New York, they booked a suite at the St. Regis luxury hotel. Renate loved to go shopping, taking Alexandra to her favorite boutiques such as Louis Vuitton, Bulgari, and Gucci. TR I at 19:16-20:11.

         Laurie and Renate owned two condominiums in Naples: the upscale St. Pierre with a gulf view, and the Breakwater, which Laurie called his "guesthouse." TR I at 20:18-21:6. By contrast, their lakeside apartment in Erlenbach was rented. TR I at 21:13-16.

         Renate died on June 1, 2010. TR I at 24:22-23. On June 9, 2010, the day of Laurie's death, all three sons were present in Switzerland. Shaun and Darren left shortly thereafter, while Craig stayed behind. TR I at 24:24-25:8. Because Renate predeceased her husband, all her tangible, personal property was devised to Laurie; her remaining property was devised to the Trust. Ex. 142 at 0007-0008. Under the terms of Laurie's will, if his wife predeceased him, all property was devised to his three sons or, in the event any son was deceased at the time of distribution, that son's share was to be distributed to his children, per stirpes, and, if there were no children, to Laurie's other sons or their children, per stirpes . Ex. 143 at 0021.

         Under the terms of both wills, if the spouse was no longer living, Craig became the personal representative of both estates (in the event Craig was unable or unwilling to perform the role, Darren was to be appointed, and after him, Shaun). Ex. 142, 143. Craig petitioned the Probate Division of the Circuit Court of Collier County, Florida, to be appointed as the personal representative. Ex. 142 at 0001, Ex. 143 at 0001. Craig also commenced probate and estate administration proceedings in Switzerland. Ex. 143 at 0005, TR I at 28:21-29:2. At first, Craig, the only brother to speak some German, kept his brothers informed about the administration of the Estate. TR I at 29:3-15. However, although Shaun repeatedly made a request for an accounting as to the Estate, Craig never provided one, offering a number of different excuses instead. TR I at 29:18-30:4.

         As previously agreed upon by the three brothers, the Florida condominiums were put up for sale. TR I at 30:9-22. In early July of 2011, the Breakwater condominium was sold for $495, 000 and the proceeds were split three-ways. TR I at 31:1-19. According to Shaun, he received $141, 000 as his share. After the sale, Craig informed his brothers that the Breakwater condominium was sold "as is" and that the sale included the personal property that was inside. Id.

         The St. Pierre condominium was sold in June of 2012 for $1.1 or $1.2 million, of which Shaun recalled receiving approximately $318, 000.[8] TR I at 32:9-22. After the St. Pierre condominium had sold, Craig told his brothers that all its contents had been included in the sale. TR I at 33:22-25. As Shaun recounted, Craig had not contacted him prior to the sale to obtain Shaun's consent to an "as is" sale. According to Shaun, given the value of the furnishings in the St. Pierre and of Laurie's and Renate's other belongings - for which no accounting had been provided by Craig - the inclusion of that personal property made no sense. TR I at 34:8-15. In response, Craig took the position that the contents of the condominium were not worth that much and he explained that it had been the best way to get the deal done quickly. TR I at 34:16-21.

         Related to the sale of the St. Pierre condominium, Craig initiated proceedings against the listing agent and engaged the Florida law firm of Cohen & Grigsby. TR I at 35:2-24. Shaun, upon request by Craig, gave Craig $7, 000 for legal bills. TR I at 36:8-12, 36:25-37:3. When Shaun learned that a settlement was discussed in the case, he offered to attend related meetings in Florida, but was dissuaded from doing so by Craig. TR I at 36:8-20. In the spring of -, sporadic updates from Craig about the litigation stopped. E-mail correspondence between Craig and Cohen & Grigsby reflects that in March -, the law firm wired $62, 503 to Craig and charged $3, 496 in fees. Ex. 157 at 0012. A corresponding transaction detail report shows that $62, 503 were wired to a bank account held jointly by Craig and Molly on March 28, 2013. Ex. 163.

