The estate of legendary buyout investor Leonard Green is suing the Los Angeles firm that he created, claiming its partners fleeced the heirs of more than $3 million after Green died in October 2002.
The lawsuit, filed Tuesday in Los Angeles Superior Court by executor Bernard A. Greenberg, alleges that Leonard Green & Partners and several of its principals cheated the estate and a related trust through a series of transactions starting in December 2002.
Neither Greenberg nor the defendants could be reached for comment late Wednesday.
According to the suit, the partnership and principals Jonathan Sokoloff, John Danhakl, Peter Nolan, Jonathan Seiffer and John Baumer allocated $6 million of the firm's assets to a Danhakl family trust on Dec. 23, 2002, as a payment for Danhakl's services to the firm.
Of that $6 million, $2 million was charged to the account of Green's estate and trust. The Green estate was not notified of the payment and would not have approved it, the suit claims.
In March 2003, the defendants made a $500,000 investment in a portfolio company known as MEMC, allegedly preventing the estate from participating, the suit said. As a result, the estate saw its stake in MEMC substantially diluted.
When MEMC was later liquidated, the estate missed out on its rightful share of the profits, according to the suit, which claims breach of fiduciary duty and other violations.
Green, who founded the firm in 1989, was a pioneer in the leveraged buyout industry.
Leonard Green & Partners has invested in 36 companies including Rite Aid Corp., FTD Group Inc. and the Claim Jumper restaurant chain, and has more than $3.7 billion in investment capital. Last week, it struck a deal to buy sporting goods retailer Sports Authority Inc. for $1.3 billion.