King Larry

by James D. Scurlock

  Of paramount concern was the shell game that Hillblom’s friends were now playing with the estate’s largest asset. Po Chung, Hillblom’s original nominee and now the head of DHL in Asia, was president of a Bermuda-based company called Monterrey, which held Hillblom’s shares in DHL, International. (Monterrey, it had been revealed, had received $142 million in dividends from DHL, International as part of the Polar Bear Deal, plus 32,000 shares of the new DHLI, of which it was agreed that 24,000 shares belonged to Hillblom.) Theoretically, Po should have owed the Hillblom Estate in excess of $200 million, because Hillblom had immediately “sold” his stake in Monterrey to Po for that amount. But through a Hong Kong law firm, Po claimed that his debt with Hillblom had been settled as follows: $106 million in DHL, International shares; $50 million for 90 percent of Danao International Holdings, the Vietnam holding company; $42 million in a wire transfer to Hillblom before his death; $4.4 million in shares of a DHL affiliate called Dumbleton; $8.8 million in deposits to the JAL/Lufthansa/Nissho Iwai indemnity fund, an escrow account that had been set up to protect DHL’s investors from unwelcome surprises; and $25.7 million in DHLC Class “B” shares. According to Po’s math, he had paid back a total of $246.9 million on an original debt of roughly $226 million. He readily admitted to having no written proof of any of this. “One of the significant ingredients of the formula which built DHL from scratch into a multibillion dollar international corporation and which Larry and I shared with the other DHL principals,” Po explained in an affidavit, “is the ability to delegate.”

  But untangling the Monterrey deal was only a starting point in understanding what Hillblom’s stake in the company he’d founded was worth. Because both DHL corporations possessed the right to buy the estate’s shares at “fair market value,” it was in their best interest that fair value be as little as possible. So too with UMDA, where Joe Waechter, the estate’s executor, was also chairman. Even Hillblom’s stake in Continental Airlines, a public corporation whose shares are traded every day on the New York Stock Exchange, were held in a limited partnership and required the approval of his partners, including DHL, to sell. Hillblom’s real estate holdings were even more problematic. The ranch in Half Moon Bay was owned by three separate corporations; the land holdings on Saipan were tied up in title disputes; the Vietnam properties, meanwhile, were bleeding cash, and banks were unwilling to finance potential buyers because of the communist government. Meanwhile, rumors of nominees stealing the assets Hillblom had placed in their name abounded, as did a long list of rumored assets that had not shown up on Waechter’s official inventory.

  “We don’t necessarily know what they got away with,” Dotts tells me, echoing the sentiments of not only David Lujan and Randy Fennell back then, but also Yeoryios Apallas, whose job, after all, was to protect the State of California’s bequest and not Hillblom’s friends. “There was another golf course in Vietnam that Larry had been involved with. I’m not sure what happened with that. There was a building in Hong Kong that he pointed out to me: ‘That’s my building.’ But on the inventory, no buildings had shown up in Hong Kong, so there was kind of issues as to what happened with that stuff.”

  But Hillblom had also left more than a few liabilities. Dozens of claims ranging from the expected to the absurd had formed a pile on Waechter’s desk. One of the largest was the income tax bill from the CNMI Department of Finance. There was also an unpaid medical bill of $2,501.20 due to the Commonwealth Health Center for treatment of Hillblom’s injuries in the Cessna crash a year and a half before. There were demands that millions of dollars in personal guarantees for business loans be suddenly honored in full. There were sizable claims from Donnici and his legal associates for deferred compensation in the form of shares of Continental Airlines and DHL—shares they claimed that Hillblom had promised them in lieu of cash but which he had never delivered. There was an extraordinary claim from a Saudi prince for $15 million for something called share appreciation rights, as well as an emotional plea from John Spice, the loyal Englishman who was tending to the ranch in Half Moon Bay; he now claimed that Hillblom had promised to secure his green card and set up a pension. Carla had hired a lawyer to recoup more than $200,000—an unpaid loan and mortgage payments she’d made on the Kaneohe house in the early seventies, when they had lived there together. And Bruce Jorgensen, Hillblom’s former lobbyist who had pulled him from the Cessna wreckage in 1993, had filed two personal injury claims as a result of that accident—one for himself and one for Adonis Gotas, the mechanic. Jorgensen was demanding $150 million in each case. Finally, the estate’s legal fees were piling up at a rate of over $1 million per month. The costs of tax experts, investment bankers (to value the DHL shares independently), and accountants would add millions more.