         Shaun last visited his parents in the St. Pierre condominium in March of 2009. TR I at 39:7-15. According to Shaun, whose description is consistent with that provided by Darren and Alexandra, the St. Pierre was Laurie and Renate's showplace where they liked to entertain. TR I at 40:11-19. The condominium was lavishly furnished, professionally decorated, and it contained designer furniture, high-end electronics, and artwork. Id . With the help of eight pictures taken from a real estate website listing, Ex. 94, Shaun described the approximately 2, 300 square foot, three-bed, three-bath St. Pierre condominium with a view of the Gulf of Mexico. TR I at 41:4-43:11. Inter alia, Shaun listed three signed Miro lithographs, two Tiffany candlesticks, three Eames chairs, several other Tiffany items such as silverware and picture frames, as well as high-end electronics, including two large plasma televisions. TR I at 43:14-45:10. Shaun also described several furs belonging to Renate, including a sable, a mink, a "white" one, and a fur-lined jacket. TR I at 45:17-46:3. Renate had a special chest of drawers built for her jewelry with velvet-lined compartments, and she owned many designer clothes, bags, and shoes. TR I at 48:6-21.

         The St. Pierre condominium also contained two safes. Shaun recounted that, on one occasion, his father took him aside and showed him stacks of banknotes in the larger safe, which Shaun estimated to be between $100, 000 and $150, 000. TR I at 49:5-17. The safe also contained jewelry and a box for one of Laurie's Rolex watches. TR I at 49:21-23. Laurie owned two vintage Corvettes[9] and a Mercedes S-Class sedan; Renate drove a Cadillac sedan. TR I at 50:11-13. Laurie also owned a collection of high-end wines, including such high-priced wines as Chateau Petrus, which can cost up to $2, 000 to $3, 000 per bottle.

         When he became terminally ill, Laurie expressed that it was important for Shaun and Craig to go down to Florida to make sure everything was accounted for and recovered. TR I at 52:10-18. Shaun next set foot into the St. Pierre condominium in July of 2010, after Laurie's and Renate's deaths. TR I at 51:24-52:6. Shaun and Craig went to the St. Pierre together. TR I at 52:19-23. Although most of the condominium looked the same and the furnishings appeared to be intact, Shaun was surprised to notice that almost all the clothing was no longer in the closets. TR I at 53:1-9. Both Laurie's and Renate's jewelry containers were empty. TR I at 53:10-16. Shaun and Craig tried to open the safe but, although Craig said that he had been given the combination by Laurie, he was unable to open it. TR I at 53:17-20. Shaun then discovered a green folder that contained an inventory of Renate's jewelry. TR I at 55:11-21. Shaun went through the itemized list with Craig who admitted that he was in possession of Renate's jewelry. TR I at 56:12-57:3. As to the safe, the brothers were unable to locate a locksmith who was willing to open the safe on a Sunday. Craig offered to stay behind and take care of the matter and Shaun returned to work in New York. TR I at 57:9-23. The following day, Craig told Shaun that he had found a locksmith to open the safe, but he contended that the safe had been empty. TR I at 57:24-58:8.

         Shaun and his family vacationed in Naples in the spring of 2012, initially with the intention of staying at the St. Pierre condominium, but they later changed their minds, feeling uncomfortable. TR I at 54:2-16. Shaun did visit the condo and found that, although the furnishings and housewares were still present, Laurie's and Renate's clothes, designer bags, jewelry, and other personal effects were gone, and there were "more contemporary and less high-end" clothes in the bedrooms and dressers. TR I at 54:25-55:5.

