2 Financial Giants Join Fight for Control of Duke Estate : Courts: The Bank of New York and Chemical Banking Corp. file papers claiming they are in line to manage the billionaire heiress’s fortune.
Where once only Doris Duke’s former physician and three servants challenged her will, the fight for control of the heiress’s $1.2-billion estate suddenly has escalated to include four of the nation’s largest banks and some of America’s most prestigious law firms.
Two new financial giants--Bank of New York and Chemical Banking Corp., the nation’s third-largest banking concern--have filed separate papers claiming they were each in line to manage Duke’s Gilded Age fortune.
Meanwhile, Appellate Judge Israel Rubin on Thursday issued a temporary injunction against the removal of Duke’s former butler, Bernard Lafferty, and U.S. Trust Co. of New York as executors. But he also ordered Lafferty to move out of Duke’s bedroom at her gated home above Beverly Hills, where she died on Oct. 28, 1993.
“I want him out. . . . I want him in an adjoining room,” the judge said. The judge questioned why Lafferty was even staying in his former employer’s house, the former residence of film idol Rudolph Valentino.
The entrance of Bank of New York and Chemical Bank adds a new dimension to an already far-reaching contest that will determine the course of one of the country’s largest charitable foundations.
Both banks are staking claims to handle Duke’s fortune based on wills or codicils she executed before her final will, signed in a Los Angeles hospital in 1993.
“Everybody wants a piece of this money. It’s all about money,” said Howard Weitzman, who represents Lafferty. “They don’t get much bigger than this.”
Indeed, plenty of legal firepower was on display Thursday when 17 lawyers filed into the Appellate Division of New York State Supreme Court to argue the request for a one-week injunction against the removal of Lafferty and U.S. Trust.
*
The probate of Duke’s will drew little attention until this past January, when a barrage of allegations were unleashed by Dr. Harry B. Demopoulos, a Scarsdale, N.Y., vitamin and longevity specialist who once served as Duke’s physician and was named her co-executor in an earlier will.
In one of the allegations, a former Duke nurse charged the heiress was murdered with morphine. A former Manhattan prosecutor, Richard H. Kuh, was asked to investigate.
Just 10 days ago, the estate was thrown into turmoil when Manhattan Surrogate’s Court Judge Eve M. Preminger--acting on Kuh’s report and citing such “classic grounds” as waste of assets and “substance abuse”--removed Lafferty as executor and named Alexander D. Forger to temporarily take his place.
Forger, a past president of the New York State Bar Assn. and former chairman of Milbank, Tweed, Hadley & McCloy, a firm long associated with Rockefeller family interests, was also executor of Jacqueline Kennedy Onassis’ estate.
In court papers filed Thursday, the deposed executors did not question Forger’s qualifications, but suggested that Preminger might have been playing politics in making the appointment--alleging that Forger served as campaign manager for the judge’s 1990 election to the Manhattan Surrogate’s Court.
In an interview, Forger denied having any significant role in Preminger’s election effort.
“I wasn’t her campaign manager,” he said. “I think I hosted one coffee. Whether or not I had a title, I don’t recall.”
Preminger also dropped the U.S. Trust Co. of New York from the lucrative job of managing the estate’s assets, saying the bank had failed to rein in Lafferty’s spending. The judge replaced U.S. Trust with Morgan Guaranty Trust Co.
In seeking the appellate order, lawyers for Lafferty and U.S. Trust complained that Preminger tossed them out without a hearing on alleged improprieties in management of the estate.
“Surrogate Preminger bases her entire opinion . . . upon a single faulty premise,” Thomas D. Barr, defending U.S. Trust, said in legal papers. “She asserts that none of the facts on which she bases her opinions is in dispute, when . . . most of them plainly are in dispute, and some of the more significant facts are just plain wrong.”
*
Later, in an appearance before Judge Rubin, Barr charged that the bank’s removal “is an extraordinary example of a failure to give due process.”
Millions of dollars in fees are at stake for not only the bank that winds up handling Duke’s financial affairs, but also the law firm that represents her estate and charitable foundation.
According to papers filed in probate court, $13 million in bills have already been submitted by Katten Muchin & Zavis. The Chicago-based firm represented the estate until Preminger’s ruling and is still defending Lafferty.
Judge Rubin met with the lawyers in a conference room before issuing his one-week injunction. He ordered Morgan Guaranty and U.S. Trust to cooperate with each other for seven days in administering the estate’s affairs while appeal of the removal of U.S. Trust and Lafferty is referred to the full appellate court for “expedited determination.”
Lafferty’s use of Duke’s old bedroom was criticized in the report issued in April by investigator Kuh. Questioning a series of expenditures by the Duke estate, Kuh said the former butler had spent more than $60,000 to refurbish it.
Weitzman said Thursday that he had informed Lafferty of the judge’s order that he move out of Duke’s bedroom and that the former butler was “going to comply with any court orders.”
Goldman reported from New York and Lieberman from Los Angeles.
