by Bill Dedman
Was this a good deal? There were more cons than pros to the proposal.
The annuity would serve Huguette’s desire to support Beth Israel, and would have provided her some income and a tax deduction. But an annuity is a very unusual financial instrument for a person of her age, and a charitable gift annuity is a blunt instrument for someone of Huguette’s high net worth. It wasn’t the most flexible way for her to donate to the hospital or to solve her cash flow problems. She would have no say in what happened to any property that she gave to the hospital, which it could sell as it wished.
And the deal was irrevocable. If the hospital, already in trouble financially, filed for bankruptcy, she might not get anything back. If she later became dissatisfied with the way the hospital was treating her, that would be too bad; the hospital would already have her money. And there was an inherent risk in trusting her healthcare to an institution that would enjoy the benefit of stopping paying her money as soon as she died.
Huguette didn’t fall for the proposal.
The hospital may have been somewhat relieved that she hadn’t jumped at its offer. Huguette would, in fact, blow away the actuarial charts, living 7.2 years more. Over that time, for every $1 million she would have given the hospital, the hospital would have paid her back nearly $800,000, diminishing the gift.
• • •
A crisis presented the hospital with one more chance to strike Clark copper. In early 2004, there were rumors that the Doctors Hospital building would be closed. A developer wanted to buy the hospital and tear it down to put up a high-end apartment building. Dr. Newman suggested to the chairman, Hyman, that they use this opportunity to get a “super-mega gift” from Huguette.
On May 11, 2004, Dr. Newman and Hyman visited Huguette. Dr. Newman wrote a note documenting his visit. He told Huguette that Beth Israel was almost sure to sell the building and that offers were in hand. The hospital wasn’t for sale, wasn’t being shopped around, but these offers were just too lucrative to ignore. Beth Israel would have to sell the hospital, and the patients would have to move.
Huguette asked to see a copy of the hospital’s financial statement. And she said she didn’t want to move.
There was one way she wouldn’t have to move, Hyman told Huguette. “A contribution in the neighborhood of $125 million would obviate the need to sell.”
The next day, in her medical chart, Dr. Singman wrote, “Expressing concern about having to leave her room here in the hospital.” Hadassah explained Huguette’s anxiety: “She don’t want changes. She used to that place. She loved that place. She liked the place. It is comfortable, she knew all the people there, all the nurses, and she is really happy in that place.”
Huguette’s choices as presented by Hyman and Dr. Newman were clear: If she did nothing, she would have to move. If she gave the hospital $125 million, or bought the building for that amount, she could stay.
This was a shakedown. On the street, such a payment is called protection money. In nonprofit hospital management, it’s called major donor development.
• • •
Beth Israel staff, from janitors to doctors, receive annual notices of the hospital policy on conflicts of interest. Gifts from patients are strictly forbidden. Accepting a tip is grounds for termination. Yet Huguette’s doctors and nurses were receiving millions in checks, and now the hospital’s leaders were holding up one of their most vulnerable patients for $125 million.
Beth Israel officials won’t answer questions about the hospital’s efforts to procure gifts from Huguette, or about their decision to let a healthy woman live in the hospital for twenty years. Attorney Marvin Wexler offered a general statement that the hospital acted in its patient’s best interests. Indeed, Huguette thrived at the hospital much more than she had in her last years at home. “The indisputable reality is that Beth Israel rescued Mrs. Clark from a secluded and extremely unhealthy existence that endangered her life,” Wexler said, “and then provided her a well-attended home where she was able to live out her days in security, relative good health and comfort, and with the pleasures of human company.”
Huguette’s reply to the $125 million request was “That’s a lot of money.” Hyman and Dr. Newman assured her they’d “never abandon her and that somewhere in the Continuum empire she’d find a home if she needed.” She told Dr. Newman that she would have to talk with her lawyer, that she’d have to think about their request.
Yet her answer gave them hope. Dr. Newman wrote to his staff that he’d gotten a similar answer when he’d asked her for a painting: “She came through with the Manet. So we’ll see this time.”
