Mr. Frodo said:

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Does the camp have a board of directors and can they be brought into this or have they? Probably a who's who of Texas families. Seems like anyone with half a brain in a position of corporate governance would have poked a few holes in the "evacuation" plan, flood planning, camp security etc.

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AM09 said:

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Windy City Ag said:

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Quote:

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This is why the piercing of the corporate veil is a common legal concept. The theoretical LLC shield gets bypassed and the shareholders are personally liable and any of their interests or assets are fair game.

Fascinating read . . .

https://trishwhitcomb.substack.com/p/how-camp-mystic-was-built-to-survive

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Thanks for sharing! Flagging to read later; this definitely drew me in...

"The structure behind [Mystic] entities was not accidental. It was designed by one of the country's leading trust and estate lawyers, a man who spent decades teaching wealthy families how to protect their assets from future lawsuits and unforeseen liabilities. His name is Stacy Eastland. He is Dick Eastland's older brother."

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dermdoc said:

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AM09 said:

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Windy City Ag said:

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Quote:

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This is why the piercing of the corporate veil is a common legal concept. The theoretical LLC shield gets bypassed and the shareholders are personally liable and any of their interests or assets are fair game.

Fascinating read . . .

https://trishwhitcomb.substack.com/p/how-camp-mystic-was-built-to-survive

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Thanks for sharing! Flagging to read later; this definitely drew me in...

"The structure behind [Mystic] entities was not accidental. It was designed by one of the country's leading trust and estate lawyers, a man who spent decades teaching wealthy families how to protect their assets from future lawsuits and unforeseen liabilities. His name is Stacy Eastland. He is Dick Eastland's older brother."

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What is even more interesting is that Stacy sued Dick back in the past and Dick won. I believe it was over the ownership of the camp. The family intertwine seems to increase their liability.

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dermdoc said:

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BrazosDog02 said:

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Corps_Ag12 said:

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TexasAg95 said:

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Leggo My Elko said:

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Marvin_Zindler said:

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This hearing this morning has felt like a funeral for Camp Mystic and the Eastlands ever running a camp again.

I just don't see how they open in 28 days.

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Yeah my gut says nothing will come from the criminal investigation, but in terms of the civil side, the facts don't look good for the camp. How they plan on opening this summer is beyond me. From a publicity stand point alone, how can they not see it's a terrible idea.

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they need to tell their attorneys to start settlement talks and tell their realtor to start looking for buyers. Try to walk away with a little money and dignity.

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The camp operations and the property itself are separate legal entities. I'm interested in how these get intertwined or kept separate throughout this process.

Dick & Tweety owned the camp operations 100% (Camp Mystic) as well as 51% of the property through a family partnership with Dick's siblings.

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Based on how we set up businesses, Camp Mystic seems to be set up as a pretty normal LLC. There is an operating side, a holding side, and some other entities. I haven't dug into the businesses to figure out how the other entities are linked, but be aware that they are listed on the lawsuits because the slick attorneys are damn sure going to try to get to all of them.

The long and short of this is that Camp Mystic, does not own the land or the assets. It's an operating entity (Camp Mystic, LLC). The big ticket items like live with the holding company (Natural Fountains Properties) or within the other entities in some fractional amount to limit exposure, help with estate planning, or whatever. So, ideally, Camp Mystic gets sued for a gazillion dollars, but the payouts are limited to insurance and whatever is in the operating accounts which should be very little. They lose nothing but some petty change, dignity, and their reputation, and go back to business when their license is renewed.

But, this situation is anything but ideal or cut and dry, so there are several ways this can go south for them and I'd say losing everything is unlikely, but not out of the realm of possibility in an indirect capacity.

Camps like this are very risky and they usually carry beefy insurance for coverage in situations like this.

Nonetheless, their insurance carrier has probably chewed all the nails off their fingers watching this.

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And this is exactly why I said this should have settled before it got this far. If the holding company had just pleaded no contest, they might have been able to divorce the Eastlands and hold on to something. That window is long gone in my opinion. The attorneys and plaintiffs have invested way too much time and money to stop at that.

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Marvin_Zindler said:

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Mr. Frodo said:

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Does the camp have a board of directors and can they be brought into this or have they? Probably a who's who of Texas families. Seems like anyone with half a brain in a position of corporate governance would have poked a few holes in the "evacuation" plan, flood planning, camp security etc.

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No. And that is part of the problem. Organizational decision making and risk assessment was basically an Eastland family circle jerk.

