Donald Sterling’s decision to revoke a family trust put the company controlling the Sterlings’ real estate holdings on the hook for $500 million in loans that can only be covered by selling the Los Angeles Clippers, the company’s chief financial officer testified today.
Darren Schield, CFO for Beverly Hills Properties, told Los Angeles Superior Court Judge Michael Levanas that he warned Sterling before he revoked the trust that there would be financial consequences.
“I told him this was going to open up the Pandora’s box and lead to severe consequences,” Schield said.
Donald Sterling revoked the trust after his wife removed him as a co-trustee.
Levanas is hearing a non-jury trial to determine whether Sterling’s wife, Shelly, has authority under the family trust to sell the team to Microsoft CEO Steve Ballmer over her husband’s objections, for a proposed $2 billion. She testified earlier in the trial that she wanted to use the sale proceeds from the team to pay off the couple’s business debts.
Two physicians declared Donald Sterling mentally incompetent, and Shelly Sterling is using those findings to support her claim she has the right to sell the team.
Schield testified that the Sterlings own about 150 apartment buildings, 15 smaller residential properties, land and a hotel. Schield said that because of the recent news concerning the Sterlings, he doubted the company would attract many investors if it went public. He also said there would be a negative impact on the Los Angeles real estate market if the couple “had to unload $500 million.”
Ballmer’s attorney, Adam Streisand, said Schield’s testimony underscores the damage Sterling has done to the family trust.
“It shows the madness of Donald Sterling in reacting without having the ability to understand the consequences of his actions,” Streisand said.
Streisand said Bank of America is close to finding the Sterlings in default on its share of the loans made to the Sterlings.
Shelly Sterling is scheduled to testify again tomorrow. Her husband’s attorney, Gary Ruttenberg, said today that his client likely will not testify again.
