Settlement Reached Over Duke Estate

The central parties in the bitter fight over the $1.2-billion estate of Doris Duke announced Wednesday that they have reached a settlement that finally could send the tobacco heiress’ fortune to charity more than two years after her death.

Under the agreement, the controversial executor named in Duke’s last will--her former butler, Bernard Lafferty--would relinquish any role in administering the estate or the new Doris Duke Charitable Foundation but still would get a $4.5-million payment as well as the $500,000-a-year bequest provided for him in the will.

Meanwhile, Dr. Harry B. Demopoulos, the New York physician who led the challenge to the will, would get a seat on the foundation’s board in return for dropping his legal challenge, which spawned a series of sensational allegations--including the charge that Duke was murdered with overdoses of drugs.

“The overriding objective was to get the billion and a quarter [dollars] to charity and get a [foundation] board that will withstand scrutiny,” said New York Deputy Atty. Gen. John H. Carley, who helped mediate the proposed settlement.

Although the pact still must be approved by Manhattan Surrogate’s Judge Eve M. Preminger, lawyers in the case said that they believed they had satisfied her main concern--that Lafferty should play no role in what will become one of the nation’s largest charities.

Lafferty declined comment Wednesday. In the past, he has said that he would bow out only if that was “the only way to get the money to charity.”

The proposed settlement would leave in place three members of the Duke foundation board originally proposed by Lafferty: Nannerl O. Keohane, the president of Duke University, which is named for the heiress’ father; J. Carter Brown, former chairman of the National Gallery of Art in Washington, and Marion Oates Charles, a society friend of Duke’s who was named in the will to oversee the heiress’ charitable trusts.

Left off the board from Lafferty’s original list were another old friend of Duke’s, actress Elizabeth Taylor, and New Jersey Gov. Christine Todd Whitman.

Under the settlement, their places, along with Lafferty’s, would be taken by Demopoulos, who once served as Duke’s longevity and vitamin doctor but was frozen out of her final wills; John J. Mack, president of the Morgan Stanley investment banking firm, and New York lawyer James Gill, a strong supporter of Gov. George Pataki.

Though Demopoulos had sought restoration of an old will naming him Duke’s executor, Don Howarth, one of his attorneys, said that the settlement was acceptable because it gets “the butler out of there [and] gives Harry [Demopoulos] a significant role.”

The 80-year-old Duke died Oct. 28, 1993, at her home above Beverly Hills. Her will was filed for probate in Manhattan.

The dispute got front-page headlines last year when Demopoulos and others filed a series of affidavits alleging that Lafferty was a drunk illiterate who went on spending sprees with Duke’s money.

Lafferty countered that he was being targeted unfairly by lawyers, bankers and others seeking “to slice up Miss Duke’s estate like a pie.”

The dispute seemed hopelessly mired in New York courts amid investigations, endless appeals and even a challenge to the partiality of Judge Preminger, which recently put the proceedings on hold.

Indeed, in announcing their proposed settlement, parties in the case had to request formally this week that a March 5 stay on the proceedings be lifted--so the judge could review the terms. Preminger was expected to set a hearing on them for early May.

“We anticipate the thing will be wrapped up quickly [but] she has to approve it,” noted Carley, who oversees charity matters for the state.

Objections could still be filed, however, by two financial giants--the Bank of New York and Chemical Bank--which were in line to handle Duke’s funds in earlier wills and have been seeking standing to challenge her final one.

The proposed settlement gives the lucrative job of managing the Duke funds to United States Trust Co. of New York, the bank brought in by Lafferty a few months before Duke’s death. As part of the deal, U.S. Trust would pay the former butler’s executive fees to date--the $4.5 million--if they are not approved by the court.