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Windy City Ag said:

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Quote:

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The long and short of this is that Camp Mystic, does not own the land or the assets. It's an operating entity (Camp Mystic, LLC). The big ticket items like live with the holding company (Natural Fountains Properties) or within the other entities in some fractional amount to limit exposure, help with estate planning, or whatever. So, ideally, Camp Mystic gets sued for a gazillion dollars, but the payouts are limited to insurance and whatever is in the operating accounts which should be very little. They lose nothing but some petty change, dignity, and their reputation, and go back to business when their license is renewed.

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This is why the piercing of the corporate veil is a common legal concept. The theoretical LLC shield gets bypassed and the shareholders are personally liable and any of their interests or assets are fair game.

Fascinating read . . .

https://trishwhitcomb.substack.com/p/how-camp-mystic-was-built-to-survive

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Quote:

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Thanks for that. I am not a lawyer but it sounds like the holding companies may be liable due to Stacy Eastland setting them up? Am I reading that correctly?

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Windy City Ag said:

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Thanks for that. I am not a lawyer but it sounds like the holding companies may be liable due to Stacy Eastland setting them up? Am I reading that correctly?

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Not really. What it says is that if certain thresholds are met our legal code allows LLC, family partnership, or trust protections to be ignored and the shareholders or officers to be personally liable . . . .it is a legal standard meant to pierce through these very legal shields.

There is a two pronged test:

"Alter Ego" - Is the new corporate structure essentially a unified business that is being smoke-screened or miraged through legal steps? The idea is that if these various legal entities, when stacked on top of each other, add up to the very same business that was disassembled into different legal entities by people like Stacy Eastland. The answer to that question, to me, is yes.

"Inequitable Outcome" - This test asks that if honoring the new legal structures would somehow sanction fraudulent behavior or shield unlawful contact. This is a maybe to me.

I have seen up close four piercing of the corporate veil cases and in each it was a pissed off and very upset and victimized set of fraud victims and the courts did not want to let white collar criminals skate so they allowed liability to transfer to directors, officers, their families, and others.

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Quote:

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Corporate Structure Challenged
Both lawsuits name several corporate entities that owned and operated the camp. According to the first petition, the Eastlands created a structure in 1998 that separated ownership of the land (Natural Fountains Properties Inc.) from operation of the camp (Camp Mystic LLC) while maintaining control over both.

The Getten lawsuit goes further, seeking to "pierce the corporate veil" and arguing that the individual defendants "inadequately capitalized Camp Mystic to perpetuate the scheme" and "underinsured Camp Mystic" to limit liability.

"The Individual Defendants used various companies to hold assets used at or by Camp Mystic so that those assets could not be used to satisfy any liabilities incurred by Camp Mystic," the Getten petition alleges.

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Windy City Ag said:

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All the lawsuits are attempting to pierce the corporate veil by the way. It was the first thing I thought of when hearing the legal structure of Mystic.

https://kerrcountylead.com/lawsuits-filed-on-behalf-of-8-camp-mystic-victims-allege-negligence-stay-in-cabins-policy/

Quote:

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Corporate Structure Challenged
Both lawsuits name several corporate entities that owned and operated the camp. According to the first petition, the Eastlands created a structure in 1998 that separated ownership of the land (Natural Fountains Properties Inc.) from operation of the camp (Camp Mystic LLC) while maintaining control over both.

The Getten lawsuit goes further, seeking to "pierce the corporate veil" and arguing that the individual defendants "inadequately capitalized Camp Mystic to perpetuate the scheme" and "underinsured Camp Mystic" to limit liability.

"The Individual Defendants used various companies to hold assets used at or by Camp Mystic so that those assets could not be used to satisfy any liabilities incurred by Camp Mystic," the Getten petition alleges.

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There is a real mismatch here . . .27 different points of attack are hitting the camp. It is going to translate into the sort of high priced harassment talented lawyers specialize in to make defendants lives miserable.

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Windy City Ag said:

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Settlement from the get go never makes sense. In my narrow experience, it is a game of chicken and you can always fall back to basically the same terms you would have thought of out of the gates.

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cheeky said:

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Windy City Ag said:

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Quote:

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The long and short of this is that Camp Mystic, does not own the land or the assets. It's an operating entity (Camp Mystic, LLC). The big ticket items like live with the holding company (Natural Fountains Properties) or within the other entities in some fractional amount to limit exposure, help with estate planning, or whatever. So, ideally, Camp Mystic gets sued for a gazillion dollars, but the payouts are limited to insurance and whatever is in the operating accounts which should be very little. They lose nothing but some petty change, dignity, and their reputation, and go back to business when their license is renewed.

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This is why the piercing of the corporate veil is a common legal concept. The theoretical LLC shield gets bypassed and the shareholders are personally liable and any of their interests or assets are fair game.

