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The son of the man who established the $1.5...

By GRAEME BROWNING, UPI Business Writer

CHICAGO -- The son of the man who established the $1.5 billion MacArthur Foundation can proceed on his claims the foundation filed false tax returns, concealed assets and should be liquidated, a Cook County judge ruled Friday.

The ruling came on the same day foundation directors announced Shirley M. Hufstedler, former U.S. Secretary of Education, and Weston R. Christopherson, former chairman of Jewel Companies Inc., had been named to the board.

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J. Roderick MacArthur, son of the late insurance magnate John D. MacArthur, charged June 20 the foundation filed false tax returns for 1978 through 1982 and understated the value of its assets to conceal its violation of federal law.

The charges were amendments to a lawsuit MacArthur, also a foundation director, had filed in February accusing eight fellow directors of squandering the foundation assets, mismanaging its principal asset and paying themselves excessive fees.

The lawsuit asked the court to liquidate the foundation, dismiss the current board and appoint another charitable organization as receiver of the foundation's assets.

MacArthur, who recently learned he has incurable cancer, had asked Chancellor Richard Curry to expedite discovery and trial proceedings in the case. Curry granted that request Friday after a 4-hour hearing.

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Curry set a status hearing in the case for Oct. 18. Both sides will exchange documents and begin depositions in the interim, MacArthur's attorney David Bradford said.

Bradford called Curry's ruling 'a complete victory.'

'We intend to press for an early trial date particularly given Rod MacArthur's health,' he said.

Foundation attorney Jay Erens said Curry had ruled only that MacArthur would be permitted to attempt to prove his allegations.

'The judge did note in course of ruling that Mr. MacArthur must be aware that his burden is formidable,' Erens said.

The Foundation is best known for its annual no-strings-attached fellowships given to super-achievers. It was established after the death of John D. MacArthur, founder of the massive Bankers Life and Casualty Co., in 1978.

The foundation sold Bankers Life in May to I.C.H. Corp., a Louisville, Ky.-based insurance holding company, for $382 million. Federal law prohibits foundations from owning more than 20 percent of a for-profit business.

Christopherson and Mrs. Hufstedler join former U.S. Attorney Gen. Edward H. Levi on the foundation board. Other directors include Dr. Jonas Salk, discoverer of the polio vaccine, radio commentator Paul Harvey and Nobel Prize-winning physicist Murray Gell-Mann.

Salk, Harvey and Gell-Mann were named in the lawsuit, along with former University of Illinois president John Corbally, former Bankers Life chairman Paul Doolen and former Bankers Life president Robert Ewing.

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