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- September 11, 1989
- Vol. 32
- No. 11
Queen, Pawns, Checkmate
Leona Helmsley Lived Regally, but Witnesses Described Her as a Royal Pain, and the Public Found Her Guilty of More Than Tax Fraud
But the citizens did their duty and after deliberating 35 hours reached a verdict in Manhattan's federal courthouse last Wednesday (Aug. 30). Leona sat expressionless as the jury foreman pronounced her guilty of tax evasion, for which she faces $8.1 million in fines and up to five years in prison. There was little solace for Leona in being acquitted on the more serious charge of conspiracy to commit extortion, for the verdict that ended her trial was merely a postcript to her tribulations. Forty-four government witnesses—the defense called only four—had methodically exposed the Queen, as she imperiously dubbed herself in her Palace Hotel ads, as an empress with no clothes. And she had long since been convicted in the public mind of being a cruel, spiteful, petty woman.
Leona's own lawyer, Gerald Feffer, had cast the trial's first stone. In his opening statement he described his client as "abrasive" and "demanding," a "tough bitch" with "an explosive temper." The tactic was designed not only to concede what could not be denied but also to lay the groundwork for a central theory of the defense: that $4 million in personal expenses had been falsely billed to Helmsley businesses not by the couple themselves but by Helmsley staffers who wanted to pay contractors and vendors without first having to face Leona's characteristic wrath at bill-paying time. All of her employees, Feffer said, wanted to "minimize the amount of time they had to spend dealing with Mrs. Helmsley."
The reasons for that became apparent as her hapless victims paraded to the witness stand to take Leona, like Scrooge, on a tour of her past sins: When one manager refused to sign a doctored invoice, she had screamed, "You f—-, you're not my partner! You sign what you're told to sign." When it was brought to her attention that a contractor she had refused to pay had six children to feed, she had replied, "Why didn't he keep his pants on? He wouldn't have so many problems." She had complained to an employee that her bedroom phone went "ding dick" instead of "ding dong," then flown into a rage at him for entering her quarters to try to fix it.
These violations of civility and reason seemed to dwarf the actual offenses of which Leona Helmsley and her husband, Harry, stood accused. (Harry was dropped from the trial after being found too mentally impaired by a succession of strokes to aid in his own defense.) The couple had disguised more than $3 million in renovation, furnishings and landscaping on Dunnellen Hall, their $11 million, 28-room mansion in Greenwich, Conn., as business expenses and billed them to 19 different companies in the Helmsley Organization. A $210,000 jade water buffalo became "a rare and important Federal carved mahogany card table" for the Park Lane Hotel. A $130,000 indoor-outdoor stereo system became a security system for the Helmsley Building. A $1 million pool house became construction work at apartment complexes in Queens. The companies got false tax deductions. The Helmsleys received the company-paid goodies, which constituted undeclared income resulting in an underpayment of their 1983-85 personal income taxes of $1.2 million. Those were their transgressions, and the government suggested that their motive was a simple one: greed.
Though the government's contention carried the day in court, it did not fully explain why Leona and Harry Helmsley, whose net worth is in the $1.5 billion range, would break the law to save a mere $1.2 million in taxes. After all, during the three years in question the Helmsleys did pay $57.8 million in federal, state and local income taxes. The amount shaved off comes to just 2 percent of the amount due, hardly enough to justify risking prison. The Helmsleys also contributed more than $10 million to charity during the same period, including almost $1 million worth of land to the Nature Conservancy and $9 million to the Harry B. Helmsley Foundation, which provides grants for medical research and education. They were hardly strapped for cash, even though Harry was paying $500,000 a year alimony to his first wife, Eve, from whom he separated around the time he met Leona, two decades ago. In 1985 the Helmsleys' 63.75 percent stake in the Empire State Building alone paid them $8.5 million.
"We're talking about small amounts of money," Feffer argued to the jury, "relative to the whole Helmsley financial picture. A million dollars to Mrs. Helmsley is not a million dollars to you."
