U.S. Rep. Schrader tangled in family legal fight for New York vacation house
Just weeks after fending off a challenger in Oregon's May 19 primary, U.S. Rep. Kurt Schrader has another fight on his hands — this time with family members.
Kurt Schrader is a Canby Democrat who has represented Oregon's 5th District since 2009. He's in the midst of a legal battle with his brother and niece, who want to sell a $3 million family vacation home in the Hamptons, a string of hamlets at the far east end of Long Island, New York. Kurt Schrader wants to keep the home, which according to documents has been owned by the family for 25 years.
The brothers are members of Shelter Island LLC, the company managing the property on Shelter Island. They accuse each other of breaching fiduciary duties. At the heart of the dispute is the question of whether Schrader's niece, Sophia Lisa Schrader, can vote to dissolve Shelter Island LLC, according to court documents filed Monday, June 8, in Multnomah County Circuit Court. Sophia is the daughter of Scott Schrader, the two men's brother. According to court records, the three brothers were named managers of the LLC when it was formed in 2011. Scott Schrader died the following year.
Court documents show that Mark Schrader and Sophia Schrader allege that the congressman has "usurped control over the company" and breached his fiduciary duties by not attending a March board meeting in which Mark and Lisa Schrader voted to dissolve the company and sell the property. The plaintiffs claim that Kurt Schrader has made "despotic demands" as well as "intentionally overstated the company's financial condition" and "incurred unnecessary and unauthorized expenses," court documents show. Mark and Lisa Schrader are asking the court to dissolve the company and enter a judgement against Kurt Schrader for "his breach of fiduciary duties," according to court documents.
A spokesperson for Schrader's office described the lawsuits as "an internal family matter" and offered no comment. The attorney for Mark and Lisa Schrader did not make his clients available for comment before publication.
Kurt Schrader, who filed a request for declaratory judgment Monday, is asking the court to invalidate the decision from the March meeting and enter a judgement that his brother violated his fiduciary duty to the company, court documents show. Kurt Schrader's attorney, Kenneth Childs of West Linn, argued that because Lisa Schrader is younger than 21, she could not legally become a voting manager of the company following her father's death, and that he and Mark are the only managers. Mark Schrader and Lisa Schrader disagree, saying that the operating agreement governing the company does not mention an age requirement, court documents show. None of the documents state Lisa Schrader's age.
In March, the plaintiffs held a meeting by phone, which the congressman did not attend, and voted to sell the property and dissolve Shelter Island LLC. Mark and Lisa Schrader allege that Kurt Schrader "refused to attend the meeting to avoid voting on the sale of the property or dissolution of the company."
Hamptons Property and rental
The congressman stated in court documents that the property was used as a vacation home for the Schrader families before the limited liability corporation formed, and subsequently has been used occasionally as a rental property. Court documents show the Shelter Island property was built in 1958. The home, located on Bootlegger's Alley, was a part of a family trust, according to court documents. Suffolk County records show the waterfront property is valued at $2.89 million.
The plaintiffs allege that the congressman is the only member who actively uses the property. Mark and Lisa Schrader, who are represented by Paul Barton of Lake Oswego, also allege that property is not profitable and "requires substantial capital improvements and repairs to remain habitable and rentable." They say that even when the property is rented, the revenue it generates "does not adequately offset its long-term capital, repair, and maintenance obligations'' and the property's losses will cause the company to be insolvent in five years, court documents show.
Mark Schrader and Lisa Schrader say that the property can't be rented because it does not comply with local ordinances, but Kurt Scharder has leased the property "to create the illusion of an income stream without a need to first improve and repair the Property to comply with those ordinances."
Schrader leaves Shelter Island info off disclosure form
Kurt Schrader's membership of Shelter Island LLC, the company that manages his family's Long Island property, is not listed in his 2018 congressional disclosures. Bessemer Trust manages the finances of Shelter Island LLC, and congressional disclosure forms from 2018 show a $100,000 reimbursement to Kurt Schrader for money to fund the company.
Despite the disclosure of the reimbursement, Schrader might also need to disclose the rental along with his position as a manager/member of the company, said Alex Baumgart, a researcher at the Center for Responsive Politics in Washington D.C.
Baumgart said representatives must disclose real estate holdings that are valued at more than $1,000 or generate at least $200 of income by the end of the reporting period.
Omissions to Congressional disclosure reports are not uncommon, Baumgart said. "Most members [of Congress] tend to be wealthy and as a result have very complex financial situations that can often lead to things being omitted unintentionally."
Schrader's 2018 disclosure does list his status as a partner at Three Rivers Farm LLC, the Clackamas County farm where he lives, according to his website.
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