Asian Children Finally Get Part of $550-Million Estate
Wealth: U.S. businessman's trysts caused a tangled legal battle. UC will also get a substantial piece of the inheritance.
By MARY CURTIUS, Times Staff Writer
x weeks into his new life in America, Nguyen Be Lory is doing the things
you would expect a 4-year-old to do. He's discovered Teletubbies and developed
a taste for Fruit Loops. At preschool, he makes friends easily and ranks
recess as his favorite activity.
But nothing in this small boy's short life has been typical. What his classmates don't know is that any day now, the new kid will become one of Vietnam's wealthiest citizens, when the first $7.5 million of an expected $30-million inheritance is transferred to a U.S. trust for him.
"Sometimes, I feel that I am living a dream," said his mother, Nguyen Thi Be, the 23-year-old daughter of a Vietnamese rice farmer.
Lory's rags-to-riches story is the result of a vicious probate fight that erupted after the death four years ago of Larry Lee Hillblom, an eccentric American multimillionaire and founder of one of the world's largest air courier services, DHL Corp. Although they never met, DNA testing has proved that Hillblom was Lory's father.
Fifty-two when he was killed in the crash of his seaplane on a Micronesian island hop in May 1995, Hillblom left behind a $550-million estate, a flawed will, a business empire that stretched from the United States to Vietnam, and the seeds of a legal war fought by more than 200 attorneys in courtrooms from the island of Saipan to San Francisco.
"It has wrecked a lot of relationships because just about every attorney in Saipan is somehow involved in this case, and the allegations and accusations have been pretty intense," said Ed Calvo, a Saipan attorney who has represented the estate in the case.
In March, fearful for Lory's safety in Vietnam, attorneys John Veague and Garrick Gallagher spirited him and his mother out of their homeland to a small town on the Eastern seaboard. The Times has agreed not to divulge the location.
Three other heirs--like Lory, the children of young Asian bar girls whom Hillblom paid for sex--remain abroad, where lawyers, relatives and guardians continue to fight over their windfalls.
Also waiting for the money to be distributed is the University of California. Hillblom's 1982 will left his fortune to a charitable trust, instructing that "substantially all" of the money should go to medical research, with "special consideration" for UC programs.
But UC's hopes of inheriting all of Hillblom's money were dashed when one young Southeast Asian bar girl after another stepped forward, claiming that Hillblom had fathered their children. They told tales of Hillblom, a lifelong bachelor, trolling bars in the Philippines, Vietnam and Micronesia, offering teenagers money in exchange for sex.
The ensuing legal fight pitted the trust and the state of California--which was fighting for UC--against Hillblom's children. It has produced a stack of court motions one lawyer estimated stands 7 feet high, and required the services of lawyers specializing in taxes, estates, civil trials, real estate, business, contracts and trusts. At least 10 attorneys have been hired for each child.
More than 100 attorneys have worked on behalf of the estate. There have also been accountants, auditors and scores of support personnel. So far, attorneys have tapped the estate for $25 million, with millions more to come.
"There have been aggressive lawyers, a will that left open the possibility for a fight, kids, charity," said Karen Johnson-McEwan, an attorney representing Hillblom's trust. "Lots of people had lots to fight for, and when there is a lot of money at stake, people fight harder."
The basis for the monumental legal fight was the law in Saipan, an international tax haven 1,000 miles off Japan's southeast coast that was Hillblom's home. At the time of his death, Saipan law entitled a child born after a will was written to the parent's estate. That gave Hillblom's illegitimate children the right to lay claim to his entire fortune.
Four years later, the legal maneuvering continues. But all sides say the battle appears to be winding down. Late last month, Hillblom's estate disbursed the first $50 million of his fortune, splitting the money between the trust and the four children his will never mentioned.
The rest is expected to be doled out by year's end. The children's share is an estimated $300 million, but they will pay about $180 million in federal estate and income taxes. The trust will receive $200 million, tax free. The rest has been put in accounts for the children and the trust.
Peter Donnici, one of five directors of the trust, hopes to begin making the first charitable grants this summer.
"The heat of the battle has so cooled that it gives me hope that we're all going to see that it is time to quit fighting and put Larry's fortune to the uses he wanted," said Donnici, a longtime friend and legal advisor to Hillblom.
The UC regents still hope to receive much of the trust's $200 million, said Eric Behrens, a UC attorney. "It could certainly be the largest bequest we've gotten," he said.
Reaching a Settlement
At first, it seemed unlikely that the children could prove their claims to Hillblom's money. No trace of Hillblom's body was found after the plane crash. His live-in girlfriend in Saipan--acting, she said in a sworn deposition, on the instructions of one of Hillblom's business associates--gathered all his personal belongings that might contain DNA and disposed of them.
