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12/12/2008 05:12 am ET | Updated May 25, 2011

The Mansion Trap

In January 1995, Veronica DeGruyter Beracasa de Uribe Hearst gave an intimate lunch for Diana, Princess of Wales, in her opulent apartment on the corner of Fifth Avenue and 66th Street. The Princess was in New York to give an award to the then editor of Harper's Bazaar magazine and fellow Englishwoman, Liz Tilberis. Tilberis had asked Veronica, a clotheshorse with a love of couture, to host the lunch. Chanel designer Karl Lagerfeld was there, along with photographer Patrick Demarchelier. So too was the Princess's great friend Lucia Flecha de Lima, the wife of the Brazilian ambassador to the U.S. -- and also Patti Hearst, Veronica's famous hostage-turned-urban-guerrilla-turned-housewife stepdaughter. So, of course, was Veronica's husband, Randolph Apperson Hearst, Tilberis's ultimate boss as chairman of the Hearst Corporation, which owns Harper's Bazaar and other magazines, including Cosmopolitan, Town & Country, and Esquire. Randy, as he was known, was the last surviving son of the American newspaper mogul William Randolph Hearst.

For Veronica Hearst, then in her 50s, it was the kind of social standing for which she had strived her whole life. A tall, pale-faced, and raven-haired beauty, she had, during her previous two marriages, occasionally been featured in the pages of fashion and society magazines, but her marriage to Randy had enabled her to become a major player in Manhattan café society -- attending many benefits and dinners, which Randy, not previously a social type, found he enjoyed immensely. His new wife made him feel like a king.

"Everything was beautiful, immaculately done," says Patti Hearst. Entertaining was Veronica's specialty. She always did it elegantly -- gushing over guests, importing titled Europeans to add glamour to the mix. "She had a sense of drama," says one frequent guest.

Her husband found his new wife titillating, stimulating, and alluring. He bragged of their physical chemistry to his men friends. He liked that she expanded his horizons. The year before the Diana lunch, the Hearsts had made the cut for a dinner given by President Clinton for the Emperor and Empress of Japan. Other guests at the White House included Cabinet members, a Supreme Court justice, former Washington Post publisher Kay Graham, Oprah Winfrey, CBS chairman Laurence Tisch, Barbra Streisand, and Peter Jennings. At the last minute Randy could not attend, as his adult daughter Catherine had fallen ill and doctors feared it could be fatal (it wasn't). He flew to Los Angeles to be with her, but Veronica went to the White House on her own. Such behavior did not win her affection from other Hearst family members, but, as one person connected to the family puts it, Veronica never minded what they thought of her. She had only one focus: Randy.

He plunged into a new lifestyle with his new wife. A stretch Mercedes was ordered that was so enormous it turned out to be too long for the garage and had to be returned. There was the new apartment on Fifth Avenue and talk of purchasing a house in the Hamptons -- until they applied to become members of the Southampton Bathing Corporation, the Waspy members-only beach club. According to a family member, Randy was accepted; Veronica was not. The talk ended.

When Randy looked at the bills from the couture houses where Veronica had been shopping, he gasped in surprise, but Veronica claimed, according to Patti, that in fact she'd gotten the items at less than the original asking prices. The way she saw it, she told her husband, she was saving money. And so, in this vein, went the glittering life of Mr. and Mrs. Randolph Hearst, culminating in July 2000 with the $30 million purchase of Villa Venezia, a 52-room, 28,000-square-foot mansion in Manalapan, Florida. Twelve miles south of Palm Beach, the estate stretched between the ocean and Lake Worth.

According to Patti, Randy had been reluctant to buy it; he was ill with prostate cancer and would die five months after the purchase. He told his children that if he was going to spend money on property in Florida it would be more wisely invested in Palm Beach itself. But Veronica loved the house for its grandeur and history. (It is a former Vanderbilt home.) "We got this for your father because he loves to swim in the wintertime," she told her stepdaughter Anne.

Veronica could not have known at the time that this particular extravagance was to be her undoing.

