The Family Jewels

Bullheaded beer and real estate tycoon Paul Kalmanovitz and his wife, Lydia, share eternity with Comstock Lode millionaires, railroad barons, and other historic figures. Matter of fact, the Kalmanovitz's $6.5 million mausoleum — among the largest at Cypress Hill Memorial Park in Colma — occupies more prominent ground than that other well-known overlord of corporate acquisition, William Randolph Hearst, who's interred up the path from the wealthy couple.

“Mr. Paul,” as Kalmanovitz was known, certainly earned the right to share such elite company, even to upstage Citizen Kane. Over the course of his 81 years, he built an “empire,” as it's referred to in his epitaph, that today includes just about every bad beer America drinks: Pabst, Hamms, Olympia, and Falstaff to name a few.

His acquisitiveness knew few bounds. He garnished his beer fortunes with extensive real estate purchases, including shopping malls, apartment buildings, and ranches, even the giant Costco store at 11th Street and Harrison. When he died in 1987, his business, S&P Co., boasted holdings worth more than $500 million. Today, they top $600 million and show no signs of abating as his beer empire penetrates Asian markets.

During the last two decades, Mr. Paul entrusted two men to assist in the creation of his dominion: Bernard Orsi, a former aide to then-Mayor Joe Alioto; and Lutz Issleib, a German immigrant from Texas. Later in life, he added a third man to his inner circle, former Howard Hughes attorney William Bitting.

But Mr. Paul still controlled everything, every check written, every decision made. And when he died he left a vacuum of power so huge it ensured a vicious legal contest over the control of his estate.

The flurry of will changes his wife made before she died and the dramatic rewrite he signed two months before he died didn't help matters. The modifications have served as a vessel into which numerous plaintiffs suing the estate have poured conspiracy theories.

Still raging in Marin County Superior Court, the estate war pits estranged Kalmanovitz relatives and former employees of the Polish ŽmigrŽ against the trustees of the estate: Orsi, Issleib, and Bitting. Eight years after his death from prostate cancer, Mr. Paul's legacy has never been more unsettled.

Outside the courtroom, all manner of evildoing has been alleged: Shady doctors with ready syringes and Mafia connections have been alluded to. Incredibly, an unfounded allegation of murder in the manor has been thrown against the wall. And relatives even make the wild suggestion that the very tomb that holds the Kalmanovitz couple — the very seat of their legacy — was used to launder money into the pockets of the trustees.

Inside the courtroom, the charges are less slanderous, but the contest is no less acrimonious.

When Lydia Kalmanovitz died last year, placing the estate in probate, two lawsuits were filed. In March, Lydia's nephew and niece — Klaus and Siglinde Schreyack, a refrigerator repairman and a hairdresser, respectively, from West Covina — alleged that the trustees wheedled the sick, elderly Lydia into cutting them out of the Kalmanovitz fortune.

The suit, based mostly on the testimony of Klaus, was thrown out of court as baseless. All the same, it echoed additional charges by Kalmanovitz relatives and former employees, who allege that the trustees took similar advantage of Mr. Paul two months before he died.

Full of painkillers, they say, the dying tycoon signed a will that cut several charities, hospitals, and universities out of the governance of the estate's riches and for the first time established Orsi, Issleib, and Bitting as trustees responsible for dispensing millions to charitable causes. The new will also placed the troika in charge of S&P stock. Since the charitable trust and the company, legally speaking, are one and the same, the three trustees now control one of the larger privately owned corporations in America.

Then came a second suit, filed this summer by Kalmanovitz relatives from Europe, which added an even more bizarre twist. The plaintiffs — two Holocaust survivors and three Polish citizens — allege that Mr. Paul traveled to Lodz, Poland, as the Iron Curtain descended in 1946 and unearthed $1 million worth of Kalmanovitz family jewels from a Jewish cemetery, later breaking his promise to return the jewels or a monetary equivalent once it was safe to do so. They're seeking $10 million from the estate. Marin Superior Court Judge Michael B. Dufficy is expected to rule on the claim in October.

When Dufficy hands down his decision, it may, barring an appeal, bring an end to the ugly legal contest over the alleged family jewels. But the Schreyack case is heading for an appeal. One of Mr. Paul's relatives, Sharon Hegseth, is talking about suing the attorney general and the state of California for alleged intimidation. (The AG joined the defense because a charitable trust, which benefits all Californians, is being contested.) And Orsi will most likely file defamation and slander suits against former S&P employees and Kalmanovitz relatives who've been slinging mud out of court, according to one of his attorneys, Michael Schwarz.

The winners and losers will be sorted out later. But total closure will be hard to come by. Mr. Paul's legacy is now marked, indelibly perhaps, by the jealousies, hatreds, and, above all, mendacity that drove the lawsuits.

