Money Crimes with Nicole Lapin - GREED: The Queen of Mean

Episode Date: October 17, 2024

Leona Helmsley ruled the New York real estate scene. Known as "the Queen of Mean" for her ruthless business tactics, she used her massive fortune to always get her way... until the IRS got involved and her empire was toppled forever. Money Crimes is a Crime House Original. For more content, follow us on Instagram and TikTok @crimehouse. To learn more about listener data and our privacy practices visit: https://www.audacyinc.com/privacy-policy Learn more about your ad choices. Visit https://podcastchoices.com/adchoices

This is Crime House. In 1987, the movie Wall Street famously declared, greed is good. Whether or not that's true, it certainly seems like people took it to heart. When we look back on the 1980s, we think of unchecked economic growth. From 1981 to 1989, the US GDP grew over 25%. It remains the third largest decade of growth in the country's history.

Ronald Reagan's policies of tax cuts and deregulation, better known as trickle-down economics, were intended to drive the economy from the top down. That was certainly true for Leona Helmsley. Working with her husband, Harry, she built a multi-billion dollar real estate empire. Along the way, she lied, cheated, and broke the law to get what she wanted.

But Leona's ruthless nature was her ultimate undoing. Eventually, her corrupt business practices came back to haunt her and caused her queendom to crumble. As the saying goes, those who don't understand history are doomed to repeat it. That's especially true when it comes to money. If you want to make the right decisions when it comes to managing your assets, you need to know what mistakes to avoid and how to spot a trap. This is Money Crimes, a Crime House original. I'm your host, Nicole Lapin. Every Thursday, I'll be telling you the story

of a famous financial crime and giving you advice on how to avoid becoming a victim yourself. In this episode, I'm covering the story of Leona Helmsley, the New York socialite and real estate tycoon dubbed the Queen of Mean. I'll tell you about Leona's rise through society's social ranks and how she gained her fearsome reputation. Then I'll get into the unethical and illegal financial practices that ultimately brought her down. Take back your free time with PC Express Online grocery delivery and pickup.

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technology, the Defender 110 lets you go further and do more. And with seating for up to seven, everyone can enjoy the journey. Learn more at LandRover.ca. At the dawn of the 1980s, New York City was entering a new era. The free-spirited 60s and 70s gave way to the drive and determination of the 80s.

Paisley, Sequins, and disco were out. Slick-backed hair and power suits were in. As Wall Street rebounded from the economic turmoil of the late 70s, the city's real estate market took off with it. With money flooding in like never before, the newly rich bought luxurious homes and gentrified a ton of the city's affordable housing.

Between 1980 and 1989, prices increased by 152% citywide. An exclusive group, people with the names like Rudin, Durst, Rose, Fisher, Tishman, and Resnick, made fortunes off the booming real estate industry. But none of them quite made the mark like Harry and Leona Helmsley, a billionaire power couple behind the city's most exclusive hotels. They epitomized the so-called Decade of Greed as they looked down on the city from their penthouse above Central Park. But their origins were much more humble than that.

Leona was born in 1920, about 100 miles north of New York City, to Polish immigrant parents who named her Lena Mindy Rosenthal. While Lena was still in diapers, her family moved to Brooklyn, where she spent most of her childhood. And shortly after high school graduation, she changed her name to the anglicized Leona Roberts. We don't really know what her upbringing was like, but if her name change is any indication, it seems like Leona was desperate to distance herself from her past. She took a big step in that direction when she married attorney Leo Panzebrer. Her marriage to Leo got Leona a taste of the good life, far from the poverty of her childhood. She also gave birth to her first

and only child, Jay. But their relationship eventually broke down. Even though Leona had a very comfortable life, she still wanted more. After her divorce, she found a second, even more successful husband, garment industry executive, Joseph Glubin. That relationship ended too. By 1960, Leona was a 40-year-old single mother,

but she refused to give up on her high society dreams. Following her second divorce, Leona got a job as a receptionist at a high-end residential real estate firm. It turned out that she could do a lot more than just answering phones. Shortly after taking the job, Leona got her real estate license and became a sales agent.

