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The Family Jewels 

In life, Paul Kalmanovitz controlled every business decision related to his $500million brewery/real estate dynasty.He even made detailed plans forthe governance of his estateafter he died. So why is the Kalmanovitz fortune the center of two vituperative

Wednesday, Sep 20 1995
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?

About The Author

George Cothran


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