Truth is surely the first casualty of any legal action. But the Kalmanovitz estate war is exceptionally hard to untangle. The trustees won't talk. Numerous requests for interviews were turned down. Many more phone calls went unreturned. And those on the other side, the relatives and the former employees, are too cryptic, too paranoid, too full of bile and impossible stories to fully believe. After wading in the muck of the Kalmanovitz legacy awhile, an observer is left with an unavoidable notion: Maybe everyone's lying. If so, it raises an ever more disturbing set of queries: How could such a powerful, willful man as Mr. Paul leave behind such a frail legacy? What happened to leave the estate so vulnerable to attack, so exposed to misrepresentation and manipulation? [page]

In addition to the mausoleum, the other most manifest reminder of the Kalmanovitz legacy lies on Paradise Cay in Tiburon: Mr. Paul's manor. Seven homes and 20-some vacant lots.

A dimple of land jutting from the coastline, Paradise Cay has two distinct advantages: It affords its residents a sweeping view of the bay and the luxury of parking their yachts and sailboats at their back doors. Looking down the hill on the outcropping of homes, with its canals and landings, it's hard not to imagine alighting from sailboat to back patio, from first mate and mizzen to maid and martini. American flags fly from several of the homes.

The cay is a far cry from where Mr. Paul began his life. Born two days after Christmas 1905, Mr. Paul took the advice of his father, Solomon, and at the age of 21 left Poland.

“His father told him, 'I don't like things here,' ” Orsi said in court. “Go find a better life.” The Nazis were still mere beer-hall thugs at the time. Only later would Solomon Kalmanovitz's warning take on a tragic prescience.

Mr. Paul traveled to Palestine and Egypt, where he learned to work on cars in a motor pool. On the advice of friends, he went to France to board a ship for America. “They told him there was a lot of U.S. trade with France,” Orsi said. There he boarded the Grenoble, a coal ship sailing for Philadelphia.

Once docked in the States, Mr. Paul feigned illness and won a shore pass. Told to stay nearby, he instead fled to New York, where he sold his peacoat for cash and met his future wife, Lydia Kohnen, an immigrant herself from Hamburg, Germany. The couple married in 1927 and traveled to Chicago, but the city was too cold for them. “Mr. Paul kept seeing postcards of California with palm trees,” Orsi testified. “So he went to Los Angeles.”

In Los Angeles, Mr. Paul worked as a handyman and later as a driver for movie mogul Louis B. Mayer. Eventually he turned his sights to nightclubs. During World War II, he hooked up with Nathan Sherry, the “S” in S&P, who at the time was a newspaper delivery driver for the now-defunct Los Angeles Examiner. Soon enough, the two owned all the bars around Union Station, a beehive of thirsty soldiers on their way to the Pacific theater. All told, Mr. Paul owned about 27 clubs, according to Orsi. He was the first white club owner to give Nat King Cole a break.

He also began to develop the reputation as a controlling boss. Orsi said in court that Mr. Paul used to put chalk marks on all the liquor bottles in his nightclubs. At closing time, Mr. Paul would send an employee around to check the level of liquor in each bottle to see how much had been sold and to make sure none was being absconded with by the help.

In 1958, Mr. Paul entered the brewery biz by buying Maier Brewing Co., in Los Angeles. For the next three decades he acquired brewery after brewery, often enacting ruthless consolidations where scores of employees were fired. He would routinely buy struggling, older breweries and move their operations to the three S&P plants in Milwaukee, San Antonio, and Tumwater, Wash. He would then dismantle the older plants and build shopping malls and office buildings.

So renowned was his cost cutting that Falstaff Brewing's St. Louis headquarters flew its flag upside-down at half-staff in 1975 when employees learned Mr. Paul had acquired the company. “He went through Falstaff like Grant went through Richmond,” Lutz Issleib told Forbes this year.

Mr. Paul's crowning business acquisition, the purchase of Pabst Brewing Co. in 1985 — a $63 million purchase in which he assumed the brewery's debt in a hostile takeover — was made bittersweet by a concurrent diagnosis of prostate cancer. Two years later, he was dead at age 81.

Today, the holdings of S&P, according to Forbes and Orsi's testimony, are staggering.

The sixth largest brewer in America — the company brews Pabst, Olympia, Hamms, Falstaff, Lucky Lager, Pearl, Regal Pale, and Grace Brothers — S&P has expanded itself into foreign countries in the past few years, penetrating China, Taiwan, and Hong Kong and becoming the largest beer exporter to Vietnam.