But two years ago, after DNA tests showed that four of the eight children whose mothers had filed claims shared a common father, the estate agreed in a settlement to the 60%-40% division between the children and the trust. Subsequent DNA testing of blood samples from Hillblom's mother removed any remaining doubt that the children were his.
The deal has survived, although at times it seemed close to unraveling.
In October, Saipan Judge Alexandro Castro ordered investigations into the financial arrangements each group of attorneys made with the children they represented, after court testimony revealed that much of the $145,000 paid by the estate to one child had been squandered. In court documents, Mercedita Feliciano was described as being in debt, her money mishandled by her attorneys, her grandmother and 20 relatives who quit their jobs when the toddler began receiving support payments from the estate. All four children are living on $5,000-a-month support payments from the estate as they wait for the legal wrangling to end.
Lory's eldest half-sibling, 14-year-old Junior Larry Hillbroom, lives with his grandparents, who have custody, on the Micronesian island of Palau. Four-year-old Jellian Cuartero is living with her mother in Saipan. Mercedita Feliciano, 3 1/2, is in the Philippines in the custody of the grandmother who, court documents say, sold the virginity of Mercedita's 14-year-old mother to Hillblom for about $2,200.
When the legal battle became poisonous, Lory's lawyers began moving him and his mother from one safe house to another in Vietnam. At one point, one of Veague's assistants in Vietnam told the attorneys he had been offered $500,000 by a Vietnamese lawyer to hand over the mother and child.
Finally, Veague and Gallagher moved Lory and his mother here. Last week, Lory won U.S. citizenship, and Veague believes the child will stay.
Dressed neatly in chinos and a striped crew shirt, Lory seemed the picture of normalcy as he greeted a visitor in the sparsely furnished, two-story brick rental home where he and his mother live with their translator.
"He is happy here," said his mother, nodding with approval as her son picked his ABCs out of a children's book and squeezed a squeak from Barney's rubber tummy.
For too many years, Nguyen said through an interpreter, their lives were more nightmare than dream.
She was one of eight children born to a poor rice farmer in a village outside Phan Biet, a resort where Hillblom owned hotels. She grew up in a house with no electricity and a dirt floor. Sometimes, there was not enough food, Nguyen said.
By age 13, she was working as a maid, then later as a cook and a nanny to earn money for the family. Eventually, she landed a waitressing job in a Phan Biet hotel restaurant owned by Hillblom.
Soon the reed-thin Nguyen--a striking woman with waist-length black hair and a soft voice--caught Hillblom's eye.
Born in the Central California town of Kingsburg, Hillblom founded DHL Corp. shortly after graduating from Boalt Hall Law School in the 1960s. It quickly grew into an international corporation that grosses $3 billion a year and employs 35,000 people.
In the 1970s, Hillblom handed over management of the firm to others and headed for Saipan to enjoy his wealth and launch new business ventures.
'He Was Funny and Nice to Me'
For the next two decades, Hillblom invested in resorts, hotels and golf courses in southeast Asia. He built a mansion on Saipan, collected cars and vintage airplanes and dabbled in politics.
He also spent a lot of time trolling the bars and dance clubs of East Asia, paying a network of women to find ever-younger virgins with whom he would have unprotected sex, according to the sworn testimony of witnesses in the estate battle.
By the time Hillblom met 18-year-old Nguyen in 1993, his face was badly scarred from an accident that year.
"He was not handsome," Nguyen said. "But he was funny and nice to me."
Nguyen spoke no English. Hillblom knew only a few words of Vietnamese. He wore jeans and T-shirts, and she had no idea he was a multimillionaire.
Hillblom saw her often, and was happy when she told him that she was pregnant, Nguyen said. Shortly before Hillblom died, Nguyen showed him pictures of his infant son, and he promised to give her money to support him. Nguyen's next news of Hillblom was that he was dead, she said.
Desperate for money, Nguyen went back to the restaurant where she met Hillblom and told a friend on the staff that she was the mother of Hillblom's child, she said. He contacted an attorney who represented some of Hillblom's business interests in Vietnam, and in 1997, the attorney introduced Nguyen to her cousin, attorney Veague.
"I met with her," Veague said, "and there was a dignity about her. I believed her story."
Now that Lory and his mother are in the United States, Veague said, he is determined that they will be prepared to handle Lory's fortune, which may double in size by the time he is 18.
Nguyen is taking English lessons, and every legal document is translated into Vietnamese for her. Lory is enrolled in a church-run preschool, and his mother dreams of him going on to college and becoming a businessman like his father some day.
For now, she has told her son only that his father was an American and that he is dead.
"He is too young to understand more," she said.
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A legal battle in Saipan over the estate of multimillionaire Larry Hillblom may be winding down. He lived on the island whenhe died four years ago.