By Don Van Natta, Jr.
(The New York Times)
A tentative settlement was announced yesterday that would end the war over Doris Duke's $1.2 billion estate and pay Bernard Lafferty, her high-spending, ponytailed butler, millions of dollars to give up his role in overseeing her fortune.
Mr. Lafferty, whom Miss Duke wrote into her will less than a year before she died, has agreed to resign as co-executor of the estate and relinquish a powerful seat on the board of the charitable foundation that would control Miss Duke's wealth. But while he would lose the power and prestige of those roles, Mr. Lafferty who is 46, an admitted alcoholic and barely literate would not give up any money. He would be paid his executors fee of $4.5 million, plus $500,000 a year for the rest of his life, according to the proposed settlement submitted yesterday in Surrogate's Court in Manhattan.
If the settlement is approved by the court which is by no means certain it would end more than two years of litigation over the estate of the late tobacco heiress, who left most of her fortune to charity. The will has been challenged by one of Miss Duke's doctors, former employees and others, and the bitter battle has led to charges and countercharges, including an affidavit contending that Mr. Lafferty and a doctor hastened Miss Duke's death with a drug overdose.
After Miss Duke died in 1993 at the age of 80, Mr. Lafferty moved into her mansions and traveled around in her chauffeured Cadillac and her private Boeing 737 at estate expense. His "profligate life style" was criticized last year by Surrogate Eve M. Preminger, who dismissed him from managing Miss Duke's estate a decision that was later overturned.
"Mr. Lafferty has agreed to step aside when the will is admitted to probate to fulfill Doris Duke's wishes that this money go to charity," said Robert Y. Sperling, a lawyer for Mr. Lafferty. "He saw no reason to continue litigation that would be costly to the estate and further delay Miss Duke's wishes that the money be used for charitable purposes." Yesterday, Surrogate Preminger was asked by the parties to approve the proposed agreement. A legal assistant said yesterday that the surrogate would hold a hearing on the matter on May 6 in her courtroom.
"This is an opportunity to resolve all possible litigation and get the money to charity and end enormous unnecessary legal bills and other expenses," said Deputy State Attorney General John H. Carley, who helped negotiate a settlement.
Surrogate Preminger rejected another proposed settlement in January, but that agreement had a key difference: It would have allowed Mr. Lafferty to keep his seat on the board of the Duke charitable foundation.
Last May, Surrogate Preminger removed Mr. Lafferty and the United States Trust Company from managing the estate, saying that the bank's executives should have reined in Mr. Lafferty's prolific spending habits. She also sharply criticized the bankers for lending Mr. Lafferty more than $825,000 at a time when he had no personal assets.
But the State Court of Appeals reversed that decision in January, saying the removal of U.S. Trust and Mr. Lafferty as co-executors was based largely on "untested hearsay."
Several lawyers and a spokeswoman for U.S. Trust, Allison Cooke Kellogg, declined to discuss the case yesterday. But according to court papers describing the settlement, all challenges to Miss Duke's disputed will, which she signed on April 5, 1993, would be dropped. One of Miss Duke’s doctor’s, Harry J. Demopoulos, who had been named executor in an earlier will, would give up his challenge; in exchange, he would get a seat on the Duke Foundation board of trustees.
According to the tentative settlement, six people would sit as trustees of the charitable foundations established by Miss Duke's will. Besides Dr. Demopoulos, these are the trustees:
J. Carter Brown, former chairman of the National Gallery of Art in Washington; Marion Oates Charles, a friend of Miss Duke's who was named as a trustee in her last will; James Gill, a partner in the law firm of Robinson, Silverman, Pearce, Aronsohn & Berman; Nannerl O. Keohane, president of Duke University, and John Mack, president of Morgan Stanley.
The dispute over Miss Duke's last will has become so tangled that more than loo separate allegations of wrongdoing have been made. The allegations range from failure by U.S. Trust to reign in Mr. Lafferty's spending to allegations that Mr. Lafferty wormed his way into Miss Duke's confidence while her mind, addled by prescription drugs, was failing.
The most scandalous allegation, leveled last year by one of Miss Duke's private nurses, is that Mr. Lafferty conspired with others to kill Miss Duke with a drug overdose. The Los Angeles District Attorney's office is investigating, but no mention is made of any of those allegations in the proposed settlement.
Another subplot came as several lawyers tried to remove Surrogate Preminger from hearing the case. After she rejected the first proposed settlement, lawyers for Mr. Lafferty and U.S. Trust asked her to recuse herself, ci-ting the harsh criticism she leveled at their administration of the estate last year.
But the surrogate refused to step aside, and the lawyers appealed. That appeal would be moot if she accepts the new settlement plan.
Even if the settlement is accepted, the case will be far from over. Still to come are applications for legal fees from more than 40 lawyers at 10 different law firms who have been involved in -two and a half years of litigation.
One lawyer estimated that the fees for all the lawyers would easily exceed $10 million, which would be paid by the Duke estate.