S&P also boasts vast real estate holdings from New Jersey and Rhode Island to Texas, Louisiana, and Illinois. In California, the company owns numerous shopping centers, warehouses, and apartment complexes. With more than 500 tenants, S&P rakes in $18.5 million a year in rent payments.

Consistent with Mr. Paul's controlling style, the company has no middle management. Between the three veeps, Orsi, Issleib, and Bitting, and the line employees — whether they be brewers, apartment managers, or whatever — there is no one. Mr. Paul's old post, the president's slot, is vacant and will probably remain so into the foreseeable future.

Filling the space left by Mr. Paul would certainly be a massive undertaking. Mercurial, controlling, and mean-spirited, he could also indulge in sentimentality. Once, after watching the movie Patton he was seized by a fit of patriotism. He cut a $500,000 check to West Point in honor of the general.

His eccentric temper and his parsimony were also legendary. Former employees remember him yanking scores of phones out of the wall and throwing them out the window of his Paradise Cay office into the bay. The reason? One former employee explained that the notoriously litigious Mr. Paul had to communicate with lawyers frequently. But he hated having no record of the call to compare to the billings his legal eagles would send him. So instead of phones, he installed faxes, and he banned conventional phones from the office. Every time he would catch his employees installing a line, he'd rip and toss. It is said that if the bay were dredged off Paradise Cay, hundreds of phones would be found. [page]

When it came to business, Mr. Paul was a full-fledged control freak. Testifying in court, Orsi remembered how the S&P offices were set up so that his boss could see everyone at all times. “He never closed doors,” Orsi said. “Jack Miller [Mr. Paul's right-hand man who died in the early '80s] was always within his sight. I was always in earshot.”

Orsi continued: “He ran everything. He made all the decisions. The price rates, labor costs. Instigation of litigation. No discussion. Response to litigation. No discussion.”

Questioning Mr. Paul's judgment? “You would approach that advisably,” Orsi said.

Mr. Paul wanted his associates close to him at all times, Orsi added. “Some assistants would sleep there overnight,” he said. “Twenty-four hours a day, seven days a week.”

When he bought Pabst, Orsi said, Mr. Paul fired the brewery's administrative staff in three weeks and had a three-story office building emptied of all its documents, which were sent to Tiburon.

Orsi testified that Mr. Paul would oversee every financial transaction the company made. “He wrote every S&P check,” he said. “He would prepare a journal, send it to the controller. He was three frustrated things: a frustrated accountant, a frustrated attorney, and a frustrated doctor.”

A typical day with Mr. Paul would begin early in the morning. New business would end at 2 p.m. Lunch at Joe's in Corte Madera was mandatory duty. Household matters would be dealt with after lunch. And after dinner, Mr. Paul would retire to his office and balance the S&P books, sometimes until the wee hours of the morning. “He would not stop until the books were 'to the penny,' ” Orsi told the court. “He would say, 'If they are off by a penny, they could be off by $5 million.' ”

No doubt, Mr. Paul was all business. He had no hobbies, other than yachting, his friends and associates say. He consumed his life with commerce. Lydia miscarried once and the couple never had a child. They poured all their familial love into their pets.

Throughout his life, Mr. Paul struggled with family, both the concept and the reality. It's more than a little telling that he had his pets — Pete and Marsha, the German shepherds; and Lady Kitty, the cat — interred in diminutive sarcophagi next to him and his wife. The pets also received cash bequests in the will (money for their conservation) while many relatives didn't get a dime.

Some of Mr. Paul's litigious relatives think the conflict stems from the Holocaust where he lost his two brothers. “It's harder to survive,” says his nephew Stanley Kalmanovitz during a break in court proceedings.

When asked about family, Mr. Paul had a standard speech, Orsi testified. “He described his family as nonexistent,” he recalled in court. “He said he went back there after the war and they had all been wiped out. He must have told that story in my presence three hundred times.”

The defendants stress that Mr. Paul made a big deal out of having no family.
“Mr. Paul always told me: 'Lutz, stay away from your relatives. They're no good. If you want to get rid of them, loan them money. They'll never show up again because they don't want to pay you back,' ” Issleib told Forbes in May.

The contention by the defendants that Mr. Paul had ambivalence or outright hostility for his relatives is somewhat self-serving. The more they can convince the court that Mr. Paul disdained his family, the easier it will be to explain why they got so little from his estate when he died.

But there's ample evidence that Mr. Paul did care about his Polish relatives — at least at one time.

Immediately after WWII, Mr. Paul made passionate attempts to salvage what remnants of the Kalmanovitz family remained after the Holocaust — even the defense's own witnesses testified to that.

“[Mrs. Kalmanovitz] told me that [Mr. Paul] was very upset about what happened to his family in the camps,” former Kalmanovitz cook Leslie Cross testified. “She said he was very anxious to get on the first flight into Poland to see about them.”

