Did Point Ruston developer conspire with son to elude creditors? Estate case turns messy
As lawsuits surrounding the debt of Point Ruston’s construction continue, a separate legal drama has been playing out since the death of the development’s founder, Michael Cohen.
Last year, The News Tribune took a look at the various debt-collection cases and receiverships involving Point Ruston properties.
The News Tribune now has reviewed court filings in Pierce County Superior Court and U.S. District Court for the Western District of Washington in Tacoma involving Michael Cohen’s personal estate.
The developer died in December 2020, and the probate case regarding disbursement of assets in his estate spun off a separate consolidated case last year that’s being heard in federal court.
At the heart of the litigation is a transfer of Michael’s assets to his son, Loren, going back to 2014 and culminating in the year of Michael’s death.
The elder Cohen’s assets, as outlined in the complaint, included numerous business entities tied to development and construction, including M&J Real Estate Investment. The company owned “membership units in affiliated business entities” controlled by Michael.
One of those LLCs, “in turn owned 49.5% of Point Ruston LLC,” the complaint states, which is the overarching entity of Point Ruston, the upscale development built atop a Superfund site along Commencement Bay, whose boundaries straddle both the cities of Ruston and Tacoma.
The affiliated entities were made part of M&J as result of the 2014 transaction, the complaint states, when Michael sold 50.1% of his ownership interest in the company and affiliated entities to Loren. Previous court filings have stated the elder Cohen was concerned about not being able to obtain future loans for his entities as a result of separate investor litigation tied to an earlier Tacoma apartment development.
The remaining percentage was transferred to Loren in a revised deal in 2020, the same year more litigation was introduced, this time from a former Point Ruston partner/investor who also challenged the 2014 sale.
An Oct. 9 complaint from the estate representative states that in 2020, “Between the first and second drafts, the decedent formed the actual intent to prevent his creditors from collecting their debts from his remaining business interests by transferring them out of his estate before he died.”
The transfer ultimately left the estate insolvent after Michael’s death, affecting not only creditors, but also Michael’s second wife and the children from that marriage, according to court filings.
The estate’s representative, Seattle attorney Carol Vaughn, also contends Loren Cohen never paid fair value in his part of the deal, putting his father’s estate at a disadvantage amid Michael’s declining health.
Loren Cohen, through his attorneys, has argued in filings that the assets had negative worth and that his father was “fully aware” in the final months of the transfer negotiations.
In an amended complaint filed Oct. 9, the estate’s representative presented arguments on how the 2020 business transaction unfolded.
“The decedent intended to transfer his businesses to Loren to avoid creditors, and at the same time, he intended to provide for his wife, Amara Cohen and his minor children,” Vaughn and her attorney, Bruce Moen, wrote.
“Loren shared the first goal and did not share the second goal,” the complaint states.
Loren Cohen’s legal team has not yet entered a full response to the latest complaint, filed Oct. 9, in federal court.
In a statement to The News Tribune emailed Oct. 28, Loren Cohen wrote, “I loved and admired my father – who was also (a) business partner – and find these false allegations very distressing.”
He added, “I wholeheartedly deny all of these allegations and am determined to fight for my day in court where the truth will be heard.”
Vaughn as personal representative of the estate is in charge of handling the legal and financial affairs of the decedent’s estate. In the federal case she is facing a counterclaim from Loren Cohen over her handling of the estate. Additionally as the estate representative, she faces a cross claim from the U.S. via the Department of Internal Revenue (which also filed a counterclaim against Loren Cohen) regarding the estate’s tax debt.
Neither Vaughn nor attorneys representing her in the federal case would offer comment when contacted by The News Tribune in October.
Russell Knight is an attorney for creditor William Newcomer, whose own case was consolidated with Vaughn’s representing the estate. Knight told The News Tribune on Oct. 24, “Michael Cohen had a lot of debts to a lot of companies and people. And you cannot avoid paying creditors from an estate by simply taking the money out of the estate and giving it to a son or child.”
The case is scheduled to go to trial next April if it is not settled before then.
Earlier investor battle leads to further court action
Michael Cohen died on Dec. 6, 2020, after a battle with cancer.
Loren Cohen filed his father’s will in Pierce County Superior Court the following January. The petition for probate stated an initial belief of “the estate to be solvent,” and Loren was appointed as the estate’s personal representative.
