It has been a taxing summer for Leona Helmsley. In fact, she might describe it, as she herself has been described, with an unladylike five-letter word that, as Newsweek`s cover last week delicately put it, ”rhymes with rich.”
Since embarking on her trial for tax fraud and extortion last month, the self-coronated ”queen” of the Helmsley hotel and real estate empire has been called ”a tough bitch” by her own defense attorney Gerald Feffer, a ”sick woman” by fellow real estate royalty Donald Trump and a ”chintzy” version of ”the Wicked Witch of the West” by Mayor Edward I. Koch.
She may be called a lot of things, but controversial new evidence expected to be introduced Monday will show, says the defense, that she cannot be called a tax cheat. By the end of this week, when the case is expected to go to the jury, it appears Leona Helmsley could either be reduced to a powerless puddle with only a bejeweled broomstick left behind or rise triumphant to reign once more over her $5 billion-plus real estate realm.
The first vision clearly was in the mind of Assistant U.S. Attorney James DeVita when he wearily rested the government`s laboriously detailed case against Helmsley last week. For seven weeks, the prosecution has trundled a train of grocery carts into court packed with what it says is documentary evidence that the 69-year-old Helmsley, her husband, Harry, and two of their former business associates, Joseph Licari and Frank Turco, conspired to evade about $1.2 million in taxes from 1983 through 1985 by falsifying invoices for about $4 million in personal goods and services and charging them to various Helmsley business entitities. Harry Helmsley, 80, was judged mentally incompetent to stand trial.
Further, the government has produced a parade of embittered former employees and suppliers, many testifying under immunity, in support not only of the tax evasion charges but the government`s claim that Leona Helmsley and her codefendant and former aide Turco extorted goods, services and cash from employees and suppliers by threatening them with dismissal or loss of Helmsley business. The most serious charge in the 47-count indictment of Helmsley and her former associates, extortion carries a possible prison term of up to 20 years. A conviction on tax fraud carries up to 5 years on each count.
In presenting the case, virtually no detail of Leona Helmsley`s personal life, from the $12.99 she paid for a girdle at Bloomingdale`s to the $58.49 she paid to have her legs waxed, has been left uncovered by the prosecution-or the press. Almost daily, the sordid tale of her lavish expenditures on herself and Dunnellen Hall, her 28-room Connecuticut estate and her somewhat sadistic- sounding dealings with employees has been splashed across TV screens and front pages. A story that plays like a low-class ”Dynasty,” complete with a cut-rate Alexis Carrington, the trial has provided the equivalent of a summer serial for a proletariat ever eager to purse its lips over the alleged misdeeds of the rich and indicted, particularly one characterized as a ”Boss from Hell.”
But DeVita had hardly rested his case when the defense sprung a move that startled him, stunned the onlookers and struck a triumphant grin on the usually dour face of Leona Helmsley.
New evidence will show, the defense said, that not only did Leona Helmsley not cheat the government out of taxes, she overpaid during the years in question to the tune of $681,000. Out of the hearing of the jury, Helmsley`s lawyers argued that a new audit of the Helmsleys` taxes, commissioned by the defense from the accounting firm Touche Ross, will show that Helmsley accountants failed to take large enough depreciations in their calculations in the taxes prepared for three Helmsley tax-shelter
partnerships.
Since the taxes on those partnerships influence the personal tax returns of the Helmsleys, the defense said, the Helmsleys cheated themselves, not the government. If the Helmsleys are proven to owe no taxes, the government essentially has no tax case.
The late-breaking nature of the new evidence enraged the prosecutor, who said he`d been ”sandbagged,” and infuriated Judge John M. Walker, Jr. who chided the defense for not sharing news of it earlier with the prosecution in accordance with federal trial rules. Despite two frantic attempts by the prosecution to have the new evidence barred, calling it ”irrelevant” and an ”attempt to rewrite history” the judge ruled that he would admit it.
A gauge of the potential power with which the defense views this new evidence is that after the testimony on the audit from Touche Ross accountants on Monday, the defense is expected to call no further witnesses. Helmsley`s lead defense attorneys, Feffer and James Bruton III, are no tax novices. Feffer, 47, is a former deputy attorney general in the Justice Department`s tax division. Bruton, 39, reportedly is under consideration for a top post in the Justice Department`s criminal tax unit.
Yet the feisty Devita, 39, is a formidable opponent: Among his criminal tax case victories was that over Unification Church leader Sung Myung Moon for tax evasion.
The latest wrinkle in the defense strategy, which might be labeled
”Blame the Helmsley Accountants,” may be dazzling, but it is consistent with the twists the defense has taken throughout the case. At the start, observers expected a ”Blame the Codefendants” defense, in which Feffer would suggest that all nefarious deeds were done by Helmsley`s former business associates Joseph Licari and Frank Turco without her knowlege.
`Big catch` for IRS
In his opening statements, however, Gerald Feffer stunned the court by saying the defense disputed almost none of the prosecutions accusations against his client; what he disputed was intent. His position was that Leona Helmsley never intended to cheat on taxes or to do anything else for which she is accused.
Leona Helmsley`s personal bills were charged to various Helmsley entitities, he said, as a device by which her executives could protect themselves from having to deal with her directly. As for the free goods and services, he suggested that they were simply part of routine business practices. He scoffed at the idea that Leona Helmsley could extort anything from her hard-nosed suppliers.