  Meanwhile, the only two things that might still settle who should inherit Larry Hillblom’s estate relatively quickly had both stalled. The Hillblom Bill was still loitering on the governor’s desk, unsigned, and the mole was resting at a lab in Northern California, untouchable as Lujan, Fennell, and the estate’s attorneys squabbled over testing protocol.

  On the early side of spring, an exasperated Randy Fennell telephoned Lujan with an ingenious (and inexpensive) way to break the legal stalemate: the three children and their mothers would submit to DNA testing, then the results would be cross-tested in order to establish siblingship. Once it was proven that Mercedita, Jellian, and Junior shared a common biological father, the identity of that father would be obvious: Larry Hillblom. Lujan and Israel were intrigued, but Lujan ultimately said no because he did not believe that the two Filipina girls could be Hillblom’s. How, he asked Fennell, could one explain the thirteen-year gap between Junior’s birth and the births of the two Filipinas? And if the children did not match, as Lujan expected, the sibship testing would only serve to weaken Junior’s case, not strengthen it.

  When the FILC attorneys found out that Lujan and Israel had rejected a second settlement opportunity, their already fragile partnership finally came undone. Lujan informed his partners that he had fulfilled his obligation of investing $250,000 into the case; if they wanted to continue their profit-sharing arrangement, he told them, everyone would have to contribute another $13,000 per percentage of the settlement that they were entitled to. A little later, Barry Israel faxed a sternly worded letter to Roland Fairfield, the FILC partner in charge of DNA, relieving him of those responsibilities; henceforth, he wrote, David Lujan would be in charge of DNA and the FILC was prohibited from taking any action without Israel and Lujan’s consent. Fairfield responded by relieving Lujan of most of his duties; Ross Putnam, the FILC partner who had become Kaelani Kinney’s boyfriend and drinking buddy, would now be Junior’s “main lawyer.”

  In several pages dripping with sarcasm and contempt, Lujan abruptly resigned. He passed the torch—as well as his schedule, including three separate briefs and oral arguments due in a single day that month, besides lobbying Froilan to veto the Hillblom Bill—to the FILC via fax. “I’m sure that you will get an audience with ease and he will be receptive to your legal arguments,” Lujan wrote of the governor, who still had one month to decide whether or not to sign the bill into law. As for Castro, Lujan cajoled, “I’m sure the Court will be looking forward to the brilliant oratory and masterful briefs you guys are capable of,” before reminding them that they would also have to respond to Peter Donnici’s Supreme Court appeal of the special master hearing. And, he added, “You should be prepared for a protracted all out war on who the next Executor should be. I predict this to be bitter and acrimonious and to last at least a week. Who the Executor will be has tremendous impact on whether Junior gets a good settlement offer. But, I’m sure you don’t need me to tell you this.”

  Then Lujan moved on to the valuation of Hillblom’s estate, particularly the DHL Corporation and DHL, International shares, whose “fair market value” would be determined by a judge in California and an arbitration proceeding in Paris, respectively. “Next to the issues of paternity,” Luj
an wrote, “this is probably the most important issue in this case. You must hire an expert, preferably a big Banking institution or someone like Goldman Sachs to review and dispute the depressed valuation which is tentatively being proffered. Once these cases are removed to Saipan and the Court schedules a valuation hearing, be prepared to be inundated by thousands of pages of reports and to be in a hearing which will last 2–4 weeks. I’m sure you’ll be up to it, finances being one of your fortes, and have tremendous fun with it. Further, you should be prepared to spend $100,000 for your experts alone.”

  Of course, Lujan continued, these were only two of many other important actions that the FILC would now be litigating, including arbitrations concerning Hillblom’s stock in the Bank of Saipan, Saipan Cattle, and UMDA, all of which would have to be liquidated. “Remember,” Lujan admonished, “Junior’s claim is to the entire Estate and you have an ethical obligation to monitor and attend these proceedings.”