When Mr. Paul arrived in Poland in 1946, he learned from his sister-in-law Alma that his brothers, Leon and Joseph, had died in Auschwitz. But he also learned that Sonia and Stanley Kalmanovitz, Joseph's teen-age children, had survived the camps.

Sonia was in love and wanted to stay in Europe, but Stanley wanted to come to America. Mr. Paul arranged for Stanley to get a visa, and he arrived in New York the year after the war ended. Mr. Paul's business partner, Nathan Sherry, met the skinny, chain-smoking 15-year-old and bought him a suit. The two then went to eat and Stanley, holding up his too-big underwear, learned that Americans ate corn. “I thought it was for just animals,” Stanley said in court.

Later that night, Stanley was awakened by Mr. Paul, who looked at the numerals tattooed on his arm and cried.

The next day, Mr. Paul began educating his teen-age charge about America. Riding in a cab, Stanley mentioned that all Americans must be rich. “He told the cab driver to take us to the worst part of town, and he showed me the beggars,” Stanley said in court. ” 'That's lesson one,' he told me.”

Then Mr. Paul threw the ratty bag Stanley was carrying out the window of the cab.

In Memphis the next day, Stanley continued his tutelage. Mr. Paul walked up to a desk clerk at a hotel and asked for a room. Told the inn was full, he walked to the end of a hall and looked at Stanley. “This is lesson number two,” he said. He took a bill out of his wallet, slipped it in his palm, and after a quick handshake with the desk clerk, the two had a room. [page]

By the end of the week, Stanley was ensconced in Tarzana, Calif., at Sleepy Hollow ranch, the home Mr. Paul had bought from the actor Robert Young. He soon went to work in Mr. Paul's Hollywood nightclubs.

Last month, Stanley, now 64, sat in Marin County court trying to convince Judge Dufficy that he wasn't the only thing Mr. Paul brought back from Europe. He and the other plaintiffs in the family-jewels case say Mr. Paul brought back $1 million in jewels and gold, too.

During lunch breaks in the family-jewels trial, Stanley Kalmanovitz goes out to the patio on the top floor of the Frank Lloyd Wright-designed Marin County Courthouse and soaks in the sun. There by the fountain, wearing his sunglasses, he drops hints, makes accusations, and plays the perfect Iago to my Othello.

“They bled this thing,” he says, referring to the trustees and the estate. “Check the medication he was on [when he signed his last will]. Surely, he was on painkillers. He was in such pain.”

He continues: “Here's a clue for you. Go to Colma and check the mausoleum. They say it cost six million dollars. But I'll bet it cost one million dollars.”

They pocketed the rest? “Yeah,” he says. “This guy here did.” Just then one of the trustees walks by.

One gets used to this sort of thing hanging around the Kalmanovitz relatives. Wild accusations, unprovable calumny are their stock and trade. They traffic in it they way S&P traffics in cheap ale.

The claims that they've chosen to lay out in court papers are only a few degrees less fantastic. Stanley, who lives in Tel Aviv, along with two cousins from Poland, Karol and Pawel Kalmanovitz, and a sister, Sonia Rollbant from France, are asking the court to believe that Mr. Paul unearthed a $1 million family treasure from a cemetery plot in 1946 and transported it to America.

They further allege that the jewels were stolen from Mr. Paul's Los Angeles home in 1948 and that their erstwhile uncle was awarded $1 million from an unnamed insurance company. That money, the plaintiffs say, was poured into the budding Kalmanovitz beer dynasty.

The basic claims about the jewelry, why and where it was buried and how Mr. Paul came to have it, were told in court by Alma Kalmanovitz, the tycoon's sister-in-law.

Now 90, Alma still lives in Lodz, Poland. Her deposition, contained in seven hours of videotape, was played in court. Visibly feisty, and sometimes sobbing, Alma tells a riveting story.

In 1939, the Kalmanovitz family in Poland — Alma and her husband, Mr. Paul's brother Leon — feared losing their wealth to the Nazis. She testified that before the invasion the family converted its wealth — the proceeds of a textile firm and other family businesses — into gold bars, diamonds, rubies, pearls, Russian gold rubles, U.S. dollars, and German gold marks before the Nazi invasion.

The day before the Nazis locked the Jews into the Lodz ghetto, she and her family buried the jewels between two family plots in a local cemetery.

She said family members wrapped the treasure in cloth and stored it in a wooden box. “If we do not survive,” Alma recalled her husband saying, “tell this to the oldest surviving person, and the ones left will divide it.”