On February 25 of this year, Villa Venezia was foreclosed on for $22 million by New Stream Secured Capital, which held the mortgages. It emerged that Veronica owed them a further $23 million. In a deposition she gave in October 2007, she admitted that in a desperate bid to keep the mansion she had pledged $3 million on her artwork, and she had used as collateral both her Westchester mansion and her Fifth Avenue apartment, apparently in violation of the cooperative's housing rules. The board stayed quiet publicly, but sources say its members were upset.

Veronica was revealed in the columns of the New York Post's "Page Six" and elsewhere as a woman with $45 million in debts who was living a life she could not afford. People who know her said she withdrew from her high-profile social life. (She declined to talk to Vanity Fair for this article.) "She will mind deeply what her reference points -- namely the titled Europeans she was so fond of -- think," says one friend. Another person said, "She has been holed up in a cave."

Randy Hearst had told his lawyer Robert Littman to look out for Veronica after his death. He knew that the terms of his father's will prevented him from leaving her enough money to continue the lavish lifestyle they had enjoyed. But Veronica refused for a disastrously long time to accept that reality.

An Old Man in Possession of a Large Fortune

Randy Hearst's five daughters -- Catherine, 69, Virginia, 59, Patti, 54, Anne, 53, and Victoria, 51 -- are staggered by how their stepmother could have let her finances fall into such disarray. They believed she was smarter than this -- after all, it had taken her only months to win their father's hand in marriage. "How could she have been so foolish?" one of them asks.

Despite Randy's illness, Veronica, thought to be 63, appears to have been totally blindsided by his death (of a stroke) in 2000. Although his fortune had been estimated by Forbes in 1999 at $1.6 billion, according to the very strict limitations set by the will of William Randolph Hearst, Randy was able to leave her only $4 million in cash and real estate worth around $60 million, but eventually encumbered by mortgages amounting to $45 million. Had Veronica sold Villa Venezia, bought with a $25 million mortgage, she might have been able to dig herself out of financial trouble.

But, according to Baroness Hélène de Ludinghausen, who has known Veronica since childhood, Veronica's lifestyle with Randy had taken her into a fantasyland that no one -- not even Robert Littman -- could talk her out of. When offers came in for the house, she turned them down, according to Palm Beach real-estate broker Linda Gary. One friend suggested that, if she was hoping to remarry, the house would be part of her allure. She even invited Tony Blair to dinner there. But despite friendships with such wealthy men as philanthropist David Rockefeller Jr. and Mexico's Carlos Slim Helú, no one materialized to replace Randy Hearst. And her debts grew. "I stopped calling her when I came to New York," says de Ludinghausen. "Simply because I got tired of hearing the 'me, me, me.'" Another friend says, "It was almost as if, having married Randy, she had, like Icarus, flown too high."

"She gave me $50,000. Had I known she was in financial trouble, I would never have asked her for the money," says Lady Lynn Forester de Rothschild, who hosted a fund-raiser for London's Tate gallery last summer. At the time no one had any idea that Veronica was cash-strapped.

It was Anne Hearst's nanny who brought Randy and Veronica together, in 1987. Veronica by this time had two husbands behind her. Her second, Colombian cement magnate Andrés Uribe, married her only 50 days before dying of brain cancer. Following Uribe's death, there ensued an acrimonious two-year legal battle over his estate, so Anne, according to a close source, was wary of Veronica. Still, Veronica repeatedly told her of her religious devoutness (she is a Seventh-Day Adventist), and claimed that she had plenty of her own money. She suggested to Anne that they help a nanny they both employed with a loan for a house in Venezuela. Veronica offered to act as interpreter, since the nanny's English was poor.

According to Anne, Veronica met Randy at his apartment in the Essex House hotel, on Central Park South, in New York. Anne remembers that Veronica looked very chic in a white suit and pearls. "I don't think [her appeal] is based on sex, to tell you the truth.... It's more to do with her image: sophisticated, religious, non-promiscuous," says de Ludinghausen. According to Anne, that evening Veronica charmed Randy, then 71. Three days later, he asked her out, and a furious courtship ensued. She would give him little notes, "Jonathan Livingston Seagull-like," recalls Patti; he gave her a box, inscribed "I love you" in Dutch. The nanny got her loan. Veronica got Randy.

