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Tuesday, May 21, 2024 | Back issues
Courthouse News Service Courthouse News Service

Lawyers Pulled a Fast One, DHL Heir Says

(CN) - An heir of the founder of DHL Express claims his trust fund dwindled from $90 million to $12 million after his attorneys and trustee increased the attorneys' contingency fee to 56 percent without his approval. And he claims that the attorneys increased guardianship payments to his grandparents to "the tune of hundreds of thousands of dollars" to keep them from protesting.

Junior Larry Hillbroom sued attorneys Barry Israel and Keith Waibel in U.S. District Court in the Northern Mariana Islands, Hagatna, Guam. Both lawyers were admitted to the California Bar; Israel lives in Santa Barbara and Waibel in Guam, according to the complaint.

Larry Hillblom, the co-founder and former owner of DHL Express, died in an airplane crash in May 1995, leaving behind four children and an estate worth about $550 million, according to the complaint.

Junior - whose name is listed as Hillbroom in the complaint, which refers to him throughout as Junior - was a pretermitted heir, living in poverty in the Republic of Palau at the time of his father's death.

He learned in mid-1995 that he was entitled to a portion of the estate. In the spring of 1997, Junior proved that Hillblom was his father through DNA testing, and was issued an heirship settlement entitling him to 15 percent of the estate.

In January 1998, attorneys Israel and Lujan persuaded Junior's grandmother, Naoko Imeong, "to execute a retainer providing the attorneys with a 38 percent contingency fee of the gross amounts Junior recovered from the Hillblom estate and any other subsequent related litigation or settlement," according to the complaint.

Israel and Lujan then received "court approval to use Junior's interim payments from the Hillblom Estate to: relocate Naoko, Junior's grandfather, Marciano Imeong, and Junior from Palau to Guam, purchase a car and house for them, pay for their utilities and food and pay for guardianship expenditures," the complaint states.

The attorneys' actions "effectively shielded Junior from outside influences and gave the attorneys the means to immediately access and control Junior and his grandparents ... [and] a mechanism to render Junior and his grandparents entirely dependent on them for their well-being in all respects," according to the complaint.

Junior says he never saw, and Lujan failed to produce, an order from the probate court approving the 38 percent retainer. He says he was informed that the court "expressly capped the fees for the attorneys representing the qualified heirs, including Lujan, in the middle 30 percent range."

Knowing that the probate court would soon distribute $7.5 million to Junior, "and to ensure that their gosling Junior would soon begin to lay them his golden eggs, the attorneys employed Waibel in their conspiracy to establish and serve as trustee to the JLH Trust and seize immediate control over Junior's interests and representation," the complaint states. The attorneys made sure to hold the power to remove and appoint trustees and to veto any of Waibel's actions to "ensure that they could control Waibel," Junior says.

In September 2000, the two attorneys sought to increase the contingency fee to 56 percent, keeping Junior and his grandparents ignorant of their actions, "to ensure they would never learn of the material facts of conspirators' scheme in time to have a fair opportunity to challenge the increase to 56 percent," the complaint states.

In the application for approval of the 56 percent retainer in the Guam guardianship case, "conspirators neither raised the issue of whether the 56 percent retainer was fair to or in the best interests of Junior, not did conspirators present any justification for the increase other than to state that the JLH Trust had the sole discretion to enter into such an agreement," the complaint states.

Junior says he did not become aware that the defendants drained so much money from his trust until Nov. 10, 2006, when he met with an FBI agent in San Francisco. After that meeting, Junior says, he discovered for the first time that his "ultimate recovery after the attorneys deducted their inappropriate fees and unsubstantiated costs from his approximately $90 million settlement of the Hillblom probate case was only about $12 million."

Junior says the defendants' fraud "resulted in the Guam Guardianship Court's approval of the 56 percent fee increase without any real contest by either Junior or any representative legitimately protecting his interests and in violation of the Hillblom probate court's prior orders capping the attorneys' contingency fee in the middle 30 percent."

The defendants' failure to inform Junior of their actions was "especially deceitful ... because plaintiff is informed and believes that Waibel, and not Naoko, was Junior's operative guardian at the time because Junior was outside of Guam and conspirators never informed Junior of their execution of the 56 percent retainer," the complaint states.

Junior seeks special damages, forfeiture of attorney's fees, and restitution for legal malpractice and fraud. He is represented by Mark Hanson of Saipan.

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