She did consider it. Two days later, she called Bock to ask if she could sell her Connecticut home to “buy Beth Israel.” He told her the property, worth perhaps $20 million, wouldn’t bring nearly enough for that.
She could have raised the money. She had more than $150 million in stocks, bonds, paintings, jewelry, and cash, in addition to more than $150 million in real estate. But she withstood the pressure. The shakedown failed. As desperately as she wanted to stay in the hospital, in that very room, she agreed to move.
Indeed, Huguette’s last donation to Beth Israel was in 2002, not counting money she left in her will. For the last nine years of her life, she repeatedly said no to its implorations. She gave nothing when Dr. Newman wrote her a letter asking for an annual donation in 2003. She gave nothing when he wrote again in 2004. She said no when they asked her to buy the building in 2004. She gave nothing when the new president of the hospital wrote to her in 2007 asking for $255,000. Beth Israel’s leaders had tried their best to exert their influence on Huguette Clark, but W.A.’s daughter stood firm.
• • •
So Huguette would move. But where?
Her first rule: no nursing homes. She told Dr. Newman that she didn’t want to go downtown to Beth Israel’s main hospital. She preferred to remain close to Madame Pierre on the Upper East Side. She sent her attorney and accountant to scour the city for other hospitals. Beth Israel officials did as Huguette asked, reaching out to those other hospitals to try to arrange a room for her. Huguette considered Mount Sinai, where her mother had died, up Fifth Avenue from her apartments. If she moved there, however, she would have to switch caregivers. Dr. Singman told her he “would have to discontinue my care for her” if she moved to Mount Sinai—it was too far from his home, he said. In fact, Mount Sinai is on the Upper East Side, the same as Doctors Hospital, and was only five minutes farther from his home in SoHo.
Hadassah told her the same: If she went to Mount Sinai, she’d have to get a new team.
The next day, she relented, agreeing to move down to the main Beth Israel hospital. She moved in July, just before Doctors Hospital closed. The next year, it was torn down to make way for multiple-story condo buildings.
The medical records show that Huguette was anxious leading up to the move, but Hadassah talked her through it.
A MORNING OUTDOORS
NOT ONCE in twenty years did Huguette take a walk or a ride in a wheelchair out to the parks near her hospital rooms. “We told her,” Hadassah said, “we can have some fresh air outside.… We have a wheelchair for you. Refused.” Her friend Madame Pierre said she urged Huguette to go out, but Huguette always changed the subject.
Huguette went outside the hospital a few times to see doctors and dentists, especially in the early years. But she was mostly in excellent health and was able to get her teeth cleaned inside the hospital.
Her last time outdoors was the day she transferred from the closing Doctors Hospital down to the main Beth Israel. It was a Tuesday morning, July 27, 2004, when Chris Sattler helped her into the ambulance for the five-mile trip from the Upper East Side. She didn’t take a long look at the old site of the Clark mansion or her apartments on Fifth Avenue or the Spence School. She didn’t see the Empire State Building or Central Park. She didn’t see a single bit of New York City on the fifteen-minute ride. The entire time, her eyes were covered, Chris said, by t
hose big patches that patients wear after eye surgery.
• • •
In her chart on the day of the transfer, Dr. Singman summarized her for the staff at Beth Israel: “She is terribly insecure, and a hospital room is her home from whence she rarely leaves.” He added one more note: “At present patient not pleased with her new surroundings, and is considering leaving.”
She didn’t leave, and now she had six nurses to watch over her. Hadassah cut back to an eight-hour shift, so more nurses were added. But because Huguette didn’t do well with new people—“She have to know you first,” Hadassah said—the nurses started doubling up, two per shift, so she would always see a familiar face if someone needed to leave early or take a day off.