It wasn't long before she carved out a niche in the ritzy Upper East Side, selling condos to new money clients. By the time Leona met Harry Helmsley, she had made a name for herself as a shrewd and ruthless real estate investor and was a millionaire in her own right. In 1970, Harry hired her to work for Brown, Harris, and Stevens, a residential real estate

firm that he'd bought a few years back. Even though Harry was 11 years older than her, the two of them had a lot in common. Like Leona, Harry came from a modest background. He was raised in the Bronx by working class parents and had to start his journey to the upper class from the very bottom. When he was only 16 years old, he was hired by a small Manhattan real estate firm

to perform menial tasks like collecting rent from tenants. But Harry had a knack for business. He saw the value in underdeveloped properties, and after the financial crash in 1928, he started buying bankrupt office buildings that he would flip and sell for profit. Like his investments, Harry tended to fly under the radar. He worked with partners on different projects, letting them get the publicity for flashy acquisitions like the Empire State Building, which he bought for $65 million in 1961. When Leona started working for Harry, they immediately clicked. They shared a love for money and an unstoppable drive to increase their wealth at all costs.

And that ruthless drive eventually got Leona into trouble. A little while after she started working for Harry, Leona had her first of many brushes with the law. As a real estate agent, one of her specialties was converting apartments into condos. At a very basic level, that usually means turning rented apartments into units you can buy instead, and you also become a shared owner of all the common spaces. And in 1971, Leona was put in charge of converting a 20-story apartment building, but she had her work cut out for her. For starters, she couldn't just file some paperwork

and then all of a sudden put those units up for sale. At least 35% of the building's tenants had to agree to the plan, and it was a tough sell. The building was rent stabilized, and Leona was asking for way more than the apartments were worth. But instead of coming down on her asking price, Leona decided to strong arm the tenants instead.

To get them to buy their units, she pretended to have other buyers lined up. And if the tenants didn't sign within 48 hours, they'd be out of luck. Of course, none of that was true. And when the tenants caught on to what Leona was doing, they went straight to the New York Attorney General. By the time it was all said and done, the building's conversion was blocked, they went straight to the New York Attorney General. By the time it was all said and done, the building's conversion was blocked and Leona's real estate license was in danger of

being revoked. At 51 years old, she was facing the prospect of having to start all over again. But in the nick of time, luck arrived for Leona in the form of a marriage proposal. From the moment Leona met Harry Helmsley, it was love at first sight for both of them. There was just one little problem with that. Harry was already married. But Harry knew what he wanted. He divorced his wife in 1971, and by the time 51-year-old Leona was going through all of her legal troubles in 1972, she and Harry

were newlyweds. They instantly became one of the wealthiest and most talked about couples in the city. Now, it didn't really matter what happened with Leona's real estate license. As Harry's wife, confidant, and business partner, she had bigger things in mind. By this point in the 70s, the economy wasn't doing great. As inflation rose into the double digits, the Helmsleys decided that they could avoid the worst of the financial crisis by investing in hotels.

It offered them more cashflow. They could raise room rates without having to wait for leases to expire or worrying about rent control. Harry already had a couple of hotels in his portfolio, but for the Helmsley's first acquisition as a couple, they bought the historic Villard Houses on Madison Avenue in Midtown Manhattan. Then they converted them into the 51-story

Helmsley Palace Hotel, which opened in September, 1980. It was to become the crown jewel of the Helmsley's real estate empire. Harry named Leona the president of the Helmsley Hotels, and she quickly became the face of the brand as well. Leona was meticulously involved in every aspect of the Helmsley Palace. Every detail had to be perfect. As they were preparing to open the hotel, Leona noticed that the towels were too thin

and she gave the staff quite an earful about it. An advertising executive Leona had hired saw the whole thing and realized they had a golden opportunity. She thought, what if they used Leona's entitlement as a selling point? Stay at the Helmsley Hotel and you too can be equally as entitled, at least for the night. The resulting campaign sold

Leona as the Queen of the Helmsley Hotels, which was the only palace in the world where the Queen stands guard. And it was a hit. People liked the idea of staying at a hotel fit for royalty and room occupancy quickly rose from 25% to 70%. By the end of the 80s, Leona had about 30 hotels in her portfolio throughout the United States. And the more successful she got, the more she leaned into her regal persona,

posing in tiaras, draped in furs, and wearing dresses that cost thousands of dollars. But as her public recognition grew, she became increasingly tyrannical toward her staff and was known to fire people on the spot if beds weren't made properly, if lampshades were crooked, or if waiters had dirty fingernails.

