July 1, 2022

Munger Tolles Secures $30 Million Victory for Estate, Exposing Major Real Estate Fraud

Munger, Tolles & Olson secured an award of over $30 million on behalf of the sister and estate of a physician and businesswoman, who was victim of a massive real estate fraud involving the sale of a 32-acre parcel in the heart of downtown Rancho Cucamonga, a city east of Los Angeles.

Dr. Etsuko Toguri, who passed away in 2019 at the age of 93, built a life as a successful self-made businesswoman and physician based in Toronto after a youth in which her family was placed in World War II camps interning Canadians of Japanese descent. 

Dr. Toguri began partnering on real estate investments with the family of Osvaldo Pierotti in the 1960s, and in 1977 they purchased the parcel of vacant land at 12215 Baseline Road – now the major mixed-use community Day Creek Square– for $166,000. 

Unbeknownst to Dr. Toguri, in 2017, the Pierotti family sold that lot to Fortune 500 developer DR Horton for $45 million—without Dr. Toguri’s consent, and without paying her a single penny. 

Osvaldo and his wife Anna Pierotti, who held legal title to the land and held Dr. Toguri’s share in trust, funneled 80% of the proceeds to their son Peter Pierotti through a shell company, and kept the rest for themselves. They went to extraordinary measures to attempt to hide the price of the sale, structuring the transaction through a pair of sham options designed to make it appear the lot sold for $8 million. Then, after lying about the sale price, Osvaldo decided to cut Dr. Toguri out completely, depriving her even of a portion of the $8 million.

Neither Dr. Toguri, who started developing Alzheimer’s disease in the mid-2000s, nor any of her representatives were made aware of the true details of the Rancho Cucamonga land deal.  

Osvaldo waited until his partner had become sick and vulnerable to cut her out. The fraud was not uncovered until Dr. Toguri’s sister Miki hired Munger Tolles, as well as co-counsel James Klein at Klein & Ass., P.C.,to obtain an accounting of her sister’s investment in this property.

After 1.5 years of litigation, an arbitrator found in favor of Miki and her sister’s estate and awarded it more than $30 million in full compensatory damages, interest and punitive damages and rejected all of the respondent’s defenses. 

“The ruling represents a righteous victory for Miki and her late sister Etsuko against a massive fraud and exploitation,” said partner Laura Smolowe. “We are thrilled that we were able to secure a victory for our client and right a wrong that was committed against a remarkably accomplished woman during the last phase of her life.”

In addition to Ms. Smolowe, the MTO team included Jordan Segall, Sara Worth and Caroline Litten.

Munger Tolles’ victory on behalf of  Dr. Toguri’s estate was covered by the Daily Journal, The American Lawyer and Law360. (subscriptions may be required)
 

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