There is urgent concern the jet's value will never be recovered on behalf of the beneficiaries of his 2017 will, among them several Deciem employees
Lawyers for the estate of the late Deciem cosmetics mogul Brandon Truaxe, who died after falling 26 floors from his Toronto condo in January after an erratic year that saw him forced out of the company he built into an international phenomenon, are rushing to court in America over a luxury jet he paid for but never formally owned.
The 2017 HondaJet HA 420, a small four-seat plane that sells for about US$5 million, is the primary asset of Truaxe’s estate, according to Ontario court filings. There is urgent concern its value will never be recovered on behalf of the beneficiaries of his 2017 will, among them several Deciem employees including the current chief executive.
Last March, as Truaxe’s mental illness and drug abuse were causing turmoil at Deciem, he paid US$4 million to an Arizona firm, Cutter Southwest, for a “lease purchase agreement” for the jet, according to correspondence between lawyers for Truaxe filed with Ontario Superior Court to support an urgent request to certify lawyer Jonathan Behar as trustee.
By last June, after Truaxe had been hospitalized involuntarily in London and Toronto, he and Cutter agreed that instead of finalizing the purchase Cutter would sell the jet on, retain a small percentage, and return $3.1 million to Truaxe, according to this correspondence.
Last December, after an Ontario court order had removed Truaxe as CEO of Deciem because of the harm his behaviour was doing to the company, Cutter sold the plane as agreed, but allegedly refused to pay the money.
“Shortly before Mr. Truaxe’s death, Cutter adopted the legally untenable position that it was not obligated to remit any portion of the required USD$3.1-million to Mr. Truaxe, and was allegedly entitled to retain all of those proceeds as well as the entirety of the USD$4-million Mr. Truaxe previously paid Cutter under the (lease purchase agreement),” reads the letter from California trial lawyer Alan Kessel to counsel for Behar, the trustee.
The effect was that Truaxe appeared to have simply lost millions of dollars about a month before he died.
Behar declined the National Post’s request for comment. William W. Cutter, president and CEO of Cutter HondaJet Southwest, said the lease purchase agreement terminated of its own accord last year.
“There was no subsequent agreement signed between our company and Mr. Truaxe,” Cutter said. “Any assertion to the contrary is unfounded.”
The claims on behalf of Truaxe’s estate have not been tested in court. As of July 12, no action had been filed in the U.S., according to publicly listed records.
Kessel’s letter claims Cutter is illegally enriching itself “by reaping a windfall of more than USD $7-million at the expense, and to the considerable detriment of, the Estate.” It says “time is of the essence” because Cutter could try to “render itself ‘judgment proof’ by transferring assets to third parties.”
Counsel for Behar filed an urgent request to Ontario Superior Court to certify him in April, 2019, which would allow him to file a lawsuit in the U.S. The request, which was granted, describes how the controversy over the jet “requires the Estate Trustee to immediately initiate court proceedings in the United States of America in order to recover the asset.”
It says there is a “substantial likelihood that the asset will be dissipated. Urgent action is required and any delay in obtaining a Certificate in Ontario could heavily prejudice the Estate.”
Truaxe’s partner, Riyadh Swedaan, told the Post Thursday he and Truaxe briefly used the plane last year for travel between Toronto and New York, but that Truaxe found it too small, and inconvenient for travel to Europe, given the stops it needed to make.
Truaxe’s death certificate, included in the court file, indicates that four days after his Jan. 20 death died he was cremated at St. John’s Norway, a crematorium and cemetery open to people of all faith traditions on the grounds of an Anglican church in the Beaches area of east Toronto.
His will is dated December 20, 2017, six months after the iconic beauty empire Estée Lauder Companies paid $50 million for a one-third share of Deciem, prompting its massive international expansion.
December 2017 also coincided with a fateful moment in Truaxe’s downfall. This was when he was rumoured to have nearly died from exposure to extreme weather on a trip to Mongolia, according to a lawsuit by investor Pasquale Cusano, and a comment by a company executive to the New York Times. This Mongolian misadventure was presented as the first sign of his mental illness. But this trip never happened, according to an interview Truaxe gave to the Post last year. He had told his staff a story about it, as a hypothetical, meant to encourage his stressed out team to slow down.
Images of Truaxe’s passport he shared with the Post support his claim that this trip never happened. But the confusion was a preview of things to come.
Over the following weeks, his public and social media behaviour became worryingly erratic. He cancelled all marketing, changed his title from CEO to “worker,” and ended a customer loyalty program, all while posting strangely manic videos on Instagram. He fired co-CEO Nicola Kilner without consulting the board, prompting the chief financial officer to resign. That CFO, Stephen Kaplan, was a witness to Truaxe’s will.
Shortly after firing Kilner, Truaxe signed the deal for the jet.
The will grants the Toronto condo to Swedaan. It directs the total of his bank accounts be divided into ten equal shares, of which four are to be paid to Swedaan, and either 1 or 1.5 to four other people, all senior Deciem staff, including Kilner, the CEO.
In an application to appoint Behar as the estate trustee, the value of assets is listed as $1,206,367.18 in personal property and $2,900,700.00 in “real estate, net of encumbrances,” for a total of $4,107,067.18. Those totals do not appear to include the interest in the jet.
Copyright Postmedia Network Inc., 2019