When Robert and Signe McMichael were building the McMichael Canadian Art Collection, they relied on the sage advice and strong support of their close friend Geoffrey Zimmerman.
Mr. Zimmerman, a lawyer, had known the McMichaels for years and diligently served their interests, both as a director of the gallery and in their legal battles with the province over the fate of the collection. He was such a close confidant that Ms. McMichael put him in charge of a $5-million family trust and most of her property after Mr. McMichael died in 2003. When Ms. McMichael died four years later, Mr. Zimmerman kept control over the property and the trust, which was supposed to support the gallery and other charitable causes.
It wasn't long before the McMichaels' niece, Penny Fenwick, began to have concerns about Mr. Zimmerman. She eventually went to court, alleging money was missing and that Mr. Zimmerman should be removed from the trust. The case dragged on for months as Mr. Zimmerman missed court appearances and failed to comply with orders requiring him to account for hundreds of questionable expenses.
Now an Ontario judge has ruled Mr. Zimmerman not only took money from the trust but also blocked attempts by Ms. Fenwick to find out what was going on. "Mr. Zimmerman's conduct fell well below the standards expected of a trustee and [he]breached some of the most basic obligations of a trustee," said the ruling by Mr. Justice George Strathy.
Judge Strathy painted a scathing portrait of Mr. Zimmerman's conduct. According to the judge, Mr. Zimmerman used trust money to pay himself nearly $450,000 and to cover sailing trips in the Caribbean, groceries, airfares, hotel bills, bar tabs, limousine services and a $3,800 cellphone bill. He borrowed money from the trust without any documentation and expensed numerous restaurant meals, including a dinner in Florida that featured lobster, lamb chops, gin and Shiraz wine.
The judge said Mr. Zimmerman drove Ms. McMichael's BMW for a year while she was in a nursing home, charging all expenses to the trust. He also hung much of the couple's personal art collection in his home, aside from a few pieces he "loaned" to a friend and another piece that he lost. Mr. Zimmerman was so brazen with trust money, the judge said, he once expensed a $307 pair of pants and a $137 pair of shoes because he had to attend a gallery function on a hot day and "didn't have appropriate clothing."
When he was asked to explain some of the expenses, Mr. Zimmerman was vague and abrasive, the judge noted. He cited one exchange with Ms. Fenwick's lawyer, Melanie Yach, who asked Mr. Zimmerman about a sailing trip to Bermuda that he billed to the trust. Mr. Zimmerman insisted the trip was trust business but when pressed to explain what he was doing, he replied: "Calling home." He then refused further specifics.
Mr. Zimmerman argued he repaid much of the money and that he has battled a host of personal troubles, including alcoholism, depression and anxiety. Judge Strathy dismissed most of his arguments, ruling that Mr. Zimmerman had not properly accounted for nearly 1,000 questionable payments. He ordered him to immediately repay the trust $480,000. He also gave Mr. Zimmerman two months to produce proper records for other withdrawals, or he will have to pay back more money which could total $430,000.
Mr. Zimmerman was unavailable for comment. He was removed as trustee last year while the case proceeded.
Tom Smart, the McMichael Collections chief executive, said the gallery has been watching the case closely. "We've been very saddened by it," he said Thursday. "We've just been caught and dismayed by the whole thing."
Mr. Smart said the gallery has received some money from the trust over the years, but more could be coming as a result of the ruling. "We've just been waiting for this to be resolved," he said.
Ms. Fenwick said she's still reviewing the decision with her lawyer. But she expressed relief that after years of legal warring the case is close to resolution. "Something is happening," she said. "That's always good."
Paul Waldie