         When Shaun visited his father during Laurie's final days in May and June 2010, he and Craig stayed at Laurie and Renate's Erlenbach apartment. TR I at 63:16-64:2. According to Shaun, the Erlenbach apartment was smaller than the St. Pierre condominium, but it was also elaborately decorated with designer furniture and artwork. TR I at 64:4-8. Laurie had a Mercedes S-Class sedan in Switzerland. TR I at 68:20-24.[10] Some of Laurie's watches and his coin collection were at the apartment, as were much of Renate's jewelry, designer clothes, gowns, furs, and handbags. TR I at 65:10-15. As Shaun described in some detail, Laurie's coin collection consisted of seven or eight large display folders holding, inter alia, Morgan half-dollars, American gold eagles, Canadian gold coins, Mexican 50 peso gold coins, Krugerrands from South Africa, as well as German and old British silver coins. TR I at 67:6-68:2. As to Laurie's watch collection, Shaun recalled seeing a gold Hamilton Electric, a Patek Philippe gold watch, a Rolex Oyster Perpetual gold watch, and a stainless steel Rolex Daytona Chronograph. TR I at 69:3-12. Laurie was wearing his gold Rolex Daytona in the hospital and gifted it to Shaun at that time. TR I at 69:10-18. Shaun never saw any of the watches, the coin collection, or the wines again, and Craig provided no accounting or explanation as to what happened to any of these items. TR I at 70:3-71:10.

         During their visit just prior to Laurie's death, Craig and Shaun discovered an extensive wine collection in a wine cellar located in a basement area allocated to the apartment. The collection included Lafite Rothschild, Mouton Cadet, and at least one case of Chateu Petrus. TR I at 65:16-66:11. They also discovered CHF 70, 000 [Swiss francs] (approximately $62, 000 at the June 2010 exchange rate) in cash. TR I at 71:11-21. The following day, with the help of Laurie's lawyer Jürg Reichenbach and at Laurie's recommendation, Craig and Shaun opened two accounts at the local Raiffeisenbank. TR I at 72:4-21.

         After Laurie's death, Shaun asked Craig how the Erlenbach furnishings would be brought back to the United States and Craig suggested that those should just be sold in Switzerland. TR I at 73:21-74:3. Shaun also described the jewelry he and Craig found in the Erlenbach apartment. TR I at 74:20-75:6. Renate's "lower-end" jewelry, which included gold necklaces and bracelets, was kept in an airline flight bag. Renate's "high-end" jewelry, kept in a jewelry box, included two large diamond rings, diamond tennis bracelets, diamond necklaces, and Bulgari rings. TR I at 75:7-23. Craig and Shaun agreed that Shaun should take the jewelry of lesser value, have it appraised in New York City, and sell it. As to the expensive jewelry, Craig stated that he had connections in Newport and he offered to have it appraised and sell it. TR I at 76:14-78:17, 86:16-25, 88:6-16.

         Documentation related to Renate's jewelry in the form of invoices[11], expert and insurance appraisals, and/or certificates of authenticity or origin was contained in the green folder Shaun and Craig located in the St. Pierre condominium after Laurie's death. Ex. 156, TR I at 80:5-22. Renate's jewelry included, inter alia, a yellow diamond ring purchased for $100, 000, Ex. 156 A; her large diamond engagement ring appraised at $73, 150, Ex. 156 C; and a diamond necklace appraised at $16, 696, Ex. 156 E. Shaun and Craig went through every item of jewelry on the list and Craig confirmed that the jewelry was in his possession. TR I at 84:10-24, 94:7-15.

         In August of 2010, after getting an appraisal for the lesser jewelry in New York, Shaun sold the jewelry for $17, 000 or $18, 000 and sent half of the proceeds to Craig. TR I at 100:25-101:24. That same month, Craig delivered Renate's two large diamond rings to Shaun so that Shaun and Alexandra could have them appraised in New York City as well. TR I at 103:2-104:7. The rings were appraised at $100, 000 and $125, 000, respectively. TR I at 104:18-20. Ostensibly unhappy with those numbers, Craig retrieved both rings from Shaun and Alexandra's apartment, with the stated intent to sell the rings in Newport, together with the other high-end jewelry. TR I at 105:2-106:24.

