King Larry

by James D. Scurlock

  When I confirm that, yes, I am James Scurlock, he extends his right arm and introduces himself as Peter Woodruff.

  Now I realize that every attorney on-island is aware of me, especially those who have pointedly ignored my presence. Woodruff hands me his card, offers that if I ever want to talk about Larry, he’d be glad to meet with me. After being ignored for so long, it’s a welcome bit of luck; Woodruff was the CNMI Senate’s counsel at the time that House Bill 10–147, soon to be known as the Hillblom Bill, was introduced to the CNMI Legislature by Oscar Babauta.

  Days later, I climb the steps of Woodruff’s law office—a modest two-story converted home across from the Saipan Cathedral that he shares with Joe Hill, Junior Larry Hillbroom’s local counsel. From behind a desk piled with briefs and law books, Woodruff recounts his arrival on Saipan as a Peace Corps volunteer before the Commonwealth came into existence, how he worked as a political adviser and hotel food-and-beverage manager before going to law school at a late age. Upon graduation, Woodruff says, he was immediately hired by the CNMI Senate. He was not one of Hillblom’s friends, but they knew one another as well as Hillblom seemed to know anyone and they’d even debated the Covenant from time to time. Hillblom had once invited Woodruff to join a flying school he started at the Saipan airport, but Woodruff (wisely) had declined. His admiration for Hillblom’s political skills becomes clear as he recounts how Larry used his money* and his intellect to shape the law here, particularly his success at protecting the CNMI’s tax rebate. Just as obvious is Woodruff’s disdain for Joe Waechter, David Nevitt, and Nevitt’s cronies at the Carlsmith firm. That they would contest Junior’s paternity, Woodruff says, is patently dishonest because it was common knowledge on Palau, where Woodruff’s wife was from, that Junior was Larry’s. Any denial of Junior’s paternity, Woodruff says with absolute conviction, must have been motivated by greed. But Woodruff saves his harshest criticism for the bill that Joe Lifoifoi drove up to Capital Hill in February 1996.

  “It was just the worst piece of legislation!” Woodruff shakes his head. “The purpose of the Hillblom Bill was to cut off all of these claims. That was the intent. And the problem there, as all of the attorneys up there [at the Legislature] agreed, was that when Larry died, the rights of the heirs vested. And for the Legislature to come in later on and to change the rules and redefine who qualifies as a pretermitted heir so as to cut off all of these people is a violation of due process. And even equal protection. You can analyze it in a couple of different ways.”

  Of course, Peter Donnici and the estate’s attorneys both took exception to this theory. The Hillblom Bill, they argued, was simply a procedural change, meaning that nothing substantive had been altered, so it could not have been altered retroactively. And Donnici had found at least one legal legend to agree with him: Charles Alan Wright, the nation’s foremost expert on civil procedure and constitutional law. Wright was the author of Federal Practice and Procedure, a text that most of the Commonwealth’s young attorneys, including Woodruff, had studied in law school. “I was appalled by that!” Woodruff says. “I was going, ‘Professor Wright was willing to stoop that low?’ And for what? For money would be the only reason for doing it. So, you know, that’s one of those things that really makes you wonder, too, about the integrity of the system, because this is one of the most respected commentators on the law in the country and he’s writing an affidavit like that in connection with this case. You know, you wonder, when large amounts of money are involved, what happens to people’s judgment?”

  That sentiment was echoed by several legislators, including Representative David Apatang, during its rushed debate on Capital Hill. “I do not see the urgency to pass this bill now,” Apatang said in open session. “Why are we changing the law all of a sudden?” He implored his colleagues to protect the many, the CNMI’s illegitimate children, rather than “the livelihood of those children whose fathers deny them their true identity.”

  But Apatang and Woodruff were in the minority back then. Over the objections of its own counsel, the CNMI House passed the Hillblom Bill on its first reading in late February 1996, after suspending the rules so that a legal opinion was not necessary. It sailed through the Senate on a 6–3 vote several weeks later. The Senate required a second reading when the bill encountered a stubborn headwind: Woodruff’s refusal to rubber-stamp the law for “legal sufficiency,” as required by law. After the final vote, Joe Lifoifoi and a Bank of Saipan board member high-fived in the Legislature’s gallery, where they’d watched the vote through a glass picture window. Lifoifoi joked that the bill should really be called the “Lifoifoi Law.”

