The familiar sign on S. 108th St. still has the Derzon name on it. A picture of the company’s founder, David Derzon, hangs on the wall above the eclectic collection of rare coins and valuables on display in the store.
But no Derzon is involved in the venerable collectibles business any longer. In the eight months between David Derzon’s death in 2007 and that of his second wife, Rebecca Derzon, she rewrote her will – cutting David’s two sons out of the business and the family fortune.
The will is now at the center of one of the nastiest courtroom brawls Wisconsin has seen in decades, a proceeding that could determine control of an estate valued at up to $3 million. Included in the dispute: About $700,000 in cash, a business worth at least $1 million, and an array of rare coins and memorabilia such as a gold pen and gold toothpick that purportedly once belonged to Abraham Lincoln.
Put it all together, and you have the ingredients for a family feud that is as contentious as any Robert Rondini has observed during his more than 20 years of practicing in probate court.
“The stakes are high. Attempts to resolve it have not been successful,” said Rondini, who was named administrator of the estate. “I have rarely come across a case in probate with this type of protracted litigation where all sides think they’re winning.”
The crux of the case is simple:
Did Lori Laatsch – the half sister of Rebecca Derzon – and her lawyers improperly influence Rebecca Derzon into changing her will and then take steps to hide their actions?
Before the will was rewritten, the estate was to be split among Alan Derzon, 64, and Mark Derzon, 62, who were to share 60%, and Paul Johnson, Rebecca Derzon’s half brother, who was to receive 40%.
The rewritten will leaves Johnson $500,000 in a trust – to be paid in monthly increments of $1,800 until he turns 65 – with the rest of the estate split between Laatsch’s two adult daughters and Johnson’s two minor daughters.
Seventy-five percent of the business went to Laatsch – who acknowledged in court that she went decades at a time without seeing Rebecca Derzon before befriending her in the years before her death.
The remaining 25% of David Derzon Coin Co. Inc. went to Diane Mehalko, a longtime employee whom Laatsch described to the Journal Sentinel as a “very good friend.” The women are running the store now, and Laatsch has been making more than $400,000 a year, and Mehalko about $160,000 annually, from the business.
The women declined to comment in any detail. “We don’t want anything in the paper,” Laatsch said. “It’s personal”
Mental, physical state
A key issue confronting Milwaukee County Circuit Judge Jane Carroll – who has presided over nine days of testimony since December – is determining the mental and physical conditions of David and Rebecca Derzon during the months before their deaths.
Rebecca Derzon, who died in August 2008 at age 59 after accidentally ingesting a fatal mixture of alcohol and prescription drugs, rewrote her will in March 2008 – just three months after her husband of nearly 30 years died at age 83.
Derzon’s sons contend their father was incoherent in February 2007 when – three months after he underwent brain surgery – attorneys explained to him that his wife could change her will after his death and spend her inheritance as she pleased.
Rebecca Derzon, the sons said, was depressed, abused drugs and alcohol, and engaged in bizarre behavior – they point, for instance, to a report by staffers at Columbia St. Mary’s that she was argumentative and smelled of alcohol when she took off her top and shouted at her husband and at staff who were treating him there in December 2006.
Mark Derzon, a California lawyer, testified last month that he talked to Rebecca Derzon by phone several times after his father died and found her to be depressed and frequently intoxicated.
“I could tell she was depressed and missed my father so much,” Mark Derzon testified. “She wouldn’t always make a lot of sense . . . her speech was somewhat slurred . . . she sounded somewhat wasted.”
Laatsch’s side counters that David Derzon was aware and completely coherent during the meeting with lawyers and that Rebecca Derzon was in control of her life. She was running the business and even had an important business meeting scheduled for the day after she unexpectedly died, Mehalko testified.
F. Brian McElligott, Laatsch’s attorney, brushed off Rebecca Derzon’s bizarre behavior as “isolated incidents – there is no indication on the record of a person that’s not functioning.”
Adding to the intrigue is that the word “draft” is stamped on the signature page of Rebecca Derzon’s revised will, covering a portion of her signature.
“What matters is the person’s intent when they take pen to paper,” McElligott said, arguing the stamp has no impact.
Howard Erlanger, who teaches estate and trust law at the University of Wisconsin Law School, said a draft stamp doesn’t automatically void a document, although he advised against using a will or contract stamped “draft.”