Anyone today would definitely consider it a hostile work environment. But that was hardly the worst thing going on behind closed doors. The Helmsleys were willing to do whatever it took to build their empire, even if it meant breaking the law. And even though Leona called herself a queen, she and Harry would still have to answer for their crimes.

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Harry Helmsley asked his business partners for a big favor. He wanted them to take out a second mortgage for almost 20 million dollars to help pay for additional costs they'd incurred. Before Harry's partner signed anything, they opened up the hotel's books. Apparently, Harry and Leona needed more money because they had spent a ton of the business's funds on personal expenses. And that is not legal.

Even if unintentional, mixing personal and business expenses is really risky. For one, claiming personal expenditures as business expenditures can trigger an audit from the IRS. It's a very involved process, especially if you can't afford expensive lawyers like Harry and Leona. If audited, you could face penalties, interest fees, and even legal action.

Not to mention, you're likely to face an even bigger tax bill. If your business is audited or sued, it also puts your personal assets at risk. And if the authorities suspect you did it on purpose, they may even charge you with criminal tax evasion or fraud. For the time being though, the Helmsleys weren't facing any criminal charges,

but they were about to be struck by a tragedy that sent their greed and viciousness to a whole new level. In 1982, when Leona was 61 years old, her son Jay died of a heart attack. Leona was devastated by the loss of her only child and had his body flown from Florida to the family crypt in New York. But the blow didn't soften her edges.

Jay and his family had been living at a property the Helmsleys owned. Almost immediately after Jay died, the Helmsleys evicted his wife Mimi and son Craig for no discernible reason. Prior to Jay's death, Leona loved Mimi. She showered her daughter-in-law with expensive gifts and the two families went on multiple vacations together. But now, none of that mattered. In a fit of grief, it seemed like Leona blamed Mimi for Jay's death, if only because Mimi had been the one to break the news to her. been the one to break the news to her. After the funeral, she vowed to destroy Bini's life, and she made good on her threat by ruining her financially. Because Leona didn't stop with the eviction. Over the next few years, she and Harry filed numerous petty lawsuits against

Jay's estate. In one of them, the Helmsleys attempted to recoup the $7,000 that they'd paid to have Jay's casket transported from Florida to New York. She even attempted to take back a ring she'd allegedly lent to Mimi, who later produced a written statement from Leona proving that it had been a gift. Leona also sued the estate for money she allegedly lent to her son.

Although many of the more frivolous claims were rejected, by the end of it all, Leona was awarded most of the $150,000 in Jay's estate. Keep in mind, this was not a lot of money for Leona at this point, but for her daughter-in-law, it definitely was. And now Mimi was left with practically nothing.

The entire ordeal played out very publicly. It wasn't long before Leona got a new nickname, Queen of Mean. And soon, the world would find out just how mean she was. In June of 1983, Leona and Harry bought a 21-room mansion in Greenwich, Connecticut. It was as fancy as you'd expect. The estate, which they intended to use as a weekend retreat, was complete with hand-carved

English mantelpieces, a 640 cubic foot silver vault, formal gardens, a tennis court, and two swimming pools. The property itself cost $8 million, plus another $3 million for furnishings and antiques. But it still wasn't up to Leona's impossible standards. She quickly began refashioning the couple's new home in her signature over-the-top way. The lavish remodel came with a hefty price tag though, somewhere between $2 and $3 dollars. But when the bills started to come in, Leona refused to pay. By the end of the remodel, she'd accumulated a laundry list of

aggrieved contractors, including painters, a stonemason, and a marble stone cleaner. In one instance, she refused to pay a $13,000 bill for a barbecue pit for what she was calling shoddy workmanship. As you can imagine, the contractor was pretty upset about it, especially because he had six kids at home to feed. But Leona wasn't moved at all. When she heard about his family's situation, she reportedly said,

Why didn't he keep his pants on? Then he wouldn't need the money. So you can imagine the contractor was in a pretty tough position here. He needed that money. Unfortunately, it's a situation a lot of people find themselves in. And there's not a lot you can do to force someone to sign a check short of a lawsuit. But if you're a contractor, website designer, or anyone who works on a per-project basis, there are ways to protect yourself.

