Empty Mansions (50 page)

H
UGUETTE DIED
owing the IRS $82 million in gift taxes, with the bill rising $9,000 per day from penalties and interest.

The tax bill was discovered because the judge decided that Bock and Kamsler needed a chaperone. In light of all the news coverage, the judge declined to let them administer Huguette’s estate alone. The judge appointed a third financial watchdog, an official known as the New York County public administrator.
That administrator’s attorneys soon discovered that Huguette had not paid millions in gift taxes on her spree of generosity. One-quarter of her estate could be eaten up by the bill from the Internal Revenue Service.

Taxes on gifts are paid by the giver, not the recipient.
No gift tax returns were filed for Huguette from 1997 through 2003, during which time she gave approximately $56 million in gifts. Some of her gifts were subject to another tax as well, the generation-skipping transfer tax, which must be paid when the recipient is much younger than the donor. The total due in taxes for all years was about $34 million, but that was just the beginning. Add on penalties of $16 million and interest of $32 million, for a total liability of $82 million.

Kamsler was responsible for the finances and was paid $5,000 a month for his accounting work. Records show that he warned Huguette repeatedly to stop making gifts because she didn’t have enough liquid assets to cover the gift taxes. He never mentioned the generation-skipping tax, which came into play when she gave money to Hadassah and some others. The public administrator’s lawyers also found that Kamsler prepared false gift tax returns claiming that the previous returns had been filed, and he lied to the IRS by claiming he didn’t know about the $5 million given to Hadassah.

Bock said that when notices from the IRS came to him, he sent them to Kamsler, but Bock also had responsibility for taxes. His monthly invoices for $15,000 listed his duties, including filing estate and gift tax returns. When Huguette paid $1.85 million for the security system on the West Bank, a gift solicited by Bock in 2000, he did not tell her that she already owed more than $5 million in taxes for gifts given that year and that she had not filed gift tax returns from 1997 to 1999. Bock said he accepted Kamsler’s assurances that he had taken care of any late filings.

When Kamsler was called to give a sworn deposition in the estate case, he wouldn’t answer questions about the gift taxes, exercising his
Fifth Amendment right against self-incrimination 192 times. He did say that he never lied or deceived Huguette and never stole from her.

Bock and Kamsler faced more trouble. The public administrator filed malpractice claims against them on behalf of Huguette’s estate, and the judge suspended them as preliminary executors. Their $6 million in fees, the payday they had toasted that day in the restaurant in 2005, was gone.

• • •

The public administrator also aggressively went after the gifts themselves, demanding the return of more than $40 million to Huguette’s estate. More than half of that amount had been given to Hadassah. If the administrator were successful, that also would reduce the gift tax bill: If there was no gift, there was no tax due. The administrator did not seek to recover gifts given to Madame Pierre and her family, Wanda Styka, or Chris Sattler, focusing on those whose financial or medical roles put them in confidential relationships.
^§
Under New York law, any gift to a person in a confidential relationship is presumed to be the result of undue influence. The recipient has the burden of establishing that the gift was proper. The public administrator’s office argued that Huguette’s close circle of caregivers used their positions to exert influence and control over her, in effect looting her assets.

The problems for the public administrator were that most of these gifts were a long time ago, and Huguette had made the gifts herself, relentlessly writing the checks until her eyesight gave out. Defending Huguette’s will, Bock’s attorney, John D. Dadakis, said the legal challenge was an insult to Huguette. “
To suggest that these gifts were not from Mrs. Clark’s generous heart is to denigrate the person who gave these gifts, as well as the recipients who cared for her with their love,” Dadakis wrote. “All of the records reflect that Mrs. Clark actively enjoyed her generosity and fully understood what she was giving.”

JUST THROWING MONEY AWAY
 

L
IKE A CONFIDENT TEENAGER
at a carnival throwing three baseballs to knock over a tower of milk bottles and win a stuffed panda, the Clark family had three chances to win Huguette’s fortune.

First, if the family could prove that both wills had not been legally signed and executed, they would inherit everything. If the family knocked out the last will, they could then go to work on the earlier will, which no one seemed to be able to find an original copy of anyway. Photocopies of wills are not often admitted. Even if the family got the later will thrown out but failed to throw out the earlier one, it still left nearly everything to the family except the $5 million to Hadassah.