  But the difficult part still lay ahead. In order for the Hillblom Bill to become the Hillblom Law, Lifoifoi would need to obtain the signature of the governor: Froilan Cruz Tenorio.

  Froilan, as everyone calls him, was known to be unpredictable and something of a maverick. He had not graduated from the University of Guam like Lifoifoi and most of the other Micronesian elite. Nor had he been involved in the Congress of Micronesia or the drafting of the Covenant. Froilan had attended Marquette University in Milwaukee, graduated with a civil engineering degree, and then worked for the City of Los Angeles for five years before starting his own construction company in Saipan.

  And unlike most members of the Legislature, Froilan had not been a friend of Larry Hillblom’s. In fact, he had originally lost the governorship to Hillblom’s good friend Larry Guerrero, winning only after he created his own political party based on libertarian principles. Like most politicians, however, Froilan had sparred with Hillblom over the interpretation of the Covenant. If the United States wanted to claim sovereignty over the CNMI, Froilan had admonished Hillblom, that was fine with him and most islanders. Ditto for foreign policy. In Froilan’s view, all the islanders wanted was a chance to run their economy in a way that made sense for them and not for New York City. During his single term as governor, Froilan tripled the number of sweatshops on-island and rejected tens of millions of dollars in federal aid, in the hope that the U.S. Congress would leave him alone.

  In the spring and summer of 1996, as Joe Lifoifoi lobbied him relentlessly on Capital Hill and at barbecues, Froilan made it clear that he was in no hurry to do Larry Hillblom’s estate a favor. The governor was focused on other matters, like protecting the island’s profitable garment industry from stateside inspectors. When I meet Froilan twelve years later in a small café on Saipan, he feigns ignorance of the Hillblom Bill, though he allows that it sounds familiar. I will have to assume that neither Froilan nor his attorney general studied the Hillblom Bill’s single precedent, a copy of which thankfully resides in the Hillblom Law Library, bound in a collection of Supreme Court opinions now at my fingertips, curiously untouched.

  The case had begun in 1991, when the illegitimate son of a wealthy Chamorro landowner named DeLeon Guerrero had sued for a piece of his father’s estate in CNMI Superior Court. DeLeon Guerrero had never acknowledged his son, David Camacho, now a middle-aged man; nor, during his father’s life, had Camacho ever filed suit to prove his paternity. In fact, Camacho’s birth certificate had made no mention of a father at all.

  Camacho’s alleged half sister, who had been appointed executor of her father’s estate, had refused to allow him to participate in the probate and claimed that the CNMI law precluded him from doing so. Although she raised a number of objections to defend their father’s estate from his challenge, the overriding issue was whether or not Camacho could be considered an heir or simply an outsider with an unproven claim.

  Many islanders (including Joe Lifoifoi and Jess Mafnas) had illegitimate children whom they openly acknowledged and provided for. Being a bastard on Saipan was not as scandalous as it might be in parts of the United States, with its quasi-puritanical values, or in the Philippines, where President Corey Aquino had famously instructed hospitals to brand the birth certificates of illegitimate babies with a bright pink stamp. In researching the islands’ young probate laws, the justices discover
ed not only that Camacho had a right to participate in his father’s probate as a pretermitted* heir but that the court could establish a parental determination. And since Camacho’s rights had vested at the time of his father’s death, disallowing him from the proceedings would be unconstitutional, not only violating due process but denying the son a vested property right—exactly as Woodruff had explained to me earlier.

  In its final opinion, the Supreme Court determined that Camacho’s claim was “more accurately described as an heirship claim under probate proceedings rather than a paternity claim.” In the CNMI, an illegitimate child was thus officially an heir, not a claimant. Camacho’s incomplete birth certificate was disregarded as irrelevant. CNMI law, the court stated, “recognizes that the natural father of a child, under certain circumstances, may be different from the husband of the child’s mother or what is stated in the child’s birth certificate.”