         At a family wedding in October of 2010, Shaun observed that Molly was wearing Renate's engagement ring and Renate's gold Cartier wristwatch. TR I at 107:21-108:23, 118:8-119:1. Shaun confronted Craig and Craig told him that he had not found a buyer yet and that this was a special occasion. TR I at 109:11-18. During a family ski vacation in December 2010, Shaun again observed Molly wearing Renate's engagement ring. TR I at 110:10-111:3. As before, Shaun confronted Craig about the ring and demanded answers about the ring being sold. Again, Craig told Shaun not to worry and that he would take care of it. TR I at 111:6-15.

         Laurie and Renate owned two country club memberships in Naples. The brothers discussed redeeming the membership interests in both clubs and dividing the proceeds. TR I at 112:10-113:3. Craig told his brothers that it would take time and that the clubs would not provide the equity back. TR I at 113:4-14. Craig never informed his brothers that he had, indeed, received checks from both clubs. TR I at 114: 7-10. The evidence submitted at trial established that on December 30, 2010, a check for $85, 065 was issued by Club Pelican Bay to the Estate of Laurie Hekking. Ex. 28 at 0014. On March 4, 2014, the LaPlaya Beach and Golf Resort issued a $40, 000 check to the Estate of Laurie Hekking and mailed the check to Craig at his Newport address. Ex. 27 at 0012, 0014. Neither Darren nor Shaun ever received a portion of those proceeds. TR I at 122:10-13.

         In April 2013, Shaun learned that Renate had an account at the HASPA [Hamburger Sparkasse] in Hamburg, Germany. TR I at 114:18-21. Shaun received a document in German from a German court. Shaun asked Craig about the document and was told by Craig that he would take care of it. TR I at 114:23-115:5. In December -, Shaun received a second communication from the German court and took it to the German Consulate in New York City, where it was translated for him. TR I at 115:8-20. At that time, Shaun learned that Craig had petitioned the German court to be appointed as personal representative in order to gain access to Renate's HASPA account. TR I at 116:1-7. Shaun hired a German law firm and obtained an injunction against Craig; Shaun and Darren were eventually appointed personal representatives so that they could close out the account. Eventually, approximately $40, 000 from the HASPA account was remitted to Shaun and Darren. TR I at 116:16-117:10.

         Shaun repeatedly asked Craig whether Laurie and Renate had other foreign bank accounts; Craig told him he didn't think so and discouraged Shaun from pursuing it. TR I at 119:2-18. Upon Laurie's directions while they were in Switzerland, Shaun and Craig went to the ZKB [Zürcher Kantonalbank] to open Laurie's safe deposit box. The box contained Laurie's gold Montblanc pen and documents in German, which Shaun did not understand. TR I at 120:22-121:1.

         Shaun learned of the existence of the Cego Foundation in late May 2010, when Laurie summoned his lawyer Jürg Reichenbach ("Reichenbach") to the hospital. Laurie advised Shaun and Craig that he was setting up an educational trust through the Winter Group, one of Laurie's companies, to provide tuition for Shaun's and Craig's children. TR I at 124:23-125:13. On that occasion, Shaun and Craig were asked to sign a document written in German and enter the names of their children as beneficiaries of the Cego Foundation. TR I at 126:4-18, Ex. 78, 79. Shaun was informed by Reichenbach and by Antoine Garreau ("Garreau"), Laurie's private banker at the Swiss bank of E. Gutzwiller & Cie. ("Gutzwiller"), that there was money at Gutzwiller for the education of Shaun's and Craig's children. TR I at 133:5-14. Garreau advised Shaun and Craig that the quickest way to communicate with him was via Facebook Messenger. TR I at 134:1-4. At the time of Laurie's death, the Winter Group account had a balance of $1.147 million. TR I at 136:11-16. In 2010, the $53, 000 annual tuition for Shaun's younger son, who has special educational needs, and the tuition for Shaun's older son, who attends a boarding school, were promptly paid. TR I at 134:14-135:19.