The Hearst daughters watched in awe at how diligently Veronica looked after their father. Patti recalls that Veronica would call maître d's of restaurants ahead of time to be sure that Randy's favorite dish was on the menu. She also made sure that at benefits he'd be seated next to the most interesting person at the most interesting table.

The members of the sprawling Hearst family -- William Randolph Hearst had five sons (Randy and his twin brother, David, who died in 1986, were the youngest), most of whom married several times -- were concerned by how little they knew about Randy's latest love. They also thought she was "too extreme."

"She always dressed in black, with pins all over the place. We didn't know whether to shake her hand or salute. The pulled-back hair, the jewels--it was all so over the top," says Patti.

Bill Hearst, one of Randy's older brothers, told him that he didn't have to go so far as to actually marry Veronica. Randy responded by refusing to speak to Bill for several weeks. Maria Uribe, Veronica's stepdaughter by her second husband, asked Patti how long Randy and Veronica had been dating. When told "two months," Maria replied, "Well, then it's too late." Patti's former bodyguard Bernard Shaw, whom she married in 1979, began assembling a dossier on Veronica's past. He uncovered questions about her background, including a friendship with Michele Sindona, a charismatic Sicilian financier, who some believe had links to the Mafia. In 1980, Sindona was convicted of embezzling $45 million from the Franklin National Bank, and the Vatican lost millions through its dealings with him. His alleged partner, Roberto Calvi, was found hanging under Blackfriars Bridge, in London, in 1982, his pants pockets filled with bricks and $13,000 in various currencies. Sindona died in March 1986 in prison, after drinking coffee laced with cyanide. According to a source, Veronica was deposed by a grand jury about him.

After Randy read the dossier, he confronted Veronica, who cried and explained she had been so young and naïve at the time of the friendship that she did not know who Sindona really was. Randy turned on the messenger -- Bernie Shaw -- for uncovering the information. After Randy and Veronica were married, Patti and Bernie and their children were rarely invited to visit.
The Lady in Black

Randy Hearst was a genial man of the old school who enjoyed country pursuits and a Dubonnet on the rocks before dinner. He had been married twice before, first for 44 years to Catherine Campbell, the mother of his five daughters. The marriage had come undone in 1982, some say as collateral damage from the infamous 1974 kidnapping of Patti by the Symbionese Liberation Army. Then 19, Patti, who had temporarily renamed herself Tania, was arrested 17 months after robbing a bank in San Francisco -- an act, her lawyers would later claim, that was the result of Stockholm syndrome, in which hostages become sympathetic to their captors. Nevertheless, she served 22 months in jail in California. Soon after his divorce, Randy wed an Italian, Maria Scruggs, but the marriage crumbled within three years, in part because of Scruggs's jealous tendencies, says Patti. There were stories of arguments at parties and fights over his preference for a certain airline known for its pretty stewardesses.

In 1987, Randy quietly married Veronica DeGruyter Beracasa de Uribe at Wyntoon, the 39,000-acre Hearst compound originally done up as a Bavarian village near McCloud, California. Patti learned of the event through Maria Scruggs, who had been told of it by Randy's driver.

Randy and Veronica's married life was not so quiet, however. Like all the Hearsts, Veronica now had access to two palatial properties: Wyntoon and the legendary Hearst Castle, spread out over 127 acres in San Simeon, California. Randy and Veronica threw grand parties there, flying guests in and serving sumptuous meals. At Wyntoon each guest was put in his own "guest castle." One remembers Veronica's flair and theatricality: "She had a lot of nerve, in a good way, a lot of fashion sense.... It was so out of the norm. I mean, it may not have been out of the norm in New York City or Paris, but once, at Wyntoon, she wore a black negligée, and it had a sheer black coat with big fluffy feathers around where your wrists are. She's certainly somebody who you can't take your eyes off of." To outsiders Veronica may have been compelling, but the Hearsts found her unsettling.

She was not particularly sensitive to their customs or history. Once, she complained of the tussles she was having with her first husband, the well-liked Venezuelan banking heir Alfredo Beracasa, over their two children. Without a trace of irony, she told Patti and other Hearst family members, "You can't possibly imagine what it's like to have your child kidnapped." Patti was dumbfounded.

Read the rest at VanityFair.com.