Then came the creditors’ claims, among those Newcomer, an investor in Apex Apartments near Tacoma Mall, one of Michael Cohen’s projects.
Newcomer’s claim against the estate was attached to an unpaid promissory note going back to November 2010 and a loan made to Michael at that time.
Newcomer and the elder Cohen already had faced off in court over Newcomer’s losses in the Apex investment. In 2015, Newcomer was awarded more than $4 million in Pierce County Superior Court after a jury found Cohen made “material misrepresentation or omission” in the deal, according to court filings.
That ruling was upheld on appeal, and the Tacoma Apex investor was ultimately awarded an additional judgment for attorney’s fees and costs.
An LLC with Loren Cohen listed as executor, PC Collections, was created in early 2019. Through an agreement, the LLC purchased the $5.7 million amount owed Newcomer.
The source of where the money came from to pay Newcomer has remained an issue.
The most recent complaint contends, “The decedent’s statement of net worth dated December 31, 2019 does not state that the decedent had any liability to PC Collections.”
Newcomer also sued Michael for the balance due on the promissory note, which was not a part of the securities lawsuit. He eventually won a judgment of more than $3.6 million against Michael Cohen’s estate.
But by then, the estate was insolvent.
Newcomer in August 2023 then sued Loren Cohen and his wife, Loren as trustee of LMC Family Trust, two real estate entities and PC Collections, over the business transfers from Michael to Loren and PC Collections’ claim of debt to be paid ahead of other creditors.
Cohen’s attorneys have pushed back on Newcomer’s claims, stating in a federal filing that Newcomer had breached the agreement with PC Collections by interfering with the LLC’s rights in the assignment and “by attacking the validity of the assignment.”
Newcomer’s lawsuit wouldn’t be the only court action involving the business transfers.
Enter a new estate representative
Loren Cohen was removed as the estate’s personal representative in the probate case, following a motion from Newcomer in November 2021. Newcomer contended the business transfers and “Loren Cohen’s inherent conflict of interest in pursuing recovery of those assets” made him unfit to be the estate representative.
Vaughn was appointed as successor personal representative for the estate in January 2022.
In July 2023, Vaughn in her role as personal representative for the estate filed a lawsuit against Loren as an individual and in his capacity as trustee of LMC Family Trust, as well as the marital community of Loren and his wife, Holland. The original complaint contended changes to the terms of the 2014 sale of business assets from Michael to Loren “substantially” reduced what was supposed to be paid to Michael.
“The court overseeing Michael’s probate administration authorized the personal representative to file this lawsuit against Loren,” Vaughn and her attorney, Bruce Moen, wrote at the time. They requested that the court “find that the 2020 transaction was the product of Loren’s undue influence,” along with Loren breaching his “fiduciary duties owed to Michael,” among other issues.
Loren Cohen filed his responses, counterclaims and cross claims in late fall 2023 and sought judgment and damages against Vaughn both as an individual and in her role representing the estate.
He also filed a cross claim against the U.S. Department of Internal Revenue, seeking lien priority for PC Collections over the IRS against the estate.
Newcomer’s and Vaughn’s cases were consolidated, and the consolidated case was moved to federal court with the addition of the United States as a third-party defendant in the estate’s tax debt.
In response, the feds brought their own action. The U.S. Department of Justice in March 2024 filed “to reduce to judgment outstanding federal income tax liabilities assessed against the estate of Michael Cohen; and to undo and set aside certain 2020 transfers of Michael Cohen’s property to his son Loren Cohen as fraudulent conveyances.”
Loren Cohen has denied the counterclaim, with his legal team stating in filings, “The assets transferred ... were taken in good faith and for a reasonably equivalent value,” adding, “Counterclaim defendant is a good-faith transferee.” His team reserved the right “to assert such other and further affirmative defenses as warranted by discovery.”
Transfer/sale of assets under scrutiny
The latest amended complaint against Cohen by the estate was filed Oct. 9, 2024, in federal court. It contends that the transfer of assets was set up to ”hinder, delay or defraud creditors,” notably a former Point Ruston entity/partner also involved in litigation with the Cohens at the time (later settled) and Newcomer.
“At the time of the transaction, the decedent retained legal capacity to make decisions, but he was vulnerable to undue influence and dependent upon Loren as his agent,” Vaughn and Moen wrote.