         The following year, Shaun notified Craig that tuition payments needed to be made; he also communicated with Garreau via Facebook Messenger. TR I at 135:20-136:6. Both responded to Shaun that there were problems with the account. TR I at 135:7-10. According to Shaun, he had empowered Craig to deal with the Gutzwiller account because Craig was frequently in Switzerland, dealing with the Estate. TR I at 135:21-25. Unable to obtain further tuition payments, and after communicating with Garreau for several weeks, Shaun advised Craig and Garreau that he was coming to Geneva in December of 2012 to pick up the checks or get the matter settled. TR I at 138:4-24. Although Craig tried to discourage Shaun from the trip because "the funds were blocked and because we didn't want any more problems" with the account, Shaun proceeded to Geneva, where he visited Garreau's offices at Gutzwiller with Craig. TR I at 139:2-24. Shaun asked for $30, 000 that were needed to keep his younger son in private school. He was advised by Garreau that the funds were blocked; that there was trouble with the regulators; and that "we didn't want to cause any undue suspicion." TR I at 140:12-142:3. Instead, Shaun received CHF 10, 000 (about $11, 000 at that time). TR I at 141:20-23. Craig offered to drive Shaun to the airport and, on the way, asked his brother to lend him CHF 3, 000 for expenses, which Shaun gave him. TR I at 142:10-21. After this event, Shaun received no further monies from the Winter Group account. Including the CHF 7, 000 he obtained in Geneva, Shaun received $88, 000 from the account, all of which were used for tuition payments. TR I at 143:13-144:11.

         In May of 2013, after pressing Garreau for an answer as to why the tuition payments were not made, Garreau informed Shaun that the account had been closed and that he should probably talk to Craig about that. TR I at 144:16-145:1. After a number of attempts to communicate with Craig, Craig finally admitted to Shaun that he had a check for CHF 548, 000 that constituted the remaining balance of the Winter Group account. TR I at 145:2-9. Craig explained to Shaun that he was trying to cash the check but that the funds were blocked domestically. Craig insisted that this was only a minor hiccup and that, once his bank cashed the check, the funds would be divided so Shaun could pay for his children's education. TR I at 145:25.

         Shaun's testimony regarding these events was corroborated by online communications between him and Garreau, including a message from Garreau dated June 17, 2013, in which he informed Shaun (upon Shaun's inquiry regarding the status of tuition payments) that the Winter Group account had been closed for almost five months. Ex. 141 at 0009. Garreau also informed Shaun that Craig had attempted to cash the check for CHF 548, 000 at the Gutzwiller office in Zurich. TR I at 150:10-15, EX 141 at 0017. Shaun never received an answer from Craig as to what happened to the funds in the Winter Group account. TR I at 149:24-150:3.

         Shaun stopped communicating with Craig in October or November -. At the time of trial, he had spent more than $600, 000 on investigators and lawyers in Germany, Switzerland, and the United States, in order to determine what happened to the Estate assets. TR I at 153:9-154:3.

         The cross-examination of Shaun conducted by Craig reconfirmed much of Shaun's testimony; established no facts inconsistent with Shaun's prior testimony; and added only few additional facts that are relevant to the case: Shaun did not receive a copy of the Purchase and Sales Agreement ("PSA") or settlement statement for the sale of the Naples condominiums. Transcript 10/07/15 ("TR II") at 13:22-14:16, 15:18-22. Shaun recalled that Laurie told him that the Tiffany silverware was worth $15, 000. TR II at 23:6-11. Craig sold an Ocelot fur coat that belonged to Renate while he was in Switzerland. TR II at 82:10-24. In November -, Shaun borrowed $30, 000 from Craig because there was a problem with the Winter Group account and Shaun needed the money to pay his sons' tuition. TR II at 70:13-71:19. The remainder of Craig's cross-examination of his brother consisted of attempts to establish that Shaun had no photographic proof of Estate items that were now unaccounted for; that Shaun had initially not known about the Winter Group - along with the suggestion that Shaun had not been as close to Laurie as claimed; and other lines of questioning that appeared to be more designed to antagonize Shaun than to extract any relevant information.