Growing emotional, Alma recalled how Leon was forced into the Jewish ghetto after the Nazi invasion. Being of German descent, Alma and her sons, Karol and Pawel, were spared. But they would ride the streetcar past the ghetto twice a week and see Leon, standing on the edge of the encampment. One day, she said, he was not there. After the war, she learned he had died in Auschwitz.

In 1946, Alma said, Mr. Paul flew to Poland and accompanied her, Pawel, and Karol to the cemetery in Lodz, where they dug up the treasure. There, they struck an agreement: Fearing the Communists as much as they had the Nazis, the Kalmanovitz family would allow Mr. Paul to keep the jewels and redistribute them back to the relatives in Poland once it was safe to do so.

“I had the presence of mind to bring a cover, a suitcase, and we put the box in the suitcase,” she said. “A lot of people were in the cemetery, and we were afraid of the Communist police. We were lucky that we got out of the cemetery.”

Afterward, she said, the two boys took turns carrying the load to a horse-drawn taxi and then to Mr. Paul's hotel room.

“I was overjoyed,” she said of Mr. Paul's successful trip back to the U.S. with the jewels. “I would never have gotten anything out of this in a Communist country.” She never got anything out of it anyway, she and the other relatives say.

The trustees and their attorneys dismiss the story of the family jewels as pure hogwash. Racing down a courthouse hallway on his way to conduct direct examination of a witness, Michael Schwarz, an attorney for the trustees, gives a frank assessment of the plaintiffs' case: “It's utter bullshit.”

California Deputy Attorney General Yeoryios Apallas, who joined the defense to protect the proceeds of the Kalmanovitz charitable trust, employed more florid tones to dismiss the claim filed by the Kalmanovitz relatives.

“The story of the buried treasure … belongs more in an adventure book than in a courtroom,” Apallas wrote in his opening brief to Judge Dufficy. “To accept any of the plaintiffs' elaborate, self-serving, and totally undocumented story requires the trier of fact to suspend disbelief, enter a world which only Indiana Jones calls home, and join him in search of the Kalmanovitz buried treasure.” [page]

Indeed, there are many holes in the plaintiffs' case. First off, insurance companies did not insure loose jewelry back in the 1940s. In fact, they are wary of doing it today. According to Robert L. Wilkinson, an insurance expert called to the stand by the defense, even if a company would have been bold enough to insure the treasure it would have insisted that the jewels be kept in a safe-deposit box in a bank.

Also, the defense sent Norman Naimark, the chair of the history department at Stanford, to Poland to conduct historical research, and he testified that he could find no references in any of the social registers or other historical documents to confirm that the Kalmanovitz family was wealthy enough to amass a million dollars in wealth, which in 1939 would have equaled one-thirtieth of all the gold in Poland.

But most damning is the fact that the plaintiffs can produce no objective documentary evidence that the jewels ever existed, that Paul and Lydia Kalmanovitz ever acknowledged receiving the jewels, or that there was any insurance payment.

Plaintiffs allege that Lydia wrote a letter to Alma in 1987 in which she promised to include a cash bequest in her will to cover the jewels. But, they are quick to add, Alma destroyed the letter.

The defense scoffs at the missing letter, asking why Alma saved all the scores of other letters Lydia Kalmanovitz sent her and destroyed this one.

Stanley Kalmanovitz doesn't think it's funny. “Have you ever lived under communism?” he asks me when I inquire about the letter. “Do you know what it's like to hide everything that is of value to you that the government could take?”

Countering the defense charge that the 1987 letter is a fiction, the plaintiffs produced a surprise witness, Lena Kowalik, a former cook at the Kalmanovitz household who said Lydia told her about the jewels. Kowalik, who quit her job and was denied when she asked for it back, is lying, according to defense lawyers.

To support the claim that there was an insurance payment after the 1948 robbery, Karl Kalmanovitz took the stand and said, simply, that Mr. Paul told him so when he visited his uncle in 1958.

“It's almost too cute how they always produce some convenient fiction whenever there is a hole in their story to fill,” Schwarz says in a phone interview.

For weeks, Sharon Hegseth, Stanley Kalmanovitz's daughter, told me the story of the Waco-style raid on her house by process servers with a subpoena from the California Attorney General's Office. Each telling grew more dramatic. Men with bullhorns yelling, “Come out and no one will get hurt.” Men crawling over her roof, banging on her windows and walls, blocking her driveway with their cars.

But Hegseth told me she didn't want the story in the paper. She's afraid for her life, she said.

Then as the family-jewels case headed into its last day, she took the stand and told the story in open court.

“For three days my house was surrounded,” Hegseth recalled in court last month. “They blocked my driveway. They were there twenty-four hours a day.”