  The decision was signed by Special Judge Larry Lee Hillblom, with the two other judges concurring.

  Forty-Six

  Reinforcements

  “There’s always been a history of racism,” Mike Dotts throws out during one of our long beachside lunches. “That, you know, the people on the island sleep under coconut trees and really don’t know anything about the law or the legal system. So, quite often, attorneys arrive from overseas to kind of teach us the way things work, and, quite often, they’re handed their hat and they end up leaving with their tail between their legs. Historically, off-island hotshots have not done well on Saipan.” Out of the dozens of stateside attorneys who became involved in the Hillblom probate, Dotts is referring to one in particular: Yeoryios Apallas.

  Apallas, a bearded and dapper Greek immigrant fond of seersucker suits and fedoras, is now general counsel of a beer distributor; he works out of a nondescript two-story suburban office building just north of San Francisco—thirty miles south of the Larry Lee Hillblom Foundation’s headquarters in Petaluma. In the spring of 1996, however, Apallas was employed by the California Attorney General’s office in Sacramento. His business card read: “Deputy Attorney General/Charitable & Trusts Division.” Part of Apallas’s job was to ensure that philanthropic organizations received the funds bequeathed them by rich Californians.

  Until February 1996, Apallas had never stepped outside of the state in an official capacity, nor had his boss or any of his fellow deputy attorneys general. But that month he received a phone call from the counsel to the University of California Board of Regents, who himself had been contacted by someone involved in the probate of Larry Lee Hillblom, the founder of DHL and member of the Forbes 400. Hillblom, the Regents’ attorney told Apallas, had died in a plane crash the previous summer and had left his fortune to a trust that he had instructed to fund medical research within the University of California system. However, events on a tiny island in the Western Pacific were conspiring to deny the UC system its windfall.

  Apallas was overnighted a copy of CNMI Superior Court Case 95-626: In the Matter of the Estate of Larry Lee Hillblom. Poring over the thousands of pages of motions, pleadings, and affidavits, as well as Rex Kosack’s Special Master Report, the deputy AG discovered a probate in crisis. An attorney named David Lujan was filing pleadings loaded with ad hominem attacks against both Joe Waechter, the executor, and Peter Donnici, the chairman of the Hillblom Charitable Trust; his latest referred to Hillblom’s former associates as “rascals.” Emergency motions were being filed on a nearly daily basis and for the most pedestrian of reasons. DNA samples had been collected but no testing protocol had been established, nor was it clear that any of the samples, mainly snippets of bloodstained sheets from Hillblom’s ranch in Half Moon Bay, were usable. The judge, an islander named Alex Castro, seemed unsure as to whether the estate could legally defend itself against paternity claims and he had allowed an inordinate number of attorneys, claimants, and experts into the case as “interested parties,” generating hundreds of pages of pleadings a day and allowing hearings to last for twelve hours or longer. On top of all this, the estate was insolvent. Peter Donnici’s attorney had summed it up neatly in one of the more recent briefs splayed across Apallas’s desk: “The proceedings with respect to the probate of Larry Lee Hillblom’s Estate are in a state of disarray.”

  Apallas’s first conclusion was that the judge had utterly lost control; such a large and complex case, he figured, required a larger and more sophisticated venue—preferably a California court. It also needed a viceroy to police the warring factions, a role that, the more Apallas read, the more eager he was to play himself. But when Apallas brought the case to his boss, a staunchly conservative and deeply religious man named Dan Lungren, the AG did not share his enthusiasm. Sending attorneys to Saipan would be expensive, Lungren knew, and few voters would understand the benefit of getting involved in a probate halfway around the world. And even if they did understand, taking sides on behalf of an alleged pedophile against poor young women and their babies was certainly not the kind of street fight that a politician—or a religious man—like Lungren would be eager to join. But Apallas persisted. Estimates of Hillblom’s net worth were rising by the day. At minimum, the trust established in his will would provide hundreds of millions of dollars for medical research—perhaps enough to fund a major breakthrough or even cure a disease. To sit back and allow that money to be snatched off the table by a bunch of greedy lawyers on a tiny island in the middle of nowhere would be immoral.