  As if his to-do list was not yet overwhelming, Lujan attached a proposed schedule of depositions that Yeoryios Apallas had just submitted to the court. If Castro approved these, and Lujan expected that the judge would, then at least one member of the FILC would have to travel to Saipan, California, and Brussels in order to attend. “It will be fun to go to all these places and live in hotels but I suspect each party will have to bear his/her costs,” Lujan opined, before warning that these were “just a few” of the issues that the FILC would now have to be on top of in order to avoid liability for “unwarranted diminution” of Junior’s interest in his father’s estate. Oh, and of course they would need to file for pro hac vice* immediately as Junior’s new lead attorneys; otherwise, Castro would not allow them to present oral arguments in his courtroom.

  With that, Lujan wished his former partners good luck and announced that he was going on a “well-deserved” vacation. Then the irascible boonie dog added a parting shot:

  P.S.: When I return, expect to be served with a lawsuit from my attorney for breach of contract unless this matter is resolved to my satisfaction. And, don’t try for an easy settlement simply because you don’t want to spend the time and money—I will not allow this to happen to Junior!

  Forty-Eight

  Celebrities

  In theory, there were plenty of reasons for Lujan to visit Koror, Palau, as he did a short time after “resigning” Junior’s case. The island paradise was only a two-hour flight from Guam—on Air Mike, an asset that might soon be owned by Junior. The estate also owned Palau’s cable system, as well as several large parcels of undeveloped land—the largest of which was tied up in litigation—and a good-size yacht docked in front of the Pirate’s Cove, a waterside dive bar that had been favored by Hillblom and his politician friends.

  But Lujan had not come to check up on the estate’s investments, nor to dive in the archipelago’s famed Jellyfish Lake, nor to enjoy a jaunt to the impossibly lush rock islands, as most wealthy tourists did. His destination was a small concrete block home framed by a tin roof and a small yard that sat just a few feet off of the main two-lane artery connecting Palau’s airport with the handful of luxury hotels on-island. As in most such homes, a few chickens grazed the yard in back, while a single fighting cock paced impatiently, its neck tied to a post, awaiting its next fight. The cock was Junior Larry Hillbroom’s prized possession. The home belonged to his grandparents, the Imeongs.

  Naoko, Junior’s grandmother, had raised the boy, but her daughter Kaelani, as his coguardian, had made most of his legal decisions—including who represented him. (Junior seemed more concerned with his fighting cock and spear-fishing than with the probate.) The gentle half-Japanese Naoko seemed uncomfortable in a legal war, particularly one involving copious amounts of money and sex. Years before, she had admonished Kaelani not to sue Hillblom for paternity when her daughter had learned his true identity. Palauans did not air their dirty laundry in public, like Americans, the old woman had lectured, though Naoko had hung a portrait of Larry above the mantel in their tiny home so that Junior would always know who his father was. Now, with her daughter living on Guam with her latest boyfriend, Naoko was shuttling Junior back and forth to Saipan for court hearings and praying for a quick resolution of his case. The estate’s lawyers were ripping Kinney’s reputation to shreds, calling her a prostitute and a drug addict. No wonder her daughter, always something of a wild child, was becoming indignant, paranoid, and increasingly violent. Naoko did not want to become rich; she just wanted it to end, with Junior acknowledged by his father’s estate and her family’s dignity intact. But none of the attorneys would listen to her.

  When David Lujan showed up at Naoko’s doorstep, she greeted him warmly. The attorney had already become something of a father figure to Junior—a positive influence, a role model. Three days later, Ross Putnam received a fax that she had terminated the FILC’s services. She had hired Lujan as Junior’s lead attorney.

  The FILC lawyers collectively howled that Naoko could not fire them. As coguardian, they said, she lacked the authority to do so unilaterally. But that did not mean that they didn’t want Lujan as Junior’s lead attorney. In fact, whenever they could get hold of Lujan, they were pressing him to agree to a new addition to their legal team: Mr. “If-the-glove-does-not-fit-you-must-acquit” himself, Johnnie L. Cochran Jr.