Hegseth is not a plaintiff in the family-jewels case. But she was an ever-present figure in the courtroom, sitting behind the plaintiffs' attorney, Thomas Hunt Jr., constantly handing him notes, some of which he used on cross-examination.

Hegseth told the story of the alleged raid on her house in order to illustrate what she and Hunt felt was the questionable behavior of the deputy attorney general on the case, Yeoryios Apallas.

Apallas was certainly pugnacious in court, sometimes losing his cool and yelling at witnesses rather than cross-examining them. Once, Hunt had to remind him that the case was being tried in a court of law and not a bar. But Hunt says Apallas has taken to the defense's case with too much gusto. According to the Sacramento lawyer, deputy AGs in trust cases are supposed to mediate, not prosecute one side of a case.

Hegseth shared another incident to make the point clear.
One day in mid-August, a witness for the plaintiffs was sitting outside in the hall of the courtroom and Apallas came out and allegedly started badgering the man. “What are you going to say?” Apallas said, according to Hegseth, who witnessed the incident. “I'm going to sit right here and listen to every word you two say.”

Later, Apallas says he apologized to the court for his overzealous behavior. But in the process, he let go with a Freudian slip that the plaintiffs say gets at the heart of where Apallas' and the AG's Office's interests lay. “I was merely carried away in my attempt to represent the S&P Co.,” Apallas told the judge.

S&P? Wasn't the AG representing the people of California, the ultimate beneficiaries of the Kalmanovitz charitable trust?

Hunt says sometimes he isn't sure who Apallas represents. Last October, for example, Apallas helped the estate pull $5.3 million out of S&P coffers in order to pay estate taxes.

The tax had kicked in because Orsi and others had received cash bequests from the last Kalmanovitz will. Since there was no ready money on hand, Bitting proposed selling some of his stock in S&P back to the company. The company would shell out the cash to pay the tax bill. A solid, legal plan. But a plan that the attorney general, in his role overseeing charitable trusts, had to approve.

Taking $5.3 million out of the company meant that was $5.3 million charities would not receive. But not only did Apallas argue in favor of the stock sale in front of Judge Dufficy, he wrote the court petition for the securities offering, a highly unusual move, Hunt says. And one which ran counter to the AG's mandate to protect estate largess for charities. [page]

As he drags his dolly of documents out of the courthouse, Hunt explains why he thinks Apallas has taken such a shine to the trustees. “He's like a peacock,” Hunt says. “He's playing with the big boys, the rich and powerful. He's carrying Bitting's cigars for him. He's riding in their limo.”

But there's apparently another reason, Hunt and the Kalmanovitz relatives say. Sitting out by the courthouse fountain one day, Stanley Kalmanovitz drops one of his hints. “Campaign contributions,” he says. “Check the campaign contributions.”

So I do. I high-tail it down to the Registrar of Voters Office in San Francisco and per-use the major donor files. And lo and behold, S&P has given Attorney General Dan Lun-gren's campaign chest $229,700 since he was elected in 1990.

What's more interesting is the timing and amount of some of the donations. From 1990 to 1993, before Lydia died and before any lawsuits were filed, S&P gave Lungren no more than $3,700 a year. In 1993, they gave no money at all. Then in 1994, the year the lawsuits were being prepared, S&P gave Lungren $192,000. Granted, it was an election year. But Lungren was an incumbent up against a challenger who had little chance of winning.

Apallas says the allegations of misbehavior on his part are totally baseless.

First, he says Hegseth's account of the so-called raid on her house is a complete fabrication. “She was avoiding service of the subpoena,” Apallas says in a phone interview. “She was hiding in the back seat of her husband's car with a blanket over her head in order to sneak into her house.”

He says Hunt is misinformed when he says deputy AGs normally act as mediators in trust disputes. “I am engaged in this litigation to preserve the assets of the charitable trust,” he says. “And any assault on those funds will be met with a substantial counterattack from Deputy Attorney General Apallas.”

Hunt's implication that he argued against the interests of charities in approving the sale of S&P stock is also misinformed, Apallas says. “The tax had to be paid,” he says. “The trustees had no choice.”

But it's the suggestion that campaign contributions played a role in determining his actions that upsets the deputy so much. “That is such an extraordinary charge and has no basis in fact,” he says. “Mr. Lungren has never discussed this case with me. He doesn't know this case from a bar of soap.”

Bernard Orsi is easy to characterize as a villain. He's handsome and rugged with a deep, booming voice. In court, he was always dressed impeccably. He has a rich man's flawless tan.

“Look, I don't mean to be rude,” he says, touching my elbow in that reassuring way. “I'm sure you're a great guy. It's just every time I open my mouth to a reporter I pick up the paper and go, 'Whoa!' ” He slaps his forehead in the same way my relatives in Italy do.