"Just because you're rich doesn't mean you're not cheap," the prosecution responded. "Not only is it not true that a million dollars means less to her than to you and me, but apparently $5 means more to her than it does to you and me." In evidence was a bill for $6.50 worth of mascara that Leona had refused to pay because she didn't like it, and testimony that she had screamed at the mansion help for buying fruit and vegetables locally instead of picking them up free from the Park Lane Hotel kitchen. Among the $320,000 in personal goods and services she charged to the Park Lane were a $12.99 Bloomingdale's girdle, a $21 crossword puzzle club membership and an $8.50 dry-cleaning bill.
Leona, elegantly dressed and austerely bejeweled—usually nothing but pearl earrings, a gold wedding band and an occasional gold-rope necklace—appeared far too dignified for such penny-pinching as she held court in the courtroom. During breaks in the trial, she would move around the courthouse as though it were just another of her properties. She would turn to face the gallery jammed with reporters and other hoi polloi, her mouth turned slightly down-ward in her characteristic inverted smile, her eyebrows slightly raised, as though to say, "Write what you will, say what you want, you cannot touch me." Marie Antoinette was more contrite.
How surprising to learn, then, that by most accounts Leona Helmsley is an underconfident, perpetually fearful woman. "She has incredibly deep insecurities," says Michael Moss, author of Palace Coup, a recently published book that details Leona's rise and fall. "She is absolutely convinced that everybody is out to get her, so she has to strike first and strike hard." According to Moss and other observers, Leona is insecure about her humble origins (her father was a hatmaker), her lack of a college education, her two failed marriages before wedding Harry in 1972. She is insecure about her looks: She asked at least one courtroom artist to shorten her nose. She is insecure about her age: She was reportedly furious with her lawyer for mentioning that she is 69 in his summation. And a former employee recalls that when a 1982 New York Times obituary of Leona's only child, Jay Panzirer, mentioned that he was 40, Leona was livid because she feared a reader could deduce her own approximate age.
But some say the greatest of Leona's fears was that people would think she had married Harry for his money. She is not without defenses against that charge: As a real estate broker, she had become a millionaire in her own right before she met Harry, and even her worst enemies concede that she is truly in love with him. "She worships the ground he walks on," observes one longtime acquaintance. But then, Harry owns much of the ground he walks on, and no one can deny that being a billionaire might be counted among his more endearing qualities.
So, according to one former employee, Leona "defused the accusation that she married Harry for his money" by trying to save him money at every turn—and Harry appreciated it. "He boasted that this woman was a tiger with his money. He was proud of her reputation as a bitch."
Another reason that Leona tried to cut corners at Dunnellen Hall, says an employee, was that Harry "was a real cheapskate when it came to the things that she liked. He didn't want Dunnellen Hall. He didn't want to spend a dime." By taking business deductions for her Dunnellen Hall expenses, prosecutor Cathy Seibel suggested, "Mr. Helmsley could save money and Mrs. Helmsley could spend it." Thus they might have been as happy as Jack Sprat and his wife, if only Leona hadn't gone into orbit with her household-improvement projects, which had hit $8 million and were still climbing when Harry finally took exception. Perhaps the bills wouldn't be so enormous, he suggested, if Leona didn't keep changing the pool-house construction plans. "You're being sucked in, too!" she screamed, according to a witness. "Can't you see they're stealing from us!"
That Leona felt everyone was out to destroy her is mentioned time and again by those who knew her. "She has this feeling that everyone is ripping her off," observes a former hotel employee. "She's paranoid about everybody and everything." The paranoia makes her irrational, says her daughter-in-law, Mimi Panzirer: "Her elevator doesn't run to the top floor."
Elaine Taylor-Gordon, president of the Taylor-Gordon, Aarons & Co. advertising agency, which ran Leona's "Queen" campaign until they quit because Leona suddenly cut their fee by two-thirds, says, "I think she is truly afraid that she doesn't have any money. I think she is very insecure. From what I understand, her family moved seven times when she was a child, and perhaps it's not a coincidence that she ended up in the real estate and hotel business and owns a lot of houses. I believe that she is afraid that people are trying to destroy them financially, that people are stealing from them and she won't have anything left."
