To view original article click here
Mark Townsend in New York @townsendmark
Life was never likely to be normal for Alex Hughes, but few could have foreseen how tangled it would become for the 13-year-old when his father, a multi-millionaire, died after a drinking binge.
Alex is the sole beneficiary of the $400 million fortune amassed by his father Mark, founder of one of the world’s biggest health brands, California-based Herbalife International. But his inheritance has sparked a ferocious legal war, as allegations fly of adults lining their pockets at the teenager’s expense, of sexual harassment of his mother, a former beauty queen, and of lengthy personal vendettas.
Even by the pugnacious standards of litigation in California, the lawsuit filed in the Los Angeles county superior court has been likened to the legal equivalent of World War Three. On one side is Alex’s mother Suzan, a former Miss Petite USA and third wife of Mark, who claims that her son needs pocket money of $877,000 a year to maintain his lavish lifestyle. On the other is the Hughes family trust, charged with looking after Alex’s millions for the next 22 years until he reaches 35. They claim that anyone in their formative years would be corrupted by such instant wealth. ‘He would be better off with his friends if they didn’t see him as the guy who’s going to be loaded,’ one lawyer close to the case told The Observer last week.
Suzan Hughes disagrees. Court papers filed on her behalf suggest that Alex had a deep taste of the California high life while his father was alive. Documents state that ‘this lifestyle included vacationing with Mark at his lavish beach home, cruising on Mark’s yacht, driving in Mark’s fleet of luxury cars and attending events of extraordinary prestige, lavishness and extravagance’.
Suzan alleges that the trustees have pilfered millions in fees from the inheritance and that there could be nothing left to collect when the time comes to take control of the estate. But the trustees believe Alex’s affluence could increase even further – up to half-a-billion dollars by 2027.
The rise of the Hughes dynasty was remarkable. A juvenile delinquent and drop-out, Mark Hughes seemed destined for Skid Row until his mother’s death in 1974 from an accidental overdose of prescription diet pills. Mark’s response was to set up his own health brand in a Beverly Hills wig factory, an enterprise that would eventually boast sales of $1 billion a year through a million independent distributors. But rumours of a drink problem never left the business maverick with the rock star lifestyle. In 2001 he was found dead in bed at the age of 44. A post-mortem revealed that he had died from an accidental combination of alcohol and anti-depressants. Before his death, he had been planning to build a dream home bigger than the White House for his new wife, ex-model Darcy La Pier, previously married to Hollywood hard man Jean-Claude Van Damme.
It is too early to tell whether Alex will develop his father’s easy charm, though lawyers on both sides describe a well-adjusted youngster. Even so, the trustees have consulted psychiatrists who deal with the ultra-rich and a rabbi who has written books on the behaviour of moneyed individuals. However, the trustees claimed last week that until now his mother has blocked all attempts to contact Alex.
They also suspect that it is Suzan, rather than her teenage son, who has asked them to hand over items such as Aubusson pillows, candelabra and a French chandelier. ‘The problem is that until he becomes an adult we have to deal with her, not him,’ said an attorney working for the trustees, who did not want to be named. He added that most of the money spent by the trust since Mark’s death has gone on defending lawsuits launched against them by Suzan.
Trust lawyers describe the case as one of the ‘most contentious trust estate proceedings on record’. Rather than pilfering the Herbalife founder’s riches, the trustees say they saved more than $100m in taxes and sold the company for twice its value when its owner died.
Suzan is unconvinced. Her lawyer, Hillel Chodos, last week told the Los Angeles Times: ‘That’s assuming they still have the money. Suzan wants Alex to have the life his father intended for him… basically they got the goldmine and [Alex] got the shaft.’
Her latest request to the trust involves it paying rent on a Malibu holiday for Alex. Chodos claims the trust has only paid $50,000 for a holiday so far and more is welcome. That request followed another lawsuit from Suzan earlier this summer, in which she alleges that a trustee sexually harassed her several months ago, a claim rejected by the defendant.
Some suspect that she remains bitter about her divorce settlement after separating from Mark in 1999, two years before his death. Under the terms she gets $10,000 a month in child support for Alex, while the trust pays a further $100,000 for her property taxes and the teenager’s tuition, a sum dwarfed by the $34m settlement granted to the Herbalife founder’s fourth wife, La Pier.
Hughes was just 11 years older than Alex is now when he founded his company in 1980, but instant success brought new pressures. During the Eighties, government regulators charged the firm with making ‘untrue or misleading’ product claims, primarily involving the caffeine content of some Herbalife products. Questions arose about the safety of the herbal-based products, attacks which Hughes successfully defended.