for $5 Million in Family Probate Battle
By MICHELLE TUCCITTO SULLO, The Connecticut Law Tribune
Published: February 18, 2016
During Edwin Jarmoc's life, he ran a successful tobacco farm in Enfield, building the businessuntil it was valued in the millions of dollars. After he died; a lengthy legal squabble ensued between his two children, with each accusing the other of mishandling their father's assets.
In a recent nine-page decision, Probate Judge James Purnell III sided with Laura Jarmoc, concluding that her brother, Stephen Jarmoc, a former state representative from Enfield, used funds to support a lavish lifestyle, including a "home, vacations, pension, tuition and a vacation home." Purnell concluded the estate is owed over $2 million, plus half of the business' profits from 2011 to the present. Attorneys expect further proceedings to determine the exact total dollar figure.
A. Paul Spinella of Spinella & Associates of Hartford predicted the total would exceed $5 million. Spinella represents Laura Jarmoc, a physician who lives in New Hampshire. "My client became aware the estate had been looted by her brother," , Spinella said. "It was painful and heartbreaking for her, but she decided to take this action [in probate court]. She is pleased with the decision."
Edward Heath of Robinson & Cole in Hartford represents Stephen Jarmoc. While Heath declined to comment, he released a statement from his client. "I respectfully disagree with the decision," Stephen Jarmoc said. "I am evaluating my options. My father and I ran the farm, my sister was not remotely involved from her home in New Hampshire. Her interpretation of what she is owed is inaccurate. It is unfortunate that I have had to work out this family matter in court."
Spinella called the case "an instructive tale" of what happens when disputes erupt among siblings over a parent's estate. "The remedy here was to bring an action in probate court claiming there was fraud on the estate," Spinella said. "This case involved tracing moneythrough thousands of financial documents, which took months of effort to get."
According to Spinella, the story centers on Edwin Jarmoc, who Spinella described as a "revered figure who was a professor and self-made tobacco farmer." Edwin Jarmoc was born in 1926 and grew up on the farm in Enfield. He earned degree in electrical engineering and became a professor at Trinity College, but continued working on the farm throughout his life.
When Jarmoc signed his will in 2004, a financial statement showed he had $5 million in assets and just $100 in debt. "It was the pattern of his life to stay debt free, only financing each individual crop and then paying off the debt when the crop was sold," Probate Judge Purnell wrote in late January.
The judge noted that Edwin Jarmoc began exhibiting signs of dementia about a year before he signed his will. At first, he showed loss of short-term memory, but later on his family had to help provide him meals and make sure he took his medication regularly. Eventually, an aide was hired to help with his daily care. He continued participating in the family business until shortly before his death in 2009 at 83. According to the judge; it is clear Jprmoc had been for some time losing his understanding of the business' finances.
While Edwin was still alive, Stephen Jarmoc was involved in the farm and shared gross sales and expenses 50/50. They shared Robert Berger as the family attorney, an accounting firm and Farm Credit bank as their lender.
In 1998, Stephen Jarmoc formed Jarmoc Farms LLC in_his name, and all real estate was put into that corporation, with the intent of providing liability protection, according to the probate decision. In 2001, Stephen, in his name, formed Jarmoc Tobacco LLC, the operating company for the farming operation, and Jarmoc Real Estate LLC, iwhich held the land they farmed.
For tax year 2002, without explanation and without a written agreement or vote, the 50/50 profit-sharing agreement was changed to 75/25 in Stephen Jarmoc's favor, the decision states. The profit division was subsequently changed to 90/10 for the 2003 tax returns. "Suddenly a 50/50 operation had become skewed vastly in favor of Stephen without explanation or written agreements or votes of the members of the LLC," Purnell wrote.
Meanwhile, the judge concluded Stephen was "living well beyond his means." Large loans were obtained, but not paid off, from the sale of crops, the judge noted. "Much of the money borrowed went to support the lavish lifestyle of Stephen and [his wife] Karen Jarmoc, their home, vacations, pension, tuition and a vacation home, none 'of Which were income-producing," Purnell wrote.
Karen Jarmoc is also a former state lawmaker and is currently president of the Connecticut Coalition Against Domestic Violence.
"During the time he was alive, Edwin complained to [his daughter] Laura that he didn't have any money," Purnell wrote. "When she confronted Stephen about the complaints, his response was that Edwin was 'crazy.'" '
The judge said the estate is insolvent. The business brings in about $2 million annually, enough to carry on the business and make mortgage payments, the judge wrote, but not enough to repay more than $7 million in debt to Farm Credit. The judge concluded that if Edwin Jarmoc had been in charge while he was still alive, and able to understand the complicated financial picture, the situation would not have developed.
The judge found that Stephen Jarmoc was unjustly enriched at the expense of Edwin's estate and Laura Jarmoc. Purnell ordered all mortgages on estate property and transfers of property after Edwin Jarmoc's death to be declared null and void.
Purnell also questioned the legality of some dealings between Farm Credit and Stephen Jarmoc. According to the judge, after Edwin Jarmoc's death, Fenn Credit walked Stephen through a process to set up a new LLC, "in order to get additional funds from the federal government that were not available to the business while the estate was being settled."
"There is a serious question whether this was appropriate or even legal since it was nothing more than a shell corporation to funnel federal money to Jarmoc Tobacco," the judge wrote."The court leaves that question to the IRS and relevant- federal agencies to figure out."