  Lujan knew what that meant: his estranged partners had finally hit the panic button and run to a celebrity attorney, believing that Cochran’s fame was a magic bullet that would knock the Hillblom Bill off the governor’s desk, cut through the brick wall erected by Hillblom’s former business associates, and bring the parties to the settlement table.

  But it also meant that they had called Lujan’s bluff. They knew that he had no intention of quitting.

  The trouble was that Lujan was not bluffing. Nor would he cave in to being replaced by Johnnie Cochran Jr.—or anyone else. When one of the FILC partners called, pleading for him to talk with “Johnnie,” Lujan was cool. He wasn’t necessarily opposed to Cochran’s coming on board, he told them, especially if he could bring some money to the table. But, he added, Castro would never approve Cochran’s hefty fee—an additional 8 percent of Junior’s settlement. Nor would Lujan relinquish his title; if Cochran was brought on as lead attorney, Lujan warned them, he would sue them all for breach of contract.

  The next day, Lujan received a letter from the FILC claiming that Governor Tenorio would not sign the Hillblom Bill if Cochran was involved, fearing the “worldwide media attention” that a member of O. J. Simpson’s “dream team” would attract. Lujan knew the reality was just the opposite: a stateside celebrity like Cochran meddling in the CNMI’s internal affairs would guarantee that the fiercely independent Froilan signed the bill. Tenorio hated the feds and the stateside attorneys even more than Larry Hillblom had. Anyone who knows anything about Tenorio, Lujan shot back, knew that he would not be intimidated by Johnnie Cochran.

  As usual, Lujan was right.

  On the morning of June 9, 1996, Governor Froilan Tenorio finally picked up one of the thick ballpoint pens on his desk and signed the Hillblom Bill into law. He might have allowed the moment to pass quietly, considering that the bill had been unanimously condemned by the government’s legal experts, including his own attorney general—whom he’d subsequently fired—and considering that he was a well-known womanizer himself. Instead, the irrepressible Froilan issued a statement that celebrated the dubiousness of his decision. “Although this Bill had a number of serious defects,” he wrote in an open letter, “I signed it with the understanding that the Legislature is willing to take the necessary action to correct those defects in new legislation.” As it turned out, the governor’s reluctance had not been due to the bill’s questionable constitutionality—in the letter he congratulated both himself and the Legislature for ignoring the advice of legal counsel—but instead due to its failure to extract a windfall for the government, which, despite hundreds of millions in federal aid, always seemed to be broke. “Since one of the policy goal
s behind the Bill was to capture some income from the Hillblom Estate,” Froilan wrote, “I trust the Legislature will take the necessary action to amend this provision at the earliest possible date.” Only then did the governor speak to the public interest: by disinheriting Larry Hillblom’s potential heirs, he asserted, the Hillblom Law would encourage other fathers to recognize their illegitimate children during their lifetime and provide for them in their wills.

  Curiously, no one faulted the governor’s bizarre logic. They faulted one another, and they faulted Johnnie Cochran. (Although they could not agree whether Froilan had signed the bill because of the celebrity lawyer’s presence or because of his absence.) FILC partner Jack Avery immediately announced that their savior was now definitely coming to Saipan—with or without Junior’s lead attorney. “Johnnie Cochran is willing to work with Naoko and attorney Lujan,” Avery wrote in a fax addressed to a personal attorney that Naoko had been forced to retain, “but is prepared to proceed without them if necessary.” Cochran’s arrival was confirmed a few days later in the Guam Daily News, which announced—on the front page—that Lujan had been replaced.

  Israel immediately flew to Los Angeles and met with Eric Ferrer, Cochran’s right-hand man. He explained that he and Randy Fennell were both already preparing appeals of the Hillblom Law to the CNMI Supreme Court, and how Cochran’s entrance into the case would only complicate a delicate situation. The last thing anyone needed was a famous statesider creating a media circus and offending the local judiciary at such a time. Israel admonished that the mere threat of Johnnie Cochran had provoked Tenorio into signing the Hillblom Law to begin with. But Ferrer told him that he and Cochran were definitely coming. They’d already booked their tickets.