‘Hillbroom trustee paid himself $3.4M more’

While Keith Waibel was subject to a limited fee agreement as then- trustee of Junior Larry Hillblom, record shows that he paid himself at least $7.6 million, according to Vietnam-based lawyer Barry J. Israel in his motion to dismiss Hillbroom’s lawsuit against him and David J. Lujan.

Israel, through counsel Theodore W. Frank, said that Waibel was subject to a limited fee agreement authorizing him to be paid a 2% fee of the trust’s value on an annual basis, yet the records show that he gave himself at least $119,500 in unsupported cash advances and another $914,219 in claimed out-of-pocket expenses.

Any such cash advances and out-of-pocket expenses, were inappropriately charged because they were for work on Waibel’s other clients or sometimes for his wife and, later, his girlfriend/mistress and baby in Vietnam, Frank added. That amount is totally unjustified given how much was apparently actually in the Hillbroom’s trust each year.

Frank raised this alleged Waibel misconduct in his argument that Waibel deliberately concealed his misconduct to divert attention to false allegations of extrinsic fraud made against Hillbroom’s former lawyers, Israel and Guam lawyer David Lujan.

Frank said that Waibel ingratiated himself to Hillbroom, playing on the latter’s drug addiction to foster a father-son relationship. He said Waibel did it such that Hilbroom would not question or challenge Waibel regarding his (Waibel) mismanagement of Hillbroom’s trust funds and assets.

Yet, Frank said, Waibel wanted more permanent assurances that his wrongdoing would never be discovered by Hillbroom.

Frank said Waibel, with the assistance of his subsequent lawyers, concocted these false allegations against Israel and Lujan.

Frank said Waibel coerced Hillbroom into thinking the allegations were true, and hoped Israel and Lujan would settle without a fight, permanently extricating him from any specter of wrongdoing in Hillbroom’s eyes.

Frank said Waibel, in exchange for his cooperation in the Hillbroom lawsuit, entered into an agreement with Hillbroom agreeing to be sued, offering his testimony in exchange for assurances that any judgment against him would not be pursued.

Frank said although Waibel claims to have admitted to his misconduct in 2006 as trustee in Hillbroom’s Trust, from 2006 to 2012 he paid himself an additional $3.4 million in fees.

Frank said clearly, there was no intention to remove Waibel as trustee during the pendency of this “shake-down lawsuit.”

He said Waibel continued as trustee for almost five years after the Hillbroom lawsuit was filed, even while the complaint goes on for pages accusing him of serious wrongdoing.

On Feb, 6, 2009, Hillbroom filed his original lawsuit.

Frank noted that Waibel’s trustee resignation letter took in effect on Dec. 31, 2013.

Hillbroom is suing Israel and Lujan for allegedly conspiring with Waibel to inflate their contingency fee when the fortune of the late DHL Worldwide Express co-founder Larry Hillblom was still undergoing probate proceedings in the Superior Court. Israel and Lujan have denied the allegations.

Hillbroom is one of the four DNA-proven children of Hillblom. His name is spelled differently from that of Hillblom.

Hillblom died in a seaplane crash off Anatahan waters on a flight from Pagan Island to Saipan on May 21, 1995, leaving behind an estate worth approximately $550 million. The bodies of the pilot and a business partner were found, but Hillblom’s body was never recovered.

In 2000, then-Superior Court judge pro tempore Alexandro C. Castro approved the settlement agreement proposed by the four children and Hillblom’s Foundation, paving the way for the distribution of the remaining $72 million cash held by the Hillblom estate.

Based on the settlement agreement, the foundation received $24.9 million. The four children received the following: Hillbroom, a Palauan, $11.3 million; Jellian Cuartero, a Filipino, $11.6 million; Mercedita Feliciano, Filipino, $11.9 million; and Nguyen Be Lory, Vietnamese, $13 million.

In the final settlement, each of the four children reportedly received a gross payment of $90 million, reduced to $50 million after taxes and fees, while the remaining $240 million went to the Hillblom Foundation.

Frank, however, disclosed that distributions received in cash by Hillbroom’s Trust were $63.8 million, plus the $585,922, and assets valued at $6.2 million were also distributed to Hillbroom and later sold most at a profit.