In any event, he said, the Helmsleys were legitimately entitled to deduct manyxpenses for Dunnellen Hall because it was regularly used for business and later suggested that even Leona Helmsley`s underwear might be considered a deductible business expense since she wore it in advertisements for the hotel chain.
He also introduced the ”Blame the Tax Man” defense concept, in which he maintained that the whole case amounted to little more than a grandstanding move by the Internal Revenue Service, for whom Leona Helmsley would be a
”big, big catch.”
In ensuing weeks, the defense has even flirted with a ”Blame Harry”
defense. This position gently characterized Leona`s husband as the heavy because, although Leona may not have known the tax law, he and his accountant knew the tax implications of her charges to the companies and chose to ignore them.
So far, the defense has called only two witnesses. The first, Geraldine Moore, an elderly secretary with the Helmsley company, testified that she had typed out false invoices, disguising $500,000 in jade artwork by substituting an equivalent sum for antique furniture, copied from listings in a catalogue from the posh auction house Sotheby`o so by her boss, Licari, and had received the Sotheby`s catalogue from the office of Turco.
The second defense witness, Leona Helmsley`s former assistant Martin Goldstein, bolstered the defense`s position that life at Dunnellen Hall was more work te notes to be heard in the case so far.
When asked by Feffer whether the Helmsleys had any personal friends, Goldstein, a prim young man who quit his job earlier this year, responded,
”No.”
That may be why Mrs. Helmsley joined a crossword puzzle club, paid $21 for membership and charged it to the Park Lane Hotel. It could also shed some light on why she charged the Park Lane $58 for a deluxe Itty Bitty Book Light, possibly to read in bed on lonely nights without disturbing Harry.
Chanel suit a no-no
Leona Helmsley, however, isn`t talking. Through it all, she hasn`t said a word, but her presence has veral of her allegedly abused subjects. She has dabbed at tears, after hearing reference to the sudden death of her only son, Jay Robert Panzirer, of a heart attack at 42.
She has occasionally laughed at accounts of incidents at Dunnellen Hall, such as the time she raged at a worker she found in her bedroom trying to fix a telephone bell that rang ”ding-dick” instead of ”ding-dong.”
On her sojourns to the ladies` room during recesses, Helmsley exchanges pleasant smiles with reporters, but, like all the principals involved, is forbidden to speak to anyone about the trial under the judge`s gag rule.
Almost daily, she has become noticeably flushed as the court day progresses, further reddening a face already marred with mysterious blotches speculated to be caused by everything from high blood pressure to the aftermath of a chemical skin treatment.
At one point, she was reprimanded for making faces at one witness and later chastised by Gerald Feffer, her attorney, for appearing in court wearing a spectacularly expensive navy blue Chanel suit, whose gold-buttoned splendor practically amounted to a neon sign proclaiming ”I`m rich.”
”What are you, crazy?,” Feffer was overheard asking his client. ”Think this is a fashion show? We`ll get a runway and bring in models.”
Except for that one Chanel lapse, Helmsley, the daughter of a Brooklyn hatmaker, has generally down-played her wardrobe, but not enough to hide that she owns an astonishingly large repertoire of handsome suits and dresses and a shoe collection that appears to be of Imelda Marcos-ian in size.
It didn`t take testimony from former personal secretary Mary Ann Epoli that Leona Helmsley was a mail-order catalogue addict, who loved a discount, to indicate the hotel queen`s passion for shopping. The prosecution has put forth endless lists of purchases-ranging from a $2,993.11 pair of cufflinks from the upper-crust British jeweler Asprey to $32.00 worth of humble Super Bug Away insect repellant-all of them charged to Helmsley properties, that give a new meaning to the phrase ”shop till you drop.”
While it might seem th, a kind thought comes from an unexpected source.
”I really think there is a groundswell of sympathy for her,” says Elaine Taylor-Gordon, president of the agency that for the last three years handled advertising for the hotel chain Leona Helmsley heads. ”I really think people think, obnoxious as she is, she got a bum rap. To a certain extent, I feel that way, too.”
These are startling words from an agency president who admittedly got rough treatment at the hands of the queen and finally resigned the account last month after Leona Helmsley abitrarily decided to reduce the agency`s fees on the $5 million-plus account by 60 percent. The explanation Helmsley gave her, she says: ”I need the money.” Upon quitting the account, Taylor-Gordon offered her successor ”all our Maalox, Advil and extra suits of armor.”
Ulcers aside, Taylor-Gordon says, ”As a businesswoman, I look at this woman who has achieved more than most people have achieved in a lifetime and I admire her. I also feel sorry for her. She`s totally alone. Her husband is ill. Obviously, there`s no one around her she feels she can completely trust.”
Moreover, Taylor-Gordon believes that like many miserly millionaires, Helmsley suffered from some paranoia. ”I think she believes she is conducting herself properly, that she is totally correct but that people are trying to cheat her. That`s perception. You know, we deal a lot with perception in advertising, and it doesn`t matter what the reality is, it`s the perception that counts.”
Helmsley ads, already created and placed by Taylor-Gordon`s agency, will continue to run for the next three months, she said. When asked if she would ever reconsider taking Leona Helmsley back as a client, she said, ”If I could make money on the account and if we were allowed to do the good work we`re capable of-yes.”
In Taylor-Gordon`s view, many of Leona Helmsley`s problems stem from the sheer fact that she is an ”arrogant woman” under microscopic scrutiny.
”She is a celebrity. She is a queen. She is the closest thing to royalty we have.”