Huguette’s room no longer had a view of the river. Her new room looked out on apartment buildings. She talked about how much nicer Doctors Hospital had been, though her shades were drawn most of the time anyway. Her new room was larger, a double room, though occupied by one patient. It was on the tenth floor of the hospital’s main circular building, called Linsky. Room 10L04 was decorated in standard late-century hospital tans and browns: wood closet of cheap laminate, tile floor, sink, bathroom, standard hospital bed with curtain for privacy, schoolhouse wall clock, modern armchair, nightstand with three drawers, fluorescent lighting.
Huguette had fewer visitors at Beth Israel than at Doctors. It was much farther from the apartment of Madame Pierre, who now visited only about every four to eight weeks. Though they still spoke on the phone every day, by 2005 Madame Pierre was showing the beginnings of Alzheimer’s, so their conversations became shorter.
Despite having fewer visitors, over these years Huguette became more open with strangers, more conversant. As she passed her hundredth birthday, in 2006, she began to leave her door open more often. She allowed her attorney Bock to visit, as Don Wallace never could. She shared French pastries and childhood stories with the nurses and other staff.
“She started coming out of her shell,” Chris said. Her time in the new hospital “re-socialized Mrs. Clark. She became less of a recluse.” She even made a new friend, visiting a woman who was a patient down the hall. Chris said Huguette “enjoyed the traffic of humanity for the first time in fifty years.”
Once a year, Huguette also allowed doctors and nurses from the floor to come into her room for little birthday parties for her. There was a little gathering for her one hundredth birthday on June 9, 2006. Attorney Bock was there, and accountant Kamsler, Chris Sattler, and Madame Pierre.
Someone brought a SpongeBob SquarePants balloon. The hospital delivered a huge cake. As birthday presents, Huguette wrote out checks to her nurses. A week later, Huguette asked a nurse if she could put more air in the balloon.
THE PRICE OF PRIVACY
HUGUETTE SEEMED TO FEAR one thing most of all: publicity. In this she favored her mother more than her father.
The jewelry that W. A. Clark gave to Anna when he was courting her, when he married her, while they raised a family, all that jewelry was entrusted by their daughter Huguette to First National City Bank, where the family banked for more than fifty years.
In the 1980s, a blue diamond and other pieces of Anna’s jewelry disappeared from the securities department at Citibank, as it was now called, either lost or stolen. Citibank made just the right threat: The bank insisted that it couldn’t pay any more than $3 million without involving the insurer, Lloyd’s of London, where such a large loss might bring publicity. Huguette accepted in 1991 a $3 million settlement, much less than the jewelry’s appraised value.
Then, in 1994, when Huguette was in the hospital, Citibank did it again. The rest of Anna’s jewelry was in a safe-deposit box, No. 883. The trust department at Citibank was paying the bill for the box, but an interoffice address changed, and the bill fell delinquent. Bank officers cut open the box and sold the contents as abandoned property to a liquidator at rock-bottom prices.
Anna’s gold wedding band, gone. Her 2 gold lockets. Her tortoiseshell combs with 320 diamonds. Her Cartier 2-strand pearl necklace with the 7-carat diamond clasp. Her 3-strand cultured pearl and jade bead necklace with two 4-carat diamonds by Cartier. Her bracelet with 36 sapphires and 126 small diamonds. Her 5 small gold bracelets. Her Cartier diamond and rock crystal hairpin with 64 diamonds. Her 3-stone diamond ring. Her pearl ring. Her 18-carat-gold-mesh purse with 5 inset emeralds and the matching gold-mesh change purse. Her Cartier gold watch with 30 carats of diamonds. Her Cartier bracelet with 22 carats of diamonds. Her Cartier necklace with 60 carats of diamonds and 40 carats of emeralds. Her 20 gold safety pins. And 30 other pieces. All gone.
The loss “has been devastating,” attorney Don Wallace wrote to Citibank, relating her “anxiety and pain.” This time Huguette didn’t know what to do. At first she wanted all her mother’s jewelry back. Citibank traced some pieces to a dealer in Europe, but they had been resold. The bank trotted out its successful threat again: Further efforts to hunt down the jewelry could bring public attention.