If one believes the Kalmanovitz relatives, disgruntled former S&P employees, and the Schreyacks, Orsi is the devil incarnate.

“He's Siciliiiiian,” says Betsie Diamond, Mr. Paul's former legal secretary, in a phone interview. (Orsi fired her shortly after Mr. Paul's death.)

Diamond tells a story about the morning after Mr. Paul's death. She walked into the office on St. Thomas Way and Orsi, Issleib, and other S&P officers were drinking Jack Daniel's, toasting the death of their difficult patron. “They asked me to join them,” she says in a phone interview. ” 'Ding dong the king is dead,' Orsi said.”

Orsi is best known as one of Joe Alioto's right-hand men during Alioto's mayoralty. He served as chief of staff, general manager of personnel, and later as port director. “He ran the town,” says Marcia Smolens, one of the city's most prominent lobbyists.

After leaving government, Orsi went to work for Pacific Far East Lines, Alioto's shipping business. The company soon hit bankruptcy and Orsi went to work for Mr. Paul in 1978 after Alioto recommended him.

Bitting is also easy for the Kalmanovitz relatives to demonize. “He worked for Howard Hughes,” Stanley Kalmanovitz says one day. “And you know what happened to him.” But for some reason, Issleib and to a lesser degree Bitting have been let off the hook by the relatives. Sharon Hegseth even testified that Issleib wished them luck on their suit. “He said, 'I hope you get what you want,' ” she said. ” 'You deserve it.' ”

But Orsi is the locus of the relatives' hatred. And it's taken a toll on his life, Michael Schwarz says. “A friend of his who he has known for a long time talked to Sharon [Hegseth] and she told this friend a whole bunch of stuff,” Schwarz says in a phone interview. “The friend told Bernie, 'If half of what she says is true you are going to jail.' The two have not talked since. Bernie is so wounded.”

Orsi is accused by the plaintiffs and others of manipulating the last will of Mr. Paul and later codicils of Lydia's reciprocal will agreement after the old man died. Impossible to prove, there still are tantalizing facts that could lead one to consider the relatives' argument.

Consider: On Nov. 13, 1986, two months and four days before Mr. Paul died, his will was succinct. All of his assets would transfer to his wife when he died, and after she died they would fold into the 102 Foundation, a charitable trust named after the first successful beer Mr. Paul bottled, Brew 102.

The foundation would be ruled by a board of trustees. The will named Orsi and Issleib to the board along with seven other members: City of Hope National Medical Center; International Guiding Eyes Inc., a Seeing Eye dog group; Creighton University in Omaha, Neb.; Children's Orthopedic Hospital in Seattle; Children's Hospital in San Antonio; Southwest Foundation for Research and Education in San Antonio; and Marin General Hospital. [page]

The will had a specific list of beneficiaries, including Guide Dogs for the Blind and Ralph M. Davies Medical Center.

On Nov. 14, 1986, Mr. Paul changed his will dramatically. The seven-member board was scrapped and replaced by a three-member board: Orsi and Issleib remained and they were joined for the first time by Bitting. The specific list of beneficiaries was also jettisoned and the Kalmanovitz Charitable Trust was set up and directed, generally, to give money to hospitals and institutions of education.

As trustees of the estate, Orsi and Issleib voted Bitting onto the board of directors of the S&P Co. (According to Apallas and Schwarz, the S&P Co. and the charitable trust are essentially the same thing. All assets left over after salaries, stock dividends, and operating costs go into the trust. The trustees vote the stock — setting salaries, costs, and dividends, and decide how to parcel out the charitable donations.)

I ask Schwarz why the will was changed, but he cannot answer. He says he'll try and get one of the trustees, or the lead attorney on the case, Ron Malone, to call me. Neither happens.

Ultimately, no one will ever know how in charge Mr. Paul was at the time he changed his will. He may well have been in total control of what was going on, as some say. Others say he was drugged up on painkillers. The sad fact is that the truth will probably never come out. There is no objective third party to testify to Mr. Paul's state of mind. Everyone has an agenda. All are equally suspect.

Take Betsie Diamond, for example. She makes the fantastic, unfounded charge that Orsi and the other trustees conspired to murder Mr. Paul.

“They killed him,” she says in a phone interview. “Oh yeah, this is murder here. He was fine the night I left [the day before he died]. He wasn't near death and the only reason his health was failing was they were drugging him.” She says that Orsi used to make rich milkshakes for Mr. Paul in order to bring on diabetic attacks.

Diamond's allegations of drugs are reiterated by Ron Weibelt, Mr. Paul's yacht captain off and on since the 1960s. “At the time [1986], he was in an out [of consciousness],” he said in court. “He'd ask me what day it is.”

