Attorney: Kane estate down to under $10K

WILKES-BARRE -- An attorney investigating the handling of late labor leader Anthony Kane’s estate has determined the former executors acted with “gross malfeasance,” causing the value of the estate to drop from $1 million to less than $10,000.

In court papers filed Friday, attorney Michael Shucosky said Joel and Gloria Riegel engaged in “self-dealing, rampant conflict of interest (and) breach of loyalty” in handling the estate. Their actions were so egregious that Shucosky is asking a Luzerne County judge to order the couple to repay all money that was lost, as well as any commissions they earned and attorneys’ fees.

The state Office of Attorney General is also investigating the handling of the estate to determine whether criminal charges should be filed, said Nils Hagen-Frederiksen a spokesman for the office.

“The reality is the estate has been squandered,” Frederiksen said. “There is an ongoing criminal investigation to determine if any of those activities rose to the level of a crime.”

Brett Riegel, attorney for Gloria and Joel Riegel, did not immediately return a phone message left at his office late Monday afternoon.

Shucosky was appointed as executor of Kane’s estate in April 2007 after the United Way of Wyoming Valley and state Office of Attorney General’s Bureau of Charitable Trusts filed a petition seeking to remove the Riegels based on alleged questionable decisions they made regarding the estate’s assets.

The United Way had an interest in the case because it was the primary beneficiary of Kane’s will. The Attorney General’s Office got involved because it oversees charities.

Shucosky’s petition says the Riegels began dissipating funds in the estate immediately after it was created. The activity included more than 30 loans, questionable fees and payments of commissions. The loans contained no documentation and were “imprudent investments with little likelihood of timely repayment,” the petition says.

Shucosky also found that at least 42 checks totaling $383,700 were paid to Kathryn Cubillo, a friend and business partner of Gloria Riegel. The checks were deposited into a bank account in which Riegel had an ownership interest and check writing ability. Cubillo says she received none of that money other than one $42,000 loan.

Shucosky said the Riegels maintained the loans were legitimate and supported by a note and mortgage totaling $675,000. But Cubillo denies that she signed the mortgage, calling it a “fraud.”

The mortgage was signed and notarized in Pennsylvania on Oct. 7, 2002. Cubillo said she was working in California at that time, making it impossible for her to sign the document in Pennsylvania, according to Shucosky.

“It is believed that the aforesaid note and mortgage was an attempt to create a paper trail for the money paid from the estate and to create collateral for the ‘loans’ well after the fact,” Shucosky says in the court document. “Even if the ‘loans’ were valid, any loan to Kathryn Cubillo was a reckless breach of the fiduciary obligations as Kathryn Cubillo had no means of repayment.”

Kane, a teacher in the Wyoming Valley West School District and president of the district’s teachers union, died in 2001. He and the Riegels were officials in the Pennsylvania State Education Association. He apparently named the Riegels as executors of his will based on his experiences with them.

Contacted Monday, Shucosky said he found the Kane case particularly “sad” because Kane, an avid supporter of the United Way, entrusted his estate to the Riegels, believing they would ensure the charity benefited.

“I believe Mr. Kane put his trust with people who were not deserving,” Shucosky said. “The real tragedy of this is the beneficiary was supposed to be the United Way. I’m not sure if the United Way will receive any benefit when this all comes to a conclusion.”

Stephen Killian, attorney for the United Way, said the charity did receive three payments totaling $93,165 from the estate. Those payments ended in 2002, causing the charity to question the administration of estate.

The United Way first filed court documents in 2005 that sought to force the Riegels to provide an accounting of the estate’s assets. It would be the start of a three-year court battle as the Riegels fought requests to provide documents and challenged a court ruling that removed them as executors of the estate.

The case will now go before Senior Judge Charles Brown, who has scheduled a hearing on Shucosky’s petition for Nov. 20.

Killian said he found the administration of the estate “disturbing.” The United Way is pleased the case has moved forward.

“In 36 years of practice, I’ve never seen anything like this,” Killian said. “We’ve finally gotten to a point where the court is going to make some kind of finding.”