Wednesday, Nov. 23, 2011 06:28 am
All in the family
Judge approves estate’s sale of stock to Davlin’s brother
Sangamon County Circuit Court Judge Pete Cavanagh approved an offer by Michael Davlin, the late mayor’s brother, to buy the stock for $203,750, the same amount the mayor had paid in 2004. Michael Davlin is executor of Davlin’s estate, and so attorney Gordon Gates was called in to act in his stead to evaluate whether the sale was in the estate’s best interests.
“It’s a good deal,” Gates said. “It’s the best price the estate is going to get.”
The late mayor purchased the truckers association stock with substantial strings. Transfer was restricted by a shareholders agreement which is not a public record. Furthermore, while other stock paid “substantial dividends,” the stock purchased by the late mayor wasn’t supposed to pay dividends until 2013, under terms of a 2004 purchase agreement that deemed the purchase an investment made at arm’s length and at fair-market value.
According to a court order approving the sale, other shareholders had first rights to purchase the stock at a price set in a 2006 shareholders agreement. Gates said that the price set in the agreement was substantially lower than the price paid by Michael Davlin. Shareholders waived their purchase rights, according to the order signed by Cavanagh.
Don Tracy, attorney for the truckers association, said in an interview that the deal was about more than money for shareholders who waived their rights.
The late mayor’s father, who died in 1998, helped found the association in the 1960s. As the association’s original shareholders died, ownership rights accrued to surviving shareholders, Tracy said. Rather than have the company eventually owned by the last surviving founder, shareholders wanted to keep the business held by a small group of families, as it had always been, so they made provisions for the late mayor and children of other founding shareholders to buy in, he said.
“If the shareholders had wanted to do the selfish thing, they would not have allowed the sale (to Michael Davlin),” Tracy said. “Allowing this to go through was a selfless thing, and it was a matter of keeping it in the family.”
Tracy called the association “a good business.” The organization sponsors truck shows and also provides drug-testing services and lobbies government. The association represents 3,000 trucking companies and 120,000 drivers in 16 states, according to its website.
Proceeds from the sale will go to Catholic Charities of Springfield, which earlier this month agreed to a $250,000 settlement with the late mayor’s estate to settle a claim of $340,000. The latter sum was due from the estate of Margaret Ettelbrick, a Davlin cousin who died in 2003. After the mayor, executor for Ettelbrick’s estate, shot himself on Dec. 14 of last year, Kevin McDermott, Sangamon County public administrator, determined that Davlin had used estate funds to purchase the stock for himself. McDermott also found that Davlin had written more than $85,000 in checks to himself and sold Ettelbrick’s house for more than $46,000 less than its fair-market value. The purchaser was a Davlin relative.
James “Bud” Potter, lawyer for the late mayor’s estate, could not be reached for comment. But it appears that Davlin’s heirs, which include his four adult children, may end up with some money.
Ettlebrick’s estate was the only claimant against the estate of the late mayor, whose house was sold last summer for nearly $270,000. The Internal Revenue Service, which had put a lien of nearly $90,000 on the mayor’s property last year, was presumably paid from sale proceeds, given that the IRS did not file a claim against the mayor’s estate. Davlin purchased the home in 2004 without a mortgage.
Once the IRS was paid, proceeds from the home sale would have totaled roughly $180,000. Patrick “Tim” Timoney, the late mayor’s lawyer, told Illinois State Police investigators shortly after the mayor’s death that Davlin’s estate was due an amount equaling one year’s salary, about $120,000, from the Illinois Municipal Retirement Fund, plus approximately $50,000 in contributions that Davlin made to his retirement plan. The math works out to around $300,000 left in the estate after Catholic Charities and the IRS are satisfied.
Contact Bruce Rushton at email@example.com.