Joseph Catania, who for more than 20 years served as the interior decorator of Leona's homes, including Dunnellen Hall (which he says was "cold, dreary and horrible when they bought it"), agrees: "I really do not think Mrs. Helmsley realizes how much money she has. I think she worried about money." And, as Woody Allen said, even paranoids can have enemies. "It's true after all that when people found out it was Mrs. Helmsley [they were dealing with], the price for something could double," Catania says. "She was overcharged many times."
One thing she could not buy at any price was friends. "Underneath all that money she is vulnerable," says Taylor-Gordon, who is that rarest of creatures, a person with something good to say about Leona: "She could be charming and sweet and she could be funny. She was very witty." But now, "Harry is sick. She has no friends. She is virtually alone with all of this splendor. I heard her say once on the phone to someone, 'I have no friends. Only my husband is my friend.' She is terrified because of that. Her husband is ill and fragile. She has her lawyers, but when this case is over, she won't even have them. They won't be having lunch with her anymore." Catania agrees: "She had only one close friend, and that was Mr. Helmsley."
The Helmsleys, of course, did not lack for acquaintances, but what many of those remember most is the real estate moguls' social awkwardness. Mike Wallace and his wife, Mary Yates, were invited to dinner a year and a half ago. "I felt sorry for her because she was obviously a pariah," Wallace says. "We went to her home on a winter night in Dunnellen. I was curious. Former [New York] Mayor [Robert] Wagner and his wife were there, [reporter] Nick Gage, formerly of the New York Times, some people they met on a cruise and her attorney. I remember she took my wife into the kitchen to show her the gold service—knives, forks, plates—I guess in solid gold, but we didn't eat on it. I suppose we were on the B list. Having said all this, I remain rather sad about Leona."
Actor Cliff Robertson remembers attending one of Leona's annual "I'm Just Wild About Harry" extravaganzas, at which a couple of hundred Who's Whoers would assemble at the Helmsleys' Park Lane duplex penthouse to celebrate Harry's birthday. "My wife at the time [actress Dina Merrill] insisted we go, and I reluctantly went. Leona squired me around, showed us her pool, had photographers there as soon as you walked in. I just thought it was a rather ostentatious display of new wealth. I thought it was, in a way, rather sad. I felt sorry for [Harry]—he seemed very nice. I couldn't wait to get home, frankly."
With few if any real friends, Leona was supported in court by her grandson, Craig Panzirer, her niece, Fran Becker, and the occasional fan that her campy celebrity can still attract. When one of the latter approached her in the hallway and said, "I think you're getting a raw deal," Leona kissed him on the cheek and said. "Thank you, dear. No one says anything nice to me anymore."
Why that is so is no mystery. "She is a mean person basically," says a doorman at one of the 26 Helmsley-operated hotels. But if Leona cannot understand why she is so reviled, she may have some quiet time as a guest in a federal hostelry to figure it out. When she is sentenced on Nov. 14, legal experts say, she is likely to get a maximum of 30 months in prison. Meanwhile she remains free on her own recognizance, and her appeals could stave off incarceration for a year or more.
A Palace Hotel worker she fired for taking an apple from the hotel kitchen—when the employee was working through her lunch hour—thinks that a more effective punishment than prison would be some sort of community service "where Leona is serving people, waiting on people." And Leona's daughter-in-law, Mimi Panzirer, notes that, for Leona, having to pay a hefty fine would probably be more excruciating than being locked up. But few legal observers dispute her attorney's contention that Leona's was an IRS show trial meant to set a deterrent example, and that means prison time. As prosecutor James DeVita argued in summation, perhaps Leona thought "the king or queen could not be prosecuted. But we don't have sovereign immunity here."
—Additional reporting by Jane Sugden and J.D. Podolsky
- Jane Sugden,
- J.D. Podolsky.
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