When Dr. Robert Atkins took a fatal fall on a New York sidewalk in 2003, his death was accompanied by highly public controversy over the risks of his diet plan and his own personal health.
Now, the Low-Carb King's legacy is taking another beating, this time from a made-for-the-tabloids battle over his fortune. A lawsuit filed in February in state court in Miami, Fla., accuses Atkins' widow, Veronica, of improperly firing the financial advisers who have been helping her manage her $400 million in assets. Atkins responded by filing a petition in April in New York City surrogate court, arguing that the advisers engaged in self-dealing and waste at her expense.
On one side of the case are the three financial advisers Atkins dubbed the "Three Musketeers" and who earned more than $10 million from Atkins since 2004. They also purchased life insurance for Atkins that would net them each $5 million if she met an early death.
On the other side is Atkins and Alexis Mersentes, a Palm Beach socialite who opposing lawyers call an "opportunist skilled in the art of seduction" and who recently married Atkins in a quiet ceremony. The Musketeers say Mersentes tried to push them out and steal the Atkins fortune. Atkins and Mersentes say the Musketeers have fleeced a vulnerable widow and should be held accountable. Their suit calls for the advisers to be removed as her trustees and seeks reimbursement of some of their fees.
Whatever the outcome, the case offers a valuable lesson in estate planning, for millionaires and non-millionaires alike. Dr. Atkins didn't have a large investible fortune when he was alive. When he died, his wife took charge of their affairs, though she had little experience in business or finance. Atkins was unprepared for the windfall she received after his death, when the diet-products business he had built was sold for some $600 million. After taxes and payouts to other shareholders, she was left with about $400 million.
Wealth experts say most people in Dr. Atkins's position would be advised to appoint a bank or trust company to help the surviving spouse manage the money. Without a corporate adviser, Atkins -- who both sides say suffered from severe depression after Dr. Atkins's death -- was left open to all manner of new friends, advisers and potential predators with ideas about how to manage her money.
"Veronica was not in a position to make any decisions about her financial life after her husband's sudden death," says Roy Black, the attorney for Atkins and . Mersentes. "If there had been a corporate fiduciary or bank, she would have had more protection."
The troubles started shortly after Dr. Atkins' death on April 17, 2003. In his will, Dr. Atkins set up two trusts -- a marital trust that would benefit his wife and receive 90 percent of their assets, and a foundation, which would continue his diet research and get 10 percent of their funds.
Two days after his death, Atkins, now 69, got a call from D. Clive Metz, a 45-year-old Miami resident and self-described entrepreneur who met the Atkinses at a Caribbean resort owned by Metz's father-in-law. Metz had dinner with Atkins in Palm Beach in early May and offered to help her with her money and foundation.
He recommended two of his acquaintances: an accountant named John J. Mezzanotte and a lawyer named John Corrigan, both based in Connecticut. The three men became Atkins's closest advisers and trustees for the marital trust, which by the end of 2003 had assets of about $420 million. They replaced the two trustees who had been appointed by the late Dr. Atkins. The men also became officers of the foundation. Atkins began paying the "Three Musketeers" $100,000 a month apiece, or $1.2 million a year, plus bonuses of $100,000 in 2004 and 2005.
Because the combined salaries exceeded statutory limits on trustee commissions, Atkins agreed to pay one of the $1.2 million salaries out of her own pocket, rather than out of the trust. She signed a 10-year contract with built-in extentions that the Musketeers say made them employees for the rest of her life. Each of the advisers also purchased a $5 million life-insurance policy for Atkins and named themselves as the beneficiaries. They said the policies, recommended by Atkins, were designed to help them carry out her foundation work if she met an untimely death.
Bruce Katzen, an attorney for the Musketeers, says his clients acted in Atkins's best interests and gave up their professional practices to devote their attention to her trust and charitable foundation. They said Atkins volunteered the extra salary and lifetime contracts. He declined to release details about the trust's performance under the three advisers' management.
"(Veronica) Atkins came to trust the (advisers') collective professional skills as well as their integrity," according to the Florida lawsuit.
Yet the relationship broke down in early 2006, after Atkins met Alexis Mersentes, also known as Constantine. According to the lawsuit, Mersentes met Atkins at a lunch at the Mar-a-Lago resort in Palm Beach. Mersentes, a dapper dresser and worldly conversationalist, had married and divorced two wealthy heiresses -- Doris Dixon, a society matron in Dallas, and Laura Mentzelopoulos, owner of the famed Chateau Margaux winery in France. A spokesman for Mersentes said he is a self-made multimillionaire who earned his money from investing and real estate.
Atkins started dating Mersentes and he became increasingly involved in her finances, according to both sides. In May of 2006, Mersentes demanded that Atkins receive $100 million from her trust -- beyond the $15 million-a-year income she was already getting, according to the lawsuit. The advisers refused. Mersentes started pushing Atkins to remove them as trustees, according to the Musketeers' lawsuit.
A few months later, she stopped paying her out-of-pocket portion of the Musketeer salaries and sought to terminate their employment contract. The Musketeers sued, claiming a breach of contract. The plaintiffs are seeking damages of $8.7 million, representing their back pay and fees they say they are entitled to under their 10-year contract.
Black says the claim about the $100 million is "totally untrue," and that Mersentes is a "red herring" in the attempt by the advisers to shake down Atkins for their money.
"The people who were supposed to be protecting her and getting paid all this money have turned around and attacked her and her husband," Black says. "They have made this about personal attacks, rather than about the fees."
Meanwhile, Atkins and Mersentes got married last month at a courthouse near Palm Beach, with no family or friends present. Asked whether they have a prenuptial agreement, Black declined to comment.