Before you sign anything or begin any work, it's important to detail out all responsibilities in what's called a Service Level Agreement or SLA. It should cover everything from the scope of work to execution to final delivery. An SLA should also include details of the service, the standards the provider must adhere to, and the metrics to measure the performance.

In the event that someone refuses to pay you and you do need to lawyer up, it's great to have an SLA to refer to that proves that you held up your end of the bargain. It's not clear if Leona's contractors had an SLA or not, but they refused to slink off with their tails between their legs. Before taking legal action,

some of them took their stories to the press. In addition to airing their grievances to the New York Post, they shared the invoices that had been paid. And just like with the hotel, the Helmsleys had billed the work on their house as a business expense. The reporter who received the tip,

a guy named Ransdell Pearson, spent the next year investigating the Helmsleys. And it wasn't the only potential legal problem Leona and Harry were facing. Around the same time, the Helmsleys were caught up in a tax evasion case involving the luxury jewelry company called Van Cleef and Arpels. This was the jewelry company in town. Their pieces were a major status symbol for anyone who could afford them.

Naturally, Leona had to have some for herself at a discount, of course. The jewelers were happy to cooperate, just not in an entirely legal way. In the mid-80s, the New York Attorney General's Office charged the company's president and controller with tax evasion. They were accused of scheming with customers like Leona to evade millions in sales tax on jewelry. According to the lawsuit, Leona spent nearly half a million dollars at the store between 1980 and 1981, avoiding about $40,000 in sales tax. New York state law says you do not have

to pay sales tax on items that are delivered to another state. So Leona wore the jewelry out of the store and arranged for the empty boxes to be shipped to her home in Connecticut. Except she didn't pay taxes on them there either. But once again, Leona got away with it. She received immunity in exchange for testifying against Van Cleef and our pals. Obviously, this was not out of need.

Leona's drive to cheat and swindle was becoming almost pathological. One time she reportedly ordered a store clerk to rewrite the bill for a pair of earrings so that she could save $4 in sales tax. But whether she was dodging giant tax bills or pinching pennies, Leona was breaking the law,

and it wouldn't be long until she got what was coming for her. At Wealthsimple, we're built for whatever you're building. Built for Jane, who wants to break into the housing market. We're built for Ted, who's obsessed with what's happening in the global markets. And built for Celine, who just wants to retire and explore the world's flea markets.

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federal investigators gathered evidence against the Helmsleys. And then in 1988, the US Attorney for the Southern District of New York, Rudy Giuliani, made an announcement. He was indicting the Helmsleys and two of their associates on dozens of state and federal charges, including conspiracy, income tax evasion,

mail fraud, defrauding investors, and extortion. The indictment claimed that the Helmsleys illegally evaded $4 million in taxes through their fraudulent billing scheme. Leona had gotten away with a lot in the past, but this was a lot to overcome. Still, she was determined to try. On the day of their indictment,

Harry and Leona arrived at the AG's office in a black limousine to surrender themselves to the authorities. They both pleaded not guilty. The Helmsley's lawyers spent the next year preparing to defend their clients. But the couple's terrible reputation wasn't doing them any favors.

In the lead up to their trial, the press was all over them, publishing story after story on the Helmsley's outrageous behavior. And Leona was forced to basically deal with it on her own. Harry was 80 years old and not in great shape. He had suffered a series of strokes and lost a lot of mental capacity.

He was so diminished that the judge overseeing their case declared him unfit for trial. But Leona wasn't off the hook. At 69 years old, she was sharp as a tack. When the trial started in the summer of 1989, she was forced to face justice on her own. It was pretty clear that her defense would be an uphill battle.