Both Weibelt and Diamond are characterized as inveterate liars by the defense. Michael Schwarz refutes all their charges — drugs, murder, will tampering — with a blanket statement.

“This stuff is coming from people who are frankly mentally deranged,” says Schwarz. “The skipper is obviously a fool. It's all loony tunes. There is not a shred of truth to any of it.”

It's in this context that Schwarz lets it be known that Orsi is most likely going to sue Hegseth and Diamond, and maybe even the Sacramento Bee, which published a story in January that contains many of the allegations of wrongdoing against Orsi.

Still, Thomas Hunt, the plaintiffs' attorney, firmly believes the validity of Mr. Paul's last will is open to question. “Mr. Paul had no idea what was in that last will,” he says one day during a court recess.

Diamond's and Weibelt's allegations served as the basis for the Schreyacks' lawsuit contesting Lydia's will. Considering the alacrity with which Judge Dufficy threw their case out — after only two days of opening arguments — the allegations should be viewed with a fair amount of skepticism, the defense says.

The Schreyacks claimed that in phone conversations, Lydia promised to leave the estate to them — all of it.

That the couple had been banished from the Kalmanovitz home in 1986 by Mr. Paul for asking for money all the time and that none of these alleged bequests showed up in any of the numerous wills and will codicils Lydia signed throughout her life bothers Siglinde Schreyack not at all. She says her aunt also never fully understood what she was signing.

“She told me, like old people do, 'I signed a lot of papers today,' ” Siglinde says in a phone interview. “I'd ask her what she signed, and she'd say, 'I don't know, some papers.' ”

In both the family-jewels case and the Schreyacks' will contest, the plaintiffs sought to show that the trustees had isolated Mr. Paul and then Lydia in order to control their decisions and keep the will revisions and other last-minute asset transfers under wraps. They refused to put phone calls from relatives through, plaintiffs allege; and they withheld mail from relatives sent to the elderly couple.

One of the more controversial transfers of Kalmanovitz wealth occurred around the same time that Mr. Paul signed his last will, the one putting all the power in the hands of Orsi, Bitting, and Issleib.

In October 1986, three months before he died, Mr. Paul signed over the deeds to Paradise Cay properties to Orsi and Issleib. No one contests the fact that Mr. Paul always intended to build homes to house his close associates. But, former employees say, he never intended for the two men to own the properties.

“He never gave anything to anyone,” Weibelt says. Which isn't entirely true. Mr. Paul's fits of generosity were well-known. He is said to have given away hundreds of big-screen televisions and VCRs in the mid-'80s.

After Mr. Paul died, beneficiaries were treated to a revolving door when it came to Lydia's will. In codicils to Lydia's will written and signed during the late '80s and into the '90s, people were cut in and out of the wills with regularity. Klaus and his two brothers were in, for $100,000 each. Then they were out. Then the Polish relatives were in, again for $100,000 each. And just as quickly, they were out again. Capt. Weibelt and his wife, Evelyn, were in and out, too. [page]

When the will had settled, the trustees made out extravagantly. Bitting got half a million dollars. Issleib got the multimillion-dollar ranch in Palmdale, which the plaintiffs say was previously promised to Guide Dogs for the Blind as a training center. And Orsi cleaned up, too. He got a check in the amount of the ranch, and he was granted the $3.6 million in Lydia's checking account. A codicil also awarded the trustees and their children millions of dollars, furs, jewels, silver, and silverware.

Throughout the family-jewels case the plaintiffs wove a leitmotif about not being concerned with the money.

“This isn't about money,” was one of the first things Stanley said to me. “Unfortunately in America you have to attach dollar signs to everything to get people to pay attention. This is about tradition. This is about family, about taking care of generations to come.”

Diamond also sees a larger crusade at work, one in which she feels allied. “No one really wants the money,” she says. “They want these three bums out of there. We want a bank or some disinterested party to oversee the estate.”

Schwarz, not surprisingly, sees a different motive — but it too is removed from the legal claims. “It's not just the money,” he says in a phone interview. “Mr. Paul created resentments in his life because he was such a controlling individual. People thought they were not getting their due. And people resolved to get even after he died.”

In the end, though, perhaps Sonia Rollbant summed it up best. Most of time I talked to her she rambled incoherently about this or that, and when she did hit on something controversial — the allegations about drugs — Stanley would tell her to shut up.

But one day, she cornered me outside the courtroom and started going on about her dogs back in France. “You know they are so precious, so fragile like children,” she said. “They need to be taken care of like children, protected from harm, from these terrible maladies. They need a place to play, a garden maybe, a nice garden with benches and maybe a fountain. Somewhere where they can play.

“You know,” she adds after a pause, “that is why we are here.

View Comments