The complaint states that nine days before Michael Cohen died, “his digital signature was affixed to a document that transferred all of his business interests – worth over $20 million – to Loren without receiving a reasonably equivalent value.”
The complaint adds that “not only did the transaction give Loren all of the decedent’s business interests, it reduced the amount that Loren owed the decedent under a prior deal by millions of dollars.”
The 2020 deal reduced the consideration of what was to be paid for the 50.1% interest from 2014 by more than $7 million and no cash paid for the remaining percentage transferred. The 2020 transfer also included other affiliated companies that were not part of the original 2014 sale, according to the complaint.
It noted, “The amended agreement has not resulted in the payment of any cash or other liquid assets to the decedent, his estate, or his creditors. It generated significant income taxes that the decedent’s estate cannot pay.”
The latest version of the complaint includes allegations of Michael’s culpability along with Loren’s alleged actions.
It states, “Loren and Michael both had the actual intent to hinder, delay, and/or defraud Michael’s creditors. The decedent’s actual intent to hinder/delay/defraud preceded Loren’s undue influence and unfair persuasion; however, Michael’s intent could not have been realized without Loren’s active involvement and the procurement of Michael’s signatures on the August agreement and the amended agreement.”
Attorney Adrienne McEntee, representing Loren Cohen, wrote in a July 2024 federal court filing, “Loren affirmatively alleges that Michael was cognitively sound and fully aware of his surroundings when he signed the amended agreement and was a forceful advocate for himself and his family throughout each and every negotiation of the agreements.”
The complaint asserts that fiduciary duty to the estate was breached, including unjust enrichment through changes made in the business transfer agreement in 2020.
The 2020 sale “left Michael’s estate with insufficient assets to fund the spousal trust, pay Michael’s creditors, pay the support award Michael’s children are entitled to … pay estate administrative expenses, or pay the income tax due on the 2020 transaction (now over $1.8 million),” the complaint states.
“According to Loren, the amended agreement was signed while he and the decedent were alone together at his home. Nobody but Loren saw the execution of the amended agreement,” it states.
The complaint also has raised questions about a separate Memorandum of Understanding, which it contends gave Loren control of assets Michael held in Mexico, including real estate and bank accounts.
Attorney Jack Krona, in an earlier filing this summer, wrote that Vaughn “has not tried to determine Mike’s intent and has actively tried to undo his succession planning.”
He also contended Vaughn had wasted estate assets “by incurring costs trying to return to the estate assets that have negative value,” while not pursuing assets “held in Mexican bank accounts.”
Krona also alleged the investigation and arguments had merely used evidence useful to build a case against Loren, without pursuing issues such as the competence of Michael’s lawyer, the risks, “various material misrepresentations or omissions” in the transfer deal his father wanted him to go along with, and transfers made to Michael’s second wife, Amara.
“Loren did not discover the misrepresentations and omissions until recently,” he wrote, and noted that Loren “was materially damaged by the 2020 sale.”
Krona also contended the estate representative “engaged in discussions and formed strategies with one creditor while not involving all creditors. … She has not acted as a neutral... .”
Where things stand now
Loren Cohen’s attorney McAntee wrote of the latest amended complaint in an Oct. 22 filing that it “substantially exceeded” the limited scope for amending what was earlier authorized by the court.
She wrote that a comparison of the first amended and second amended complaint “reveals a staggering number of revisions—1,889 in all.
“If allowed, the estate’s sweeping amendments, filed on the eve of the discovery deadline, will prejudice defendant Loren Cohen and his legal team, requiring them to seek an extension of the discovery cutoff to address the new claims and allegations.
“For these reasons, Loren requests that the Court strike the estate’s (second amended complaint) and require the estate to pay his reasonable attorneys’ fees for the time that his legal team spent preparing this motion.”
If denied, McAntee added, the team sought an extension to answer and respond to the latest complaint.
Meanwhile, the parties in the federal case most recently have been in talks over a review of tax returns of various business entities in regards to the transfer agreements.
Knight, Newcomer’s attorney, told The News Tribune in October that the most recent arguments are a “small cog in a complex machine.”
“What this lawsuit is about is correcting that improper transfer of assets,” Knight said. “The tax returns of the LLCs will be one of many indications of the value of those companies.”