The signing ceremony had certainly been faulty, especially considering that a challenge to the will by Huguette’s distant relatives could have been anticipated. The defects were many. The will had been drawn up by one of the beneficiaries, attorney Bock. Another beneficiary, accountant Kamsler, was the only person who had any discussion with Huguette about her wishes, and he was a felon. At least one of the beneficiaries, Hadassah, apparently was in the room and, by one witness’s account, was helping Huguette hold the pen. The ceremony was not videotaped or photographed. Though the patient was elderly with failing eyesight, the will was in regular-size type. The lawyer overseeing the signing, Bock’s colleague, said he hadn’t read the document and had no idea Bock was receiving a bequest. No independent doctor examined Huguette and swore to her competence. There was no discussion of the provisions of this will, or the existence of prior wills, or the fees that her executors would receive. The witnesses had no way of knowing whether Huguette knew what she was signing, or even whether this was Huguette, not an impostor.

Despite this slipshod handling of the procedure, the standards are so low that even an incompetently handled document could meet the minimum standards to be legally executed.

Second, the family could try to prove that Huguette was unduly influenced
by her caregivers, that the will didn’t represent her true wishes. The family argued that Huguette was so scared of going back to her apartment, so dependent on her nurses and advisers, that she couldn’t resist their efforts to shape her decision.

Not all influence, however, is undue influence. To prove undue influence under New York law, the family must show almost to a certainty a “moral coercion, a powerful moral force that cannot be resisted,” depriving the person of her own free will. If there are facts to show that the will was parallel with Huguette’s wishes—love of her nurse and goddaughter, a desire to preserve Bellosguardo, a history of great generosity—it would be hard to distinguish undue influence from extreme eccentricity.

Even if the family could prove undue influence, that didn’t mean they would get any money. A jury could throw out the will entirely, which would benefit the relatives. As an alternative, though it rarely happens, a jury could just as well excise only those beneficiaries it decided were taking advantage of positions of trust—possibly the nurse, doctor, attorney, accountant, and hospital. It’s hard to see how any claim of undue influence could be leveled against the goddaughter, Wanda, who hadn’t seen Huguette since 1954, or the Bellosguardo Foundation, which didn’t even exist when Huguette signed the will. If other beneficiaries were knocked out, that would increase the shares going to Wanda and the foundation, not to the family.

Third, the relatives could try to prove that Huguette was incompetent, that she lacked the mental capacity to sign a will. If Huguette were incompetent, the relatives would win everything. The nineteen told the court, though none of them had seen her in more than forty years, that they were sure Huguette “was not of sound mind or memory and was not mentally capable of making a will.”

One of the relatives assigned to Huguette
a specific diagnosis. This half-grandnephew, Jerry Gray, is a psychotherapist, a licensed clinical social worker, and the founder of nonprofit groups that work around the world to help survivors of political torture bring their torturers to justice. Jerry saw Huguette only one time, the glimpse at a family gathering during World War II, when he was about nine and Huguette about thirty-seven. He was the one who said Huguette stared at him, saying
nothing. Now, based on what he read in the media and in court papers, Jerry reduced his great-aunt to a diagnosis, which other Clarks said they found persuasive.

“
Huguette was a schizoid personality disorder,” Jerry testified, naming a mental condition in which a person has a lifelong pattern of social isolation and indifference to others, “possibly complicated later by paranoid ideation,” he said, so she was “compelled by mental illness to isolate herself.” He ticked off criteria in
the diagnostic manual, saying this diagnosis clearly fit because Huguette “chose the solitary activity of playing with dolls all her life, apparently didn’t have a sex partner, had no close friends as we measure friendships, and did not appear to want or need human relationships.” Jerry contended that Huguette had “very few interests, if any,” and clearly didn’t understand what she owned, as shown by “living a reclusive life in a hospital, while you have enormous wealth and five residences you could live in.” She displayed, Huguette’s nephew summed up, “
an irrational pattern of just throwing money away.”