By Dana Hedgpeth and Alec MacGillis
Washington Post Staff Writers
Monday, October 9, 2006
Theodore N. Lerner and his family have spent their lives in the Washington area, but even those who have worked alongside them say the family retains an aura of mystery and power.
Ed Risse, a planning consultant who worked for Lerner's former attorney, John T. "Til" Hazel Jr., in the 1990s, recalls when Lerner would arrive at Hazel's Fairfax City law office for meetings. With little warning, the limo would pull up, Lerner would get out surrounded by family members and other company executives and they'd all be whisked into the building.
"He had an entourage. It was an event -- the visiting of royalty in a small provincial town," Risse said.
And most of the entourage tends to be family. Lerner's son, Mark, a part-owner of the Washington Capitals, oversees leasing and management and is taking an active hand with the Nationals. Robert K. Tanenbaum, married to Lerner's daughter Marla, oversees project financing. Marla leads the family's charitable foundation. Edward L. Cohen, married to daughter Debra, manages its financial investments.
At a recent interview, the sons-in-law did most of the talking. Theodore Lerner -- still fit thanks to regular tennis -- looked on impassively and crumpled a slip of paper into a ball. When he spoke, it was in short bursts.
The principals in the company hold monthly meetings for their 400-employee real estate business in Bethesda, as well as regular meetings to discuss the Nationals. The family says decisions are made by consensus. But the patriarch is still considered a first among equals, even as he nears 81 and now splits his time between his office in Bethesda and his second home in Palm Springs, Calif.
"How many stories do you hear about the guy who doesn't give up any power until after the eulogies are said? That's the pattern in most situations," Cohen said. "Here you've got a man who works every day but goes to California and lets his children run everything day to day. He's out in California at his desk waiting for someone to call to seek some wisdom, and he's available to give it to us."
As Lerner tells it, it all started with a $250 loan he got more than 50 years ago from his wife, Annette, whom he met at a dance at Washington's Coolidge High School and married in 1951. The couple still live in the Chevy Chase house where they reared their children, a home assessed at $1.2 million and decorated with the artwork of Annette, an artist and collector.
"I had to make sure her investment was protected, so I had to work very hard," Lerner said.
The son of a clothing salesman who emigrated from Palestine, Lerner was raised in an Orthodox Jewish home on Fifth Street NW. His 1944 Roosevelt High School yearbook shows a shock of curly hair and a crimped smile over this caption: "Quiet Ted has done much to keep Roosevelt a top-rating high school."
After a stint as an Army clerk, Lerner graduated from George Washington University on the GI Bill. On his 21st birthday, his father died, and Lerner started selling homes on weekends to support his mother, sister and brother. He got a law degree from GWU, but his only stint as a lawyer came when he was appointed to represent a parking attendant who drove off with a car. He got the sentence reduced, but the defendant didn't pay up and was never heard from.
"I decided to stick with real estate," Lerner said.
He started on the ground floor, selling homes in suburban subdivisions. Despite a shy disposition ill-suited to sales, he flourished and drew the notice of businessmen looking for young talent to help build shopping centers.
All along, the Lerners have focused on projects in their home town and refrained from taking the company public. In a 1975 letter to The Washington Post, Lerner wrote that this had to do with the "enormous personal challenge" and "feeling of accomplishment" that came from working on his own, in his own community. Real estate development, he wrote, "is one of the few remaining areas in our economy not dominated by large corporations where individual initiative can still function."
The Lerners are very private -- a mix, they say, of modesty, distrust of the media and a calculation that, until now, there hasn't been reason to spend time on publicity. They say they realize that they will need to take a more public role as team owners but express uncertainty about how to do so and still maintain control over information.
One sore spot with the family is the acrimony between Lerner and his brother, Lawrence.
In the 1960s, Theodore Lerner invited his brother, a pharmacist seven years his junior, to enter into partnership managing properties. But Lerner fired Lawrence as a company director and officer in 1983 after the older brother became concerned about his sibling's work, and Lawrence started to send mean-spirited letters to him and Mark Lerner, according to court testimony.
Since then, there have been 17 lawsuits between the siblings in which Lawrence has claimed that his brother conspired to deprive him of tens of millions of dollars from shared ventures. Theodore Lerner has spent $2 million in legal fees, according to testimony, and members of the two branches of the family have not spoken for years. The Lerners declined to comment on the dispute and cited it as their reason for granting only one interview for this article.
Theodore Lerner's attorney, Albert Brault, noted in an interview that no finding of fraud had ever been made. Cohen testified in a 1999 trial that the dispute is more a deeply-rooted personal matter than a business disagreement. He said Lawrence received $28.4 million in company distributions over a 10-year period.
"One of the points of the litigation was to embarrass Ted as much as possible because it was based in hate," Cohen testified. "It wasn't a money issue. It was vengeance and hate."
Larry Lerner's attorney, Jeremy W. Schulman, disagreed. "Larry's only goal is and has been to be treated equitably, to be given access to information to which he's entitled and to participate fairly in businesses that he has worked hard to build and grow," Schulman said.
The feud sits in stark contrast to the unity of Ted Lerner's immediate family. Many who have worked with the family say they expect that little will change as more power goes to the next generation. The family is so cohesive, Cohen said in the interview, that he hadn't even bothered to study closely the legal papers being drawn up for the eventual full handover of the company to the families of Lerner's children.
"I can't tell you exactly what those documents even say," he said.