Oversight sparks a fight between generations of Perelmans

It was 1990, and Raymond Perelman, the noted businessman and philanthropist, was about to make a novice's mistake.

Perelman was negotiating a complex $27 million business deal intended, in part, to ensure lifelong wealth for a granddaughter, Alison.

That, at least, is his recollection.

But Perelman, then 72, never made sure that the key details of what he wanted were put into writing.

Twenty years later, that omission has led to an ugly legal battle in Philadelphia between Perelman and the man on the other side of the table - his youngest son, Jeffrey, Alison's father.

An ever-increasing stack of legal briefs in state and federal court is chock-full of words such as fraud, stealing, and vicious, words not normally associated with either the father or his lesser-known, but also civic-minded, businessman son.

Efforts to reach a resolution between Raymond, now 93, and Jeffrey, 61, have been fruitless. Jeffrey won the initial legal round, but his father appealed.

So the public, which enjoys concerts, medical care, and art thanks to the generosity of Raymond Perelman and his wife, Ruth, also gets a glimpse of the family at war.

Reduced to its essence, the story is: Raymond Perelman contends that after selling a portion of his industrial and medical holdings to Jeffrey in 1990, his son deliberately ignored an oral agreement to place 50 percent of the assets in a trust to ensure lifelong wealth for Alison, now 28.

Jeffrey Perelman thereby broke a "contractual promise," his father alleged in court, which may constitute "fraudulent misrepresentations to his father."

Tough stuff. But Jeffrey's response was tougher.

"Raymond Perelman has now, in the twilight of his life, elected to engage in a vicious course of conduct . . . bent on destroying his son's reputation," Jeffrey said in a lawsuit accusing his father of defamation.

By Jeffrey's account, Raymond told family friends that his son had "committed fraud" and "stolen" from his own daughter. In another document, filed in May, Jeffrey said his father had a "heart and head bursting with anger, arrogance, and rage."

Jeffrey Perelman also accuses his brother, Ron, principal owner of the cosmetics company Revlon Inc., of "stirring the pot" to egg on his father's attack.

For his part, Jeffrey says his father's lawsuit is "wrong on the facts and wrong on the law."

The Perelman family is known for its civic activity and philanthropy, or, at other times, as fodder for New York City gossip columnists.

There is the Perelman Center for Advanced Medicine at the Hospital of the University of Pennsylvania. (Raymond and Ruth.) The Perelman Auditorium at the Kimmel Center. (Ditto). The Perelman Building at the Philadelphia Museum of Art. (Ditto.)

And that's the short list.

Jeffrey Perelman is secretary of the board of trustees at Children's Hospital of Philadelphia (uncompensated), and his wife, Marsha, a successful businesswoman independent of the Perelman family, is the chair of the Franklin Institute's board (also uncompensated).

New York-based Ron is perhaps best known for his well-worn spot in divorce court (four times, once from the actress Ellen Barkin), but he is also a fantastically successful businessman. Forbes says he is worth $10 billion and is the 23d-richest man in the United States.

Money, however, has not brought peace to the family.

After negotiations between father and son fell apart in October 2009, Raymond Perelman asked Common Pleas Court to order Jeffrey to revise the 1990 agreement, pay his daughter the income that went to Jeffrey, and award Raymond damages.

That day, Jeffrey Perelman filed a lawsuit in U.S. District Court accusing his father of defamation.

Infuriated by what Jeffrey Perelman says were accusations by Raymond that Jeffrey and his wife "engaged in a fraudulent scheme to mislead Raymond and to bilk their own daughter," Jeffrey Perelman asked a federal judge to intervene. That court action insured the dispute entered the public domain.

"In every family there are battles, and in every family . . . there comes a time when you have to say enough is enough," said Anne Gordon, a family friend.

"It was time for Jeffrey to say this is not true, there is no basis in reality, it has to stop," Gordon said.

Family members have declined to comment.