         B. Darren Hekking

         Darren's testimony regarding the St. Pierre condominium was consistent with that provided by Shaun, but included more specifics. Darren added that the St. Pierre condominium, where he visited Laurie and Renate twice a year, was 2600 square feet in size and contained expensive items such as two Eames chairs with ottomans, a flat screen television, a Bang & Olufsen stereo, custom-made furniture, fine crystal, lithographs, and other art objects. TR II at 101:2-103:12.

         Darren recounted that his father owned a number of Brioni suits and Hermes neckties and he confirmed the makes and models of Laurie's watches as previously described by Shaun. TR II at 104:15-105:5. As to Renate's property, Darren recalled her large diamond engagement ring and gold Cartier watch, as well as a closet stocked with bags, gowns, dresses, golf wear, and furs. TR II at 105:8-106:1. In addition to the Miro lithographs, Darren described a Lalique crystal elephant sculpture Laurie and Renate had bought in Dubai. TR II at 106:17-20. Darren confirmed that there was a Mercedes S-500 and a Cadillac STS and a collection of expensive wines. TR II at 107:3-108:3.

         As to the two safes in the St. Pierre condominium, Darren recounted that, on his April 2009 visit, his father opened both safes in front of him. The smaller safe contained a gun Laurie described as "home defense, " and the larger safe contained a couple of jewelry boxes and was "chock-full" of hundred-dollar bundles, each with a $10, 000 band around it. Laurie told Darren that it was his "get-out-of-jail" or "kidnap money." TR II at 109:1-9. Darren did not know the combination for the safe; he was told by Laurie that Craig knew the combination. TR II at 109:10-16.

         After Laurie died, Darren discussed the Estate with Craig, who told him that he was working on identifying where everything was and putting everything together. TR II at 113:1-18. Although Darren repeatedly requested an accounting from Craig, none was ever provided. TR II at 113:21-114:11. Like Shaun, Darren stopped communicating with Craig in November -. Darren recounted that he also received a notice (in German, which Darren does not speak) from a German court and that, upon asking Craig whether there was money in Germany, he was told that there was no money, but that some money might be owed in Germany for Renate's estate. TR II at 114:12-115:2.

         After the Breakwater condominium sold in 2011, Darren received his one third share of the sales proceeds. TR II at 115:8-15. Darren was aware that there was a problem with the sale of the St. Pierre condominium, although the sale did close in 2012. TR II at 115:16-116:5. Like Shaun, Darren was told by Craig that the St. Pierre condominium had been sold with all contents and, like Shaun, Darren was "absolutely beside [him]self" because of the value of the furnishings and other items. TR II at 116:12-25. Darren requested the PSA and closing binder from Craig, but he never received either. TR II at 117:1-15. Darren was aware that Craig had instituted proceedings against the listing broker related to the broker's commission for making a sale below asking price, TR II at 117:16-118:11; however, Darren was never advised by Craig that he had settled the case on behalf of the Estate and that $62, 500 had been wired to Craig and Molly's joint account. TR II at 118:21-119:5.

         Darren learned that Craig had taken Laurie's Mercedes when Craig drove up in the car while visiting Darren in -. When he questioned Craig about this, Craig told Darren that he had bought the car from Laurie prior to Laurie's death for $35, 000. TR II at 120:2-121:19. Craig refused to produce any paperwork and Darren noted that the Mercedes still had Laurie's Florida vanity plates on it. TR II at 121:20-25. Darren was also given no accounting regarding Renate's Cadillac. TR II at 122:1-3.

         Likewise, Darren received no accounting regarding any personal property in Switzerland. TR II at 122:8-20. As to the Mercedes S-500 in Switzerland, Craig advised Darren that he had sold the car and that there would eventually be a reconciliation of the funds. Darren received no portion of that sale. TR II at 123:9-22.

