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Leona Helmsley, 87; ruthlessly ran part of hotel empire

Leona Helmsley, with her husband, Harry. She served 21 months in jail for tax-evasion. Leona Helmsley, with her husband, Harry. She served 21 months in jail for tax-evasion. (1991 file/afp)

WASHINGTON -- Leona Helmsley, a self-made businesswoman who helped run the $5 billion New York real estate and hotel empire of her third husband before being convicted of federal income-tax evasion, died yesterday at her summer home in Greenwich, Conn. She had a heart ailment and was 87.

Mrs. Helmsley's lust for media attention and her combative style earned her the tabloid nickname "the Queen of Mean." By any standard, she was a woman of moxie and accomplishment -- a college dropout who as a 42-year-old divorced mother began a successful career as a real estate broker.

In 1972, she married Harry Helmsley, whose property management business included dozens of apartment complexes; office towers such as the Empire State Building; and a nationwide chain of hotels.

Mrs. Helmsley assumed the presidency of the hotel component and displayed an autocratic manner that she emphasized was geared to better customer service.

In advertisements for the luxurious flagship, the Helmsley Palace, she presented herself as tiara-crowned royalty with captions that read, "the only Palace in the world where the Queen stands guard." She was subsequently shown in the ads polishing silver, making beds, and tasting the cuisine. "I wouldn't settle for drab-looking food," she said in one caption. "Why should you?"

Mrs. Helmsley's personality became a central part of the tax charges and her popular lore. Several disgruntled employees testified that her exacting ways scraped away the dignity of everyone on her payroll, from the cleaning staff to the top executives.

One of Mrs. Helmsley's personal maids testified against her during the income-tax evasion trial in 1989. The maid said Mrs. Helmsley had boasted: "We don't pay taxes. Only the little people pay taxes." Mrs. Helmsley denied having said that, but her reputation for high living made the comment seem convincing to many, and it proved a damning statement at trial.

Most of the charges stemmed from Mrs. Helmsley's ostentatious devotion to her husband. She threw lavish, celebrity-studded birthday parties for him with the theme "I'm Just Wild About Harry;" once bought him a $45,000 clock; and spent millions of dollars overhauling their Connecticut mansion, Dunnellen Hall, on 26 acres near Long Island Sound.

She reportedly wrote off the costs of such luxuries -- a $130,000 stereo system that piped music all over the Connecticut property, $500,000 in jade art that the couple claimed as antique furniture for their hotel business -- against the profits of the hotel chain.

The Helmsleys were indicted on charges of skirting $4 million in income taxes. Harry Helmsley, 11 years older than his wife and nearing 80 at the time, was found mentally incompetent to stand trial. He died in 1997.

As Leona Helmsley's trial began, it was revealed in court documents that she had participated a few years earlier in a sales-tax fraud scheme involving the exclusive jewelry company Van Cleef & Arpels. She had failed to pay taxes on about $500,000 worth of items but was granted immunity for her testimony against the company's officials, two of whom pleaded guilty.

Mrs. Helmsley was convicted in 1989 on the tax-evasion charges related to the hotel. (She was found not guilty of extortion charges related to kickbacks from hotel contractors and suppliers.) Republican presidential hopeful Rudy Giuliani, then a US attorney, was one of the two chief prosecutors in the high-profile case.

In a momentous fall, Mrs. Helmsley exchanged her luxurious penthouse apartment for a jail cell to serve 21 months of a four-year sentence. She was ordered to pay more than $8 million in fines and back taxes.

Leona Mindy Rosenthal, the daughter of a hat manufacturer, was born July 4, 1920, in Marbletown, N.Y., and grew up in Brooklyn. Her parents were Polish Jewish immigrants.

As a sophomore, she abandoned English studies at Hunter College to earn money as a dress-company model. Later profiles said she worked as a Chesterfield cigarette girl in promotional advertisements, but investigative reporters assigned to cover the Mrs. Helmsley downfall disputed the claim.

She had a son in an early marriage to lawyer Leo Panzirer. She twice married and divorced Joseph Lubin, a garment industry executive. The son from her first marriage, Jay Panzirer, died in 1982 at 40 after a heart attack.

She leaves a brother, four grandchildren, and 12 great-grandchildren.

By 1962, her marriages had collapsed and she was living with her mother. She took the less-ethnic pseudonym Leona Roberts -- she legally changed her surname just before marrying Harry Helmsley -- and found work as a receptionist at Pease & Elliman, a real estate brokerage company.

Her organizational skills and ambition helped her advance over seven years to senior vice president. By the late 1960s, she had become independently wealthy on commissions on a series of projects to convert rental buildings to cooperatives. In 1970, she was hired by a subsidiary of Harry Helmsley's company, and her assertiveness won the boss's notice.

Helmsley, who had no children, divorced his wife of 33 years and married Leona. To celebrate their union, her husband began the Harley Hotel chain, using the first syllables of "Harry" and "Leona" for its name.

Leona Helmsley remained an active figure in the business, particularly in the growing hotel holdings. She reportedly won the leadership of her husband's six New York hotels by criticizing and then improving on the professional interior design motif for his prestigious Park Lane Hotel in Manhattan.

In 1980, Mrs. Helmsley was named president of Helmsley Hotels Inc., which included the Hospitality Motor Inn national chain.

She was obsessed with customer service and micromanaged details in the kitchen and at the front desk. By the time the tax-evasion charges surfaced, she had long been dubbed the "Queen of Mean" by the tabloid media; other headlines used "Dragon Lady" and "Rhymes With Rich."

At 68, she began serving time in a minimum security prison in Danbury, Conn.

After her release in 1994, Mrs. Helmsley and her husband escaped the harshest media attention by staying on their property in Scottsdale, Ariz. She performed 750 hours of community service as a condition of her early parole and returned to a coterie of admirers in New York.

She immersed herself in her husband's business, including its property management operations, as he became increasingly infirm. She began selling many of the landmark properties, and partners began to accuse her of enriching herself at the expense of the company.

Forbes magazine recently estimated her net worth at $2.2 billion, placing her at 350 on its list of the world's wealthiest people. The Chronicle of Philanthropy reported that she donated $5 million to the American Red Cross for Hurricane Katrina relief efforts.