During opening statements, Leona's lawyer did not mince words about his client. He famously said, I don't believe Mrs. Helmsley is charged in the indictment with being a tough bitch. He was hoping that the jury would see past her horrible reputation and be swayed by the facts. But those weren't exactly in her favor either.

Leona had made plenty of enemies over the years and they were more than happy to testify against her. When it was all said and done, Leona was convicted of 33 counts, including mail fraud and conspiracy to defraud the United States. The jury found her guilty of evading $1.2 million in federal income taxes.

The two business partners who colluded in the scheme alongside the Helmsleys were also convicted of abetting the tax fraud. In 1989, Leona was sentenced to four years in prison, 750 hours of community service, and a $7.1 million fine for tax fraud. Her lawyers tried for years to appeal the conviction, but it was no use. In 1992, 71-year-old Leona's sentence was upheld. The decision seemed to have quite an effect on her. After the sentence was read, she collapsed and was rushed to the hospital.

It turned out the Queen of Mean did have a heart, and the thought of her punishment had made it give out. But Leona did recover and was deemed healthy enough to serve her sentence. In a bit of an irony, she was released after only two years for good behavior. Even if Leona's time in prison had changed her, she still had to face the consequences. After her release in 1994, she was forced to give up control of the Helmsley hotels

because New York does not allow convicted felons to hold liquor licenses. Leona had been officially dethroned, and it seemed like she was ready to abandon her queendom. After prison, Leona lived a quiet existence with her husband. They had another three years together until Harry passed away in 1997, leaving his nearly $2 billion estate to Leona. Following Harry's death, Leona spent the rest of her life largely out of the public eye.

A decade after her beloved husband died, she passed away in 2007 from congestive heart failure at the age of 87. Surprisingly, Leona left a lot of her estate to charity, both before and after her death. She donated $5 million to the families of New York City firefighters after September 11th, and $2.5 million to the 9-11 Memorial Museum. She also gave $25 million to New York Presbyterian Hospital

for medical research. And Leona was also generous with her loved ones. She famously established a $12 million trust for her beloved dog, Trouble. And she left millions of dollars to her brother, Alvin, who was in charge of making sure trouble got everything she needed. Leona also gave two of her grandchildren $5 million each, as long as they visited their father's grave every single year. But those on Leona's bad side

were left with nothing. Her other two grandchildren were left out of her will entirely and so was her daughter-in-law, Mimi. Even at the end of her life, Leona had to come out on top. And if you think about it, that's kind of what caused her entire downfall. If she'd just paid what she owed and conducted her business honestly, she wouldn't have

gotten into any trouble and she could have reigned over New York City without question. But as they say, pride comes before a fall. Leona couldn't help herself. She thought she was above the law, and because of that, her empire crumbled. That's it for today's story. But before we go, I have one final takeaway. No matter what Gordon Gekko says, greed is not good. Especially when it comes to your taxes. I get it.

Taxes suck. We all hate paying them. Thankfully, there are tons of legitimate ways though to reduce what you owe. Of course, I am not a CPA, but things like charitable donations, actual business expenses, and pre-tax retirement contributions are great ways to reduce your tax bill.

So do yourself a favor and don't try to get cute. If you mess with the IRS, they will come knocking. And just like Leona Helmsley eventually learned, they won't leave until they get what they're owed. Thank you so much for listening. I am your host host Nicole Lapin. Come back next time as I take you through another wild story and offer you some advice along the way.

Money Crimes is a Crime House original powered by PAVE Studios. Join me every Thursday for a brand new episode. Here at Crime House we want to thank each and every one of you for all of your support. If you like what you heard today, reach out on social media at Crime House on Instagram, at Crime House Studios on TikTok and at Crime House Media on X. Don't forget to rate and review and follow Money Crimes wherever you get your favorite podcasts. Your feedback truly makes all the difference. Money Crimes is hosted by me, Nicole Lapin, and is a Crime House original powered by Pave Studios. It is executive produced by Max Cutler.

This episode of Money Crimes was produced and directed by Ron Shapiro, written by Morgan O'Hanlon, edited by Alex Benidon, fact checked by Claire Cronin, sound design by Carey Murphy, and included production assistance from Sarah Carroll.