Maurice Kanbar v. Henry Kaufman

MEMORANDUM

Maurice Kanbar is an inventor, entrepreneur, and philanthropist. Henry Kaufman is a retired bond trader and investment banker. Kaufman and Kanbar met around 1962, when Kaufman underwrote a public offering for Kanbar’s company, the Spandex Corporation. They became friends at that time and spoke occasionally. In 2001, Kanbar sought Kaufman’s advice in a financial problem regarding Kanbar’s charitable foundation. Kaufman came to San Francisco and moved into an apartment building owned by Kanbar. He helped Kanbar to realize about $10 million in tax savings by converting his charitable foundation to a charitable trust.

While Kaufman was in San Francisco, it became clear that Kanbar would receive $320 million from the sale of Skyy Vodka. Kanbar asked Kaufman if he would stay and help Kanbar to manage this money with the intent of distributing it to charity. Kaufman agreed to stay. Kaufman was eventually responsible for investing all of the money that Kanbar received from the sale of Skyy, and he had signing authority over Kanbar’s bank accounts. Kaufman was not compensated formally for his services. Kaufman had little specific direction from Kanbar; however, he was aware of…