Pippen says he wrongly thought advisers had his best interests at heart
June 9, 2010
BY LISA DONOVAN Cook County Reporter
In his second day of testimony, Scottie Pippen today said he “trusted my advisers and the lawyers’’ — and assumed they had his “best interests’’ at heart.
But as his malpractice case against the law firm continued in a downtown courtroom, Pippen explained how a deal in which he bought a 25 percent share in a Gulfstream jet went south.
Under questioning from his attorney, Pippen recalled asking his financial adviser, Robert Lunn, to research the viability of buying a 25 percent share of a Gulfstream jet.
A day earlier, Pippen explained he had met a pilot, Craig Frost, who ferried him and his family across the country on charter flights, and they talked about going in to business together.
The idea was that Pippen would kick in $1 million for a quarter share of a Gulfstream II jet, which would be leased out for charter flights, and on future trips he or his family would only have to pay for the cost of fuel, Pippen said at the trial in Associate Judge Brigid Mary McGrath’s courtroom in Cook County Circuit Court today.
But all of it was unfolding in the winter and spring of 2002, when Pippen was playing for the Portland Trailblazers, and his mind was on the details of playing basketball, he said.
As winter turned to spring, the deal was re-negotiated so the Pippen would have 50 percent ownership in the jet. By summer, the deal was refinanced and Pippen signed off on a $5 million loan for the business.
A flurry of letters on display during the jury trial, though, showed that red flags had been raised by several parties about the deal, including by Pedersen & Houpt — the target of Pippen’s lawsuit.
Still, the deal went ahead with Lunn sending him “signature’’ pages to complete the deal. Pippen testified he hadn’t seen any of the correspondence and didn’t know until it was too late that he wasn’t examining every inch of the deal because he was working.
But problems with the deal arose when the loan went in to default, apparently as evidence emerged that Frost, the pilot, never signed off on the business deal and the jet was grounded for repairs resulting in the charter revenue stream drying up.
In 2004, U.S. Bank went after Pippen for the money. Pippen was ordered by a court to pay the $5 million loan, plus another $1 million in default and interest fees.
