The Secret Tale Of William Lauder ?

Make Money Blog$-Do rich folk get special treatment regarding 

the privacy of their court cases?

 A case study involves the chairman of Estee Lauder.

Last year lawyers for William P. Lauder, then chief executive of the Estée Lauder Co., filed a highly unusual motion in New York Supreme Court. They asked the judge to keep anonymous all the parties to a suit that he had filed and to seal the file from prying eyes. Was Lauder trying to keep secret a formula for the company's beauty products? Hardly. His suit concerned a dispute with a woman not his wife, with whom he had had a daughter. His lawyers nonetheless tried to justify the secrecy on the grounds that he's "chief executive of a major multinational corporation." They claimed, "When the file is open, the gossip press can review it and quote from it."

Imagine that. Judge Emily Goodman ultimately refused the sealing request but signed an order forbidding the parties and their lawyers to speak to the press. Naturally, some details were leaked to the New York Post, but it has remained mostly hush-hush; at least one stock analyst covering Estée Lauder was unaware of the controversy. FORBES obtained approval to review various documents only in the judge's chambers.

If the messy facts of Lauder's case are unique, his attempt to obtain secret justice is all too routine among the ultrawealthy. You can go back to William Randolph Hearst, whose heirs sought in 1977 to have his probate files sealed. The judge resisted the effort, pointing out that "when individuals employ the public power of state courts to accomplish private ends," they can open themselves up to "the possibly disadvantageous circumstance" of public scrutiny.

In the end the heirs managed to keep the probate files closed. Billionaire grocer Ronald Burkle was not so lucky when he waged a three-year battle to keep his divorce records private. In 2006 a California appellate court struck down a law that Burkle had invoked requiring financial records from divorces to be kept under seal. In September 2009 Henry Nicholas, founder of network equipment maker Broadcom ( BRCM -news - people ), lost a similar battle to seal his divorce records in an Orange County, Calif. court. He is appealing.

The Lauder case involves not a divorce filing but a 32-page contract between William Lauder and Taylor Stein (right), a 39-year-old socialite who is the mother of their now 2-year-old daughter. It spells out that a trust held for Stein would get $1 million annually through 2017 if she did not reveal the identity of the child's father, among other proscribed activities aimed at distancing Stein and her child from the Lauder family and keeping the matter under wraps.

Lauder, 49, is the son of Leonard Lauder (whose name appears in the upcoming table, with an estimated $4 billion net wealth). William served as chief executive of Estée Lauder, founded by his grandmother in 1946, from July 2004 to July 2009, during which time the Stein affair and then the legal battle were taking place, mostly out of the press. His reign was not especially successful. Three years into it the firm surprised the industry with the announcement that William would be replaced within two years by Fabrizio Freda, a nonfamily member. Analysts cheered, and the company's stock surged 8% on the day of the announcement. The stock is up 83% (62 points ahead of the market) since Freda took over last July. Estée Lauder netted $406 million from continuing operations on revenue of $7.48 billion in 2009. William remains chairman.

source: http://www.forbes.com

Posted in: Billionaires