Fascinating read . . .

https://trishwhitcomb.substack.com/p/how-camp-mystic-was-built-to-survive

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I believe it will be found that there was no piercing of the corporate veil and here's why. NFP is a corporation (S-corp or C-corp is unclear to me) and owns the land and buildings. Camp Mystic LLC is the operator of the camps. Dick and Tweety own 100% of the LLC and a 52% majority of the Natural Fountains Properties Corp. One of the minority owners of NFP at 22% is S. Stacy Eastland, Dick's brother. Dick's sister, Nancy Leaton, also owns 22% and a couple cosines own the remainder.

Here's where it gets interesting. Stacy was a pioneer of the Texas Family Limited Patnership, and other asset protection strategies, dating back to his days at Baker Bott's in Houston in the 1990s. In 2000 he took his skills to Goldman Sachs Family Office Services Group where he has worked with ultra-wealthy families in structuring wealth for estate, liability and tax efficiencies for the past 25 years until joining Ytterberg Deery Knull two years ago. Asset protection is his life. There is no way he allowed a substantial family asset with such obvious potential liability exposure to be operated in a manner that could extend to the real asset, the land itself.

As an interesting footnote, Stacy and the other minority owners have sued Dick and Tweety perhaps numerous times over the years claiming that access to the land was restrictive and the rent payments were well below market rates in the lease agreements, thus harming the minority shareholders. The last case I foundwithout looking hardwas 2012. In reading some of it I get the impression that was Dick was somewhat of a controlling and greedy man. Some of the testimony I watched appears to align with that.

I don't foresee a scenario in which the Eastland family runs Camp mystic or Camp Cypress ever again. Monetarily speaking the future is much more opaque. A more likely scenario is that a new operator contracts with NFP, Inc. and the land is monetized in a more equitable manner across the landowners. But if Stacy wants to keep the land in the family then I would imagine that is what will happen camps or not. I suspect he is more interested in use of the land.

Edited to add: wrote that before I saw the last page of comments or read the article. I'll definitely read the article now.

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BrazosDog02 said:

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And that's IF there are only two entities. This bathing is set up with llc, partnerships and multiple share holders, etc. It's like 4 layers deep!

That has to take an impossible task and make even harder, I would think.

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It does. From what I have seen, I doubt they will be able to pierce the corporate veil to get to the most valuable asset.....the property.

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Marvin_Zindler said:

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BrazosDog02 said:

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And that's IF there are only two entities. This bathing is set up with llc, partnerships and multiple share holders, etc. It's like 4 layers deep!

That has to take an impossible task and make even harder, I would think.

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It does. From what I have seen, I doubt they will be able to pierce the corporate veil to get to the most valuable asset.....the property.

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dermdoc said:

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Marvin_Zindler said:

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BrazosDog02 said:

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And that's IF there are only two entities. This bathing is set up with llc, partnerships and multiple share holders, etc. It's like 4 layers deep!

That has to take an impossible task and make even harder, I would think.

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It does. From what I have seen, I doubt they will be able to pierce the corporate veil to get to the most valuable asset.....the property.

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Does that mean the Eastlands will still own Mystic?

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dermdoc said:

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Marvin_Zindler said:

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BrazosDog02 said:

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And that's IF there are only two entities. This bathing is set up with llc, partnerships and multiple share holders, etc. It's like 4 layers deep!

That has to take an impossible task and make even harder, I would think.

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It does. From what I have seen, I doubt they will be able to pierce the corporate veil to get to the most valuable asset.....the property.

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Does that mean the Eastlands will still own Mystic?

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cheeky said:

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Windy City Ag said:

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Quote:

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As an interesting footnote, Stacy and the other minority owners have sued Dick and Tweety perhaps numerous times over the years claiming that access to the land was restrictive and the rent payments were well below market rates in the lease agreements, thus harming the minority shareholders. The last case I found without looking hard was 2012. In reading some of it I get the impression that was Dick was somewhat of a controlling and greedy man. Some of the testimony I watched appears to align with that.

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Drundel said:

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Cliff notes question, what's the goal of the lawsuit?

Asking as a cynic, do the families want money, want the land, want to shut them down and/or bankrupts them, etc?

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Drundel said:

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Cliff notes question, what's the goal of the lawsuit?

Asking as a cynic, do the families want money, want the land, want to shut them down and/or bankrupts them, etc?

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Senator Blutarski said:

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Would everyone be happy if they just hired a third party general manager, maybe someone who ran a camp in another state?

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EnglishElhew07 said:

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I think in watching the video of the findings it's very clear that the Eastlands should not be trusted to run a camp again. To me the question now moves to are the plaintiffs trying to exact maximum pain in the form of continued lawsuits, including trying to take the land from the family, essentially with the end result of not just disgrace but also total financial ruin. Or do they simply want camp safety reform and to remove the Eastlands from running mystic.

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