Lawyers for Jeffrey Perelman referred questions to Gordon, a former managing editor of The Inquirer, who is speaking to reporters on behalf of Jeffrey and Marsha Perelman. Raymond Perelman, who goes regularly to his Bala Cynwyd office, said he was willing to be interviewed, but his attorneys subsequently stopped him.

Alison Perelman, now working toward a doctorate at the University of Pennsylvania, also declined to discuss the feud. Sources said she had worked hard to maintain good relations with her parents and grandparents.

Raymond Perelman is not questioning his son's commitment to Alison's financial well-being, said Lawrence G. McMichael, a lawyer with Dilworth Paxson L.L.P. who represents the elder Perelman. "It has nothing to do with how Jeffrey might or might not treat his daughter," he said. "It has everything to do with how Raymond wanted to treat his granddaughter."

"Ray had a very clearly expressed intent that has never changed, that half of the value . . . was to go Jeffrey's children."

"There is no doubt that was Raymond's principal objective," McMichael said. "When it became clear to him that Jeffrey wasn't going to fix it, he had no choice."

The 1990 deal resulted from Jeffrey Perelman's unhappiness with his father, who retained tight control over the industrial and mining firms he had assembled over a lifetime. Jeffrey was "becoming disillusioned with the circumstances of his employment, principally as a result of what was already a badly deteriorated relationship with Raymond," a court filing by Jeffrey's attorneys says.

Ruth Perelman, now 89, stepped in to try to make peace. Raymond agreed to sell a dental-equipment firm and other industrial companies to Jeffrey, allowing him to operate the businesses without interference from his father.

Most important, Raymond Perelman contends, it was supposed to ensure that Alison had "wealth sufficient to enjoy a lifestyle comparable to that he had enjoyed." Fifty percent of the assets sold to Jeffrey would be placed in a trust specifically for her, he says.

But that was not put in writing, and a clause in the agreement says the only elements to the deal are those in stated in the paperwork.

A central question is how Raymond Perelman could have failed to realize until recently that the deal he signed was not the deal he negotiated.

"This man is an extraordinary astute businessman," Gordon said. "This trust was carried out exactly as Raymond and Jeffrey agreed 20 years ago."

Asked why Raymond Perelman might now believe it was not, Gordon responded, "I do not know."

McMichael, Raymond Perelman's attorney, said: "The reasons he didn't know fall into two categories."

"The transactions were done by Jeffrey, who at that time was on both sides" of the negotiation, as both the buyer and employed by the seller, his father. Raymond Perelman "trusted Jeffrey, and he trusted" the lawyers who handled the transaction.

And, McMichael said, "he was told repeatedly after that, everything was done as he wanted it to be done. Everyone told him that."

Whatever happened, the dispute has generated at least four lawsuits. In addition to the initial federal and state actions, Raymond Perelman filed a legal-malpractice case over the 1990 agreement. In October, Jeffrey Perelman filed a suit claiming that Raymond and Ron Perelman improperly used money from a pension fund to finance Revlon operations. Gordon says that case is unrelated to the trust dispute.

So far, the legal score is in Jeffrey's favor. In March, a state judge upheld his preliminary objections to his father's initial lawsuit, though Raymond Perelman has appealed. The legal-malpractice case also was tossed.

If Raymond Perelman loses his appeal, the federal lawsuit will be moot, said Jeffrey's attorney, James T. Smith of Blank Rome, conceivably ending the legal action.

A negotiated resolution is impossible if it means settling on Raymond Perelman's terms, Gordon said.

"There have been several appeals [to Raymond] to say, let's sit down and have a conversation about this, and that hasn't happened in any productive fashion," she said.

McMichael said, "It could settle," but he added that "it would require Jeffrey to do some of the things that he has promised to do."

Ruth Perelman has tried to mediate, but has been unsuccessful.

"It would be a wonderful thing for the family, and particularly for Ruth," McMichael said. "She would love to see the case settled."