“You don’t have to be a lawyer to know . . . that’s not how we would normally do things,” said Erlanger. “This would leave us suspicious.”
Business started in 1959
According to testimony in the case, the seeds of the coin company were planted in 1959, when David Derzon and his Russian immigrant father, Charles, put a few coins on display at their downtown Milwaukee hardware store.
The coins sold well, and by the mid-1960s, David Derzon opened a Derzon Coin store on 7th St. – in the shadow of the courthouse where the inheritance fight is playing out now.
“Interesting people would come in and sell all sorts of things,” Alan Derzon, a Milwaukee lawyer, said in an interview. “It was never a pawn shop, but they would buy jewelry, diamonds, gold in many different forms, stamps occasionally, sports memorabilia or historical manuscripts.”
The business moved to several locations, settling in West Allis in the late 1980s. In a 1987 Milwaukee Sentinel story, David Derzon was referred to as the dean of Milwaukee coin dealers and was quoted as saying that Rebecca had joined him in the business 15 years earlier.
“That’s why this whole thing is sad,” Mark Derzon testified. “When things were good, everyone got along so well. Everything was great.”
Even David Derzon’s 1978 marriage to Rebecca, 24 years his junior, was handled well by the family, Mark Derzon said. The marriage came one year after David Derzon divorced Fay Derzon, the mother of Alan and Mark.
Regardless, Mark testified that the family accepted his father’s new wife.
“He loved her very much,” said Mark Derzon. “She loved him very much.”
Relationship issues start
But relations, particularly between Alan Derzon’s family and Rebecca Derzon, became strained in the final years of David and Rebecca Derzon’s lives.
Rebecca Derzon’s drinking became more frequent, her behavior more outlandish, and in late 2005 Alan and his wife banned her from driving any of their 13 children, several witnesses said.
The prohibition angered Rebecca Derzon and drove a wedge between her and Alan Derzon’s family.
Around the same time, Rebecca Derzon had an affair with a neighbor – a dalliance that resulted in Rebecca’s seeking a restraining order in November 2006 against her then ex-lover.
In August 2006, Rebecca Derzon made the first change in her will – which had split her holdings evenly between Alan and Mark Derzon. The change gave 40% of her estate to Johnson, her half brother; 40% to Mark; and 20% to Alan.
The following December, doctors discovered the tumor in David Derzon’s brain. It was while their father was undergoing surgery, they say, that the Derzon brothers learned of the existence of Lori Laatsch, Rebecca’s half sister.
“Lori Laatsch just shows up to the hospital,” said Kevin Demet, attorney for the Derzon sons and Johnson. “She doesn’t have a relationship with Rebecca that anybody knows about.”
Said Alan Derzon in court, “I didn’t know Rebecca had a sister.”
Lawyers for the Derzon sons and Johnson paint Laatsch as using her influence over Rebecca Derzon in the months before and after her husband died.
“Rebecca’s husband died. She didn’t feel she had anybody,” said Jack Wisniewski, who is also representing the Derzons and Johnson.
Laatsch, who lives in Hartland, acknowledged in court that she did not know her sister’s maiden name. She also contended in court that Rebecca Derzon was adopted by Laatsch’s father – a claim contradicted by various documents submitted as evidence.
As children, the women lived in the same house until Laatsch was 3 and Rebecca Derzon was about 13, Laatsch said. Rebecca Derzon then moved to the home of her biological father after her stepfather sexually molested her, Laatsch said.
Laatsch said she saw her sister at a birthday party in 1976, and they were reunited in 1997. “That relationship was sustained until she died,” Laatsch testified.
She began working for the Derzons as a paid housekeeper and store employee in 2007, she said.
Signing of disputed will
When Rebecca Derzon died, Laatsch listed her own father as Rebecca Derzon’s father in the obituary.
“She did it in order to establish a closer relationship with (Rebecca Derzon) and to justify her obtaining a larger share of the estate,” Demet argued in court. ” . . . All prior documents indicated she inherited nothing.”
The current, disputed will, according to John Remmers, the lawyer who prepared it – and who represented David and Rebecca Derzon for many years – was signed during a March 2008 meeting with Rebecca Derzon at the coin store. Laