Estimate of Heinz Fortune Doubled
Teresa Heinz Kerry, through a network of investments in blue-chip corporations, venture capital funds and municipal bonds, controls a family fortune worth an estimated $1 billion, an examination of public records shows.
The $1-billion figure is double the estimates of her wealth that are widely cited in news stories about her husband, Massachusetts Sen. John F. Kerry, the presumptive Democratic nominee for president.
The couple would rank as the wealthiest to occupy the White House, far surpassing such storied presidential fortunes as the Kennedys’. Their assets are so vast and far-reaching that they mirror the U.S. economy, and will likely raise questions about conflicts of interest.
“She represents a new ballgame in terms of her wealth and in terms of the wealth she controls,” said Kevin Phillips, a political commentator and author of the history “Wealth and Democracy.”
Heinz Kerry’s investments, worth an estimated $500 million in 1995, have grown over the last nine years to $1 billion or more, even accounting for large living expenses and charitable contributions, according to an analysis of Securities and Exchange Commission filings, Senate financial disclosure reports, probate documents and other public records.
Since key details of Heinz Kerry’s investments are not in the public record, a precise valuation is not possible. The Times analysis produced estimates as low as $900 million and as high as $3.2 billion.
Three senior executives at investment firms that handle accounts for wealthy clients reviewed The Times’ study and said the $1-billion valuation was a fair and conservative estimate.
Heinz Kerry has declined requests by The Times in recent months for interviews. Campaign representatives for Sen. Kerry and his wife said the couple regarded their assets as private. The representatives also declined to provide answers to written questions over the last two weeks.
Heinz Kerry’s money is actively managed every day of the year, providing capital to Gannett, Anheuser-Busch, Pfizer and Procter & Gamble, among many others. It helps finance municipal sewer systems, technology start-ups, schools and more.
The trust accounts are held at Mellon Financial Corp., the Pittsburgh institution that has long handled the affairs of the Heinz family. She inherited the family’s fortune in the food business 13 years ago.
In 2003, the Heinz trusts made 890 trades in stocks, bonds, funds and other investments -- more than three trades for every day that securities markets were open. In dozens of cases, the trades were for assets valued above $1 million, and scores of other trades involved assets worth hundreds of thousands of dollars.
Heinz Kerry’s net worth is usually estimated at half a billion dollars, though these estimates are not explained in documentation. In its latest annual ranking, Forbes magazine did not include her among the world’s billionaires; the last time the magazine estimated her wealth was in 2002, when it said she was worth $550 million.
But The Times examined financial disclosures as far back as 1982 filed by Sen. John Heinz (R-Pa.), who died in 1991, and Kerry. In 1995, H.J. Heinz Co. filed an SEC document that showed Heinz Kerry was the beneficiary of trusts that held $400 million of Heinz stock. Separately in 1995, the year they married, Kerry filed a Senate disclosure report that showed Heinz Kerry had other assets worth an estimated $100 million.
The Times examined the portfolio of stocks and bonds for each year since 1995, and concluded that it grew to roughly $1.3 billion, in part by diversifying out of Heinz stock.
Records and public statements show that charitable contributions and family living expenses could have drained no more than $300 million out of the trust fund. Last month, she disclosed that she had income of about $5.1 million in 2003, apparently representing some of the income generated by the trusts.
“If you had $500 million in 1995, I don’t see how you couldn’t be close to $1 billion today with any reasonable equity strategy,” said L. David Tisdale, chief executive of Starbuck, Tisdale & Associates, a Santa Barbara investment advisor who reviewed The Times’ work.
Certainly, the Kerrys would be among the richest families to ever occupy the White House, eclipsing even President Kennedy and well ahead of the other moneyed chief executives over the last century.
When Franklin D. Roosevelt died in office, he left an estate valued at $1 million, according to his presidential library. That would be worth about $11 million today when adjusted for inflation. Herbert Hoover had roughly $8 million when he entered office in 1929, according to archivists at the Hoover presidential library -- an amount worth $88 million today.
Lyndon B. Johnson was worth an estimated $14 million in 1966, Life magazine said at the time. That would be worth $82 million today. The magazine Trusts & Estates estimated Johnson’s worth at $20 million in 1973, worth $85 million today.
President Bush’s disclosure statement shows assets estimated by The Times at about $13 million, including his large ranch in Texas. The value of the Bush family assets, managed by former President George H.W. Bush, is not known.
The most difficult former president to assess is Kennedy, whose father, Joseph P. Kennedy, was still alive during his presidency and was worth perhaps $200 million to $400 million, according to historians at the Kennedy library -- an amount equal to $1.3 billion to $2.6 billion when adjusted for inflation.
President Kennedy’s share of the income from the Kennedy trust was $500,000 annually, according to the book “Wills of the Presidents.” Political experts say that Kennedy was personally worth perhaps only $20 million when he was elected president, or $124 million today. But Kennedy enjoyed the largess of his father, including payments for his wife’s personal expenses, the use of family yachts, and access to estates in Cape Cod and Florida.
If Kerry is elected, he will join a long list of presidents who were helped by their wife’s wealth. Thomas Jefferson, John Tyler, LBJ and William McKinley also married into wealth, said Carl Sferrazza Anthony, a leading authority on first ladies.
“George Washington married the wealthiest woman in the colony of Virginia,” he added.
Heinz Kerry inherited a vast fortune from Sen. Heinz, who was killed in a 1991 private aircraft accident. Heinz, formally H.J. Heinz III, was the fourth generation of the Pittsburgh family famous for its ketchup and other food products.
The money is held mainly by seven trust funds and several other investment accounts set up to benefit her and her three children, as well as to provide for charitable contributions. Heinz Kerry’s money is generally kept separate from her husband’s, according to the Senate disclosure report.
The business affairs are managed by the Heinz Family Office, located in an upscale office building just two blocks from the White House on Pennsylvania Avenue. Besides overseeing the family business, the office helps manage Heinz Kerry’s many public policy programs.
In addition to her family holdings, Heinz Kerry controls three large nonprofit corporations in Pittsburgh and Washington that have a combined $1.2 billion in assets, according to Internal Revenue Service filings. They have a wide-ranging agenda, supporting the arts, education, women’s health, the environment and much more.
Tax records show that she supplements those activities with separate money from family trusts. For example, she provides at least $6.5 million annually to the Heinz Family Foundation, a nonprofit corporation, to help its activities.
She also separately supports half a dozen programs that involve environmentalism and archeology in another unregistered organization -- the Teresa and H. John Heinz III Foundation -- that does not file tax returns.
Political experts predict the Kerrys will be compelled to disclose more about their assets and perhaps place them in a blind trust if Kerry wins the election.
Heinz Kerry has not said whether she will continue to oversee her personal assets or the family trusts if Kerry is elected. A Kerry spokesman said Friday that these issues had yet to be seriously considered. However, she has said repeatedly that she would not step down from her leadership of her philanthropic corporations.
A key issue is whether a Kerry presidency would be hobbled by conflicts of interest or the appearance of them because of her holdings or active trading. “It is hard to imagine that it would not cause conflicts,” said Phillips, the author. “They should have thought of this long ago.”
Leon E. Panetta, White House chief of staff under President Clinton, agreed that although the amount of Heinz Kerry’s wealth was not a campaign issue, it could cause problems if Kerry were elected.
“They will have to seriously consider putting it in a blind trust,” Panetta said. “All of us who have served in government have had to do that. In the end, it is the better way to go, because it removes any suspicion that a decision is self-serving. You have enough problems just making a decision, without dealing with the concern you may be putting money in your pocket.”
(Trusts are legal vehicles dating back hundreds of years that hold assets for the benefit of others. They are generally used by the wealthy to minimize taxes and eliminate long probate proceedings. A blind trust puts management of money outside the view of its beneficiaries.)
No specific law requires the president, much less the first lady, to put assets in a blind trust, said Stan Brand, a federal government ethics expert and Washington attorney. In fact, federal law says almost nothing about the first lady, though she does get protection and funding for an office.
Since Heinz Kerry owns such a broad portfolio of U.S. and foreign stocks, the actions of a Kerry administration could have a daily effect on companies in which his wife has millions of dollars invested, said Robert M. Stern, a financial disclosure expert and president of the Center for Governmental Studies.
“Almost any decision Kerry makes will affect one of her companies,” Stern said. “It might help the situation if the wealth were put into a blind trust.”
President Bush has placed his assets in a trust that is invested almost exclusively in certificates of deposit, according to his financial disclosure statement on file with the federal Office of Government Ethics.
Political experts say Americans have a natural curiosity about the personal wealth of their leaders, though it seldom becomes a central political issue. Far from holding grudges against the rich, voters often elect wealthy individuals and even admire their lifestyles, the experts say.
Heinz Kerry owns a Gulfstream jet and several properties around the country, including a $5-million ski chalet in Idaho, a $9-million oceanfront summer house in Nantucket, Mass., and a $4-million estate in western Pennsylvania. After marrying nine years ago, the couple purchased a five-story mansion assessed at $6.9 million in one of Boston’s poshest neighborhoods.
For all the wealth, however, the couple does not live ostentatiously, according to friends and associates. Among Heinz Kerry’s vehicles is a 1989 Jeep that she keeps in Idaho, state records show. “If you go to Teresa’s homes, you could take the furniture and put it in any home,” Jeffrey Lewis, chief of staff for Heinz Kerry, said in an earlier interview. “It is comfortable, not ostentatious.”
Maxwell King is president of the Heinz Kerry endowments in Pittsburgh. He said the 65-year-old heiress, who was born in Mozambique to a prominent doctor and was educated in South Africa and later Geneva, has her mind on many matters other than her wealth.
“For some people, having great wealth is a heavy burden,” said King, a former editor of the Philadelphia Inquirer. “She doesn’t carry it heavily at all. She has a pragmatic view of her money. She doesn’t view it as important, but as a vehicle to do things. She holds close to Heinz values.”
The Heinz family has long been known for its philanthropy, and Heinz Kerry is but one wing of a family that has funded art museums, scholarships, university chairs, charities for the poor, hospitals, literary awards, symphonies, public service television, programs for women’s health, architectural competitions and much more.
Still, the fortune helped elect Sen. Heinz, and it has played a limited but key role in Kerry’s primary campaign.
At a pivotal juncture, Kerry took out a $6.4-million loan in December on the Boston property. The big loan, requiring interest payments that exceed Kerry’s Senate salary of $154,700, is nearly as much as the assessed value of the property. It came from Mellon Trust of New England.
“It was absolutely necessary for him to do that, and the wealth at that point helped him,” said James Thurber, director of the Center for Congressional and Presidential Studies at American University in Washington. “It was not an issue in the primaries, and I do not think it will become an issue in the campaign. There is so much money rolling in now from small contributions that he doesn’t need to go to the personal wealth.”
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Teresa Heinz Kerry’s assets
The vast wealth created by the Heinz family is organized under Teresa Heinz Kerry as shown below:
Family assets $1 billion under nine family trusts and other investment accounts. A sample, including some representative investments over $1 million:
* H.J. Heinz II Charitable and Family Trust: Delphi Ventures V Limited Partnership, Menlo Park, Calif.; Heartwood Forestland Fund II Limited Partnership, forest in Pennsylvania, West Virginia, Michigan and Kentucky; H.J. Heinz Co.*
* H.J. Heinz II Family Trust: H.J. Heinz Co.*; Seix High Yield Fund; GMO Foreign Fund
* Heinz Family Commingled Stock Funds: American International Group Inc; Gannet Co.; Wells Fargo & Co.
* Heinz Family Commingled Bond Fund: Eric County, Pa. sewer bonds; California Department of Water Resources, power supply; Jordan, Utah, School District
* H.J. Heinz III Marital Trust: H.J. Heinz Co.*; Anheuser-Busch Cos.; Pfizer Inc.
Philanthropic assets: $1.2 billion in three holdings: * Vira I. Heinz Endowment: $399 million * Howard Heinz Endowment: $768 million * Heinz Family Foundation: $69 million
*Heinz Kerry’s trusts and other family accounts are believed to hold between $200 million and $300 million of H.J. Heinz Co. stock, based on its sales of Del Monte Co. shares, which were distributed in a merger, and certain public statements made by the Heinz Co.
Sources: Times reporting. Graphics reporting by Ralph Vartabedian.