         Darren was aware of the 7.8 carat yellow diamond ring Renate owned and recalled seeing her frequently wear her 3.75 carat diamond engagement ring and her gold Cartier watch. TR II at 125:2-16. Darren identified a picture of the engagement ring on the insurance appraisal form. Ex. 156 at 0006. Like Shaun, Darren saw Molly wearing the engagement ring and Cartier watch at the family wedding in Florida. TR II at 126:13-127:3. Darren confronted Craig and Molly, asking them why she was wearing jewelry belonging to the Estate. In response, Craig asked Darren not to make a scene and assured him that the jewelry would be sold and that there would be an accounting. TR II at 127:4-13. A second confrontation occurred when Molly was wearing the ring again at the Vermont ski vacation. TR II at 127:18-10. Molly was present during both conversations, but "didn't have much to say." TR II at 127:14-17, 128:11-15. Craig confirmed to Darren that he was in possession of Renate's jewelry, but he provided no update regarding its appraisal or sale, nor did he ever inform Darren what had become of it. TR II at 129:9-24.

         Similarly, Craig did not inform Darren that he had received the redemption checks from the two Florida country clubs. TR II at 131:11-15. The only bank account Craig identified as belonging to Renate was an account at Huntington Bank in Florida; in response to Darren's questions regarding any Swiss accounts, Craig said that he was looking into it but that there "was not much there." TR II at 131:16-132:17. Other than one third of the proceeds from Laurie's life insurance and the condominium sales, [12] Darren received no further money from the Estate. TR II at 133:1-17.

         On cross-examination by Craig, Darren reconfirmed that Laurie owned a number of Brioni suits (conceding that he did not look at the labels but noting that his father only wore Brioni suits), as well as various Hermes ties, and specific luxury watches. Transcript 10/08/15 (TR III) at 6:13-7:10. Darren also provided some specific information regarding Laurie's high-priced wine collection, TR III at 13:11-14:21, and he reconfirmed seeing several $10, 000 stacks of cash in the safe at the St. Pierre condominium. TR III at 16:23-17:5.

         Darren explained that when he visited his father in Switzerland shortly before Laurie's death, he stayed at a hotel because Craig informed him that Laurie did not want anyone at the Erlenbach apartment. TR III at 17:11-19, 198:25-19:20. In response to a series of questions from Craig, Darren acknowledged that, although Shaun had told him in the fall of 2010 that he had sold the "lesser" jewelry, Shaun did not provide Darren with an accounting of the transaction, nor did he tell Darren until 2011 that he had realized about $17, 000 or $18, 000 from that sale. TR III at 21:13-25:9. Darren again confirmed that he saw Molly wearing Renate's engagement ring during the Vermont ski vacation. TR III at 25:24-25:7.

         C. Alexandra Hekking

         Alexandra has been married to Shaun for twenty years; they have two children. TR IV at 7:11-17. Alexandra's description of her relationship with Renate and Laurie echoes that described by both Shaun and Darren. Every spring break (Alexandra is a teacher), she and her family visited Renate and Laurie in Florida, and her in-laws often came to New York City during the Christmas season. TR IV at 8:6-21. Alexandra and Renate were friends; Renate liked to shop for the grandchildren and she liked to take Alexandra shopping. Alexandra and Renate went to the beach together and visited museums. Id. at 8:22-9:2. Renate was extremely close to the children. Id. at 9:3-4.

         Alexandra and Shaun stayed at the La Playa beach club when they visited Florida, but had dinner with Laurie and Renate at the St. Pierre condominium most evenings. TR IV at 9:9-22. Alexandra provided a description of the layout and furnishings of the condominium consistent with that provided by Shaun and Darren. TR IV at 10:10-17. She described the Eames chairs and ottomans, Miro lithographs, Baccarat crystal, Tiffany silver, and Villeroy & Boch china. TR IV at 15:18-16:8.

         In addition, Alexandra described the velvet-lined jewelry compartment Renate had added to the drawers in her closet, which contained a lot of jewelry. TR IV at 11:6-20. Renate wore a gold Cartier watch, a gold elephant bracelet, a diamond ...


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