So Huguette wouldn’t sue, wouldn’t risk having her name in the newspapers. Valuing her privacy more than money, she had no leverage. She relented, demanding $6 million while protesting that the jewelry was worth $10 million.
The bank chairman, John S. Reed, wrote her a note of apology but agreed to pay no more than $3.5 million. She took it. Before making the payment, Citibank insisted that she produce a statement from an independent physician attesting to her mental competence so she couldn’t revoke the deal. After a few months, the bank accepted such a statement from her own physician, Dr. Singman.
Similarly, Huguette and her attorneys took no action, and did not call the police, when someone stole nearly a quarter of a million dollars from her in November 1991, after she went into the hospital. Her bank reported that someone cashed a check from an old unused account, getting away with $230,000. Another check for $650,000 was refused. Her attorney, Wallace, didn’t call the police, but quietly closed the account.
• • •
Huguette’s gentle ballerina by Edgar Degas, Dancer Making Points, which she had bought with her mother in 1929, was stolen from her apartment wall in 1992 or 1993. Not wanting any publicity, she urged her attorney not to report the loss. She didn’t file an insurance claim or call the police, but the building manager reported the theft anyway, and an FBI agent marched right into Huguette’s hospital room for an amiable conversation. Wallace was shocked: The FBI had spent a full hour more with his client than he ever had.
Twelve years later, in 2005, the FBI discovered that Huguette’s Degas pastel was hanging in Mission Hills, Kansas, at the home of the noted collector Henry Bloch, the “H” in the H&R Block tax preparation firm. He and his wife, Marion, had purchased the Degas ballerina unwittingly from an art dealer in Manhattan. Soon after the painting had disappeared, a well-dressed man with a European accent had walked into a small gallery, saying the Degas ballerina had been in his family for many years. The gallery owner bought it, no questions asked. Then the Blochs were told of the painting and had it shipped to Kansas, after having a museum director friend look over the painting’s provenance.
Huguette wanted the painting back, of course. Instead of demanding their money back from the dealer and returning the painting, the Blochs claimed that, even if the painting had been stolen, it was abandoned property, because Huguette had not tried to find it. Besides, the Blochs had promised to give their entire collection of Impressionists, after their deaths, to Kansas City’s Nelson-Atkins Museum of Art, where Henry Bloch had been chairman of the board. The museum was adding a Bloch Building to honor its longtime benefactors. Huguette did not want to sue. Any publicity about a stolen Degas could bring her life into the open.
To avoid any embarrassing public attention for either party, after years of discussions the attorneys agreed on an unusual solution. Huguette signed a deed giving the painting to the Kansas City museum. She, not America’s tax expert, would receive the charitable deduction for the $10 million painti
ng. To assure the museum that Huguette, who was now 102, was able to make such a decision, Dr. Singman signed a second statement attesting to her competence.
To make things tidy for the lawyers, the painting actually had to change hands. Outside the Bloch home on an October day in 2008, the Degas ballerina was the object of the following game of hot potato. The ballerina was taken down from the wall and handed to Huguette’s attorney, Wally Bock. Bock was escorted by a former FBI agent to the driveway, where the director of the museum, Marc Wilson, was waiting in a limousine.
Bock handed the painting to the director of the museum, which was receiving it as a gift from Huguette.
And the museum director walked the ballerina back into the Bloch home, where it went in the same spot, above the sofa, between a Seurat and a Toulouse-Lautrec. The museum’s executive committee had agreed to lend the painting to the Blochs. Although a stolen painting had been found on their wall, they got it back, for as long as they lived. The deal was so hush-hush that the museum’s curators, and most of the museum’s directors, didn’t know they now owned the Degas. The museum did agree that it would consider lending the painting, up to twice within the next twenty-five years, to Huguette’s favorite museum, the Corcoran Gallery in Washington.
The effect for Huguette, of course, was that she no longer owned her ballerina. She asked the Kansas City museum to take a photograph, at full size, so she would have a print to remember her by.