  By the time Lungren finally caved, Apallas had prepared his first, supremely confident, pleading—a document so pretentious and grandiose that it purported to reframe the entire probate in the estate’s favor. According to Apallas, Hillblom was “a great and generous man—a global visionary—who wanted to improve the quality of life for all mankind.” Peter Donnici and Joe Waechter were “well-meaning friends” who had been a little clumsy. Rex Kosack, meanwhile, had produced an “extraordinary document,” but it was also “fundamentally flawed” because the three children suing the estate could not legally be considered beneficiaries until they proved their biological relationship to Hillblom. In fact, before Apallas had set foot into Castro’s courtroom, he had already coined a new term for Junior, Mercedita, and Jellian: presumed beneficiaries. As such, Apallas wrote the court, they were owed nothing whatsoever.

  But the deputy attorney general’s pleading went much further. The estate not only possessed the right to defend itself from paternity claims, Apallas admonished Castro, it was obligated to do so. In fact, if the estate did not fight back hard enough, Apallas wrote, the AG’s office might sue the Bank of Saipan and its attorneys for negligence. But Apallas concluded his missive on a conciliatory note: “The protagonists in the Estate should sheath their swords and get down to doing what is best for the interests of Larry Hillblom’s Estate and the vision he left behind. . . . March we all must do. . . . Let’s get the business of who did what to whom behind us. . . . Let’s get down to the business of getting this money to work for mankind as Mr. Hillblom had intended. Larry would have expected nothing less from us.”

  Apallas’s missive landed on Saipan to a reception that might have awaited a giant turd. Randy Fennell demanded that “Mr. Apallas should promptly identify any authority on which he relies in support of his contention that the California Attorney General can go wandering around the United States and its possessions looking for large probates to intervene in.” David Lujan implored Castro to throw the deputy attorney general’s letter into the trash can—“where,” he scoffed, “it belongs.” Both attorneys called out the hypocrisy of an attorney general demanding to enter a case without local counsel, as required by law. But on this last point, Apallas’s excuse was incontrovertible: there were, he observed, no attorneys left on Saipan who were not already involved in Hillblom’s probate.

  Forty-Seven

  Feeding Frenzy

  One can only conclude that Donnici and Hillblom had been in a criminal conspiracy regarding trading with the enemy [in Vietnam] and the conspiracy continue
s to today with the assistance and connivance of Waechter. . . . Their secretiveness speaks volumes.

  —Barry Israel, January 1996

  Castro invited Apallas into his already overcrowded courtroom a week later. Once inside, however, the deputy attorney general realized that the documents he’d studied had not told the whole story. The most contentious question swirling around Hillblom’s probate was not the validity of Rex Kosack’s Special Master Report or the constitutionality of the Hillblom Bill or whether the “mole” should be tested or whether Larry Hillblom was a criminal, for that matter. What all the parties really wanted to know was: How much was Larry worth?

  Officially, the number was $422 million—the sum of Joe Waechter’s latest inventory. Slightly more than half of that amount derived from Hillblom’s shares in DHL Corporation and DHL, International; the rest was a hodgepodge of Hillblom’s other investments: UMDA, Vietnam, Continental Airlines, cellular licenses, and real estate, including the huge ranch in Half Moon Bay, an island in Greece, and a ski chalet in Méribel, France.

  But Waechter’s total was highly subjective; even he admitted that most of the numbers were little more than informed guesses. David Lujan saw something more sinister—a deliberate lowballing that would deliver Hillblom’s former business associates the windfall they had never received during his lifetime. How else to explain Waechter’s valuing Hillblom’s one-quarter interest in DHL, International—a fast-growing, $4 billion company—at just $126 million? Or a piece of property he owned near the Nikko Hotel for almost nothing, when Hillblom had collateralized it at $11 million a year earlier? Or the UMDA stock at $50 million, when Hillblom’s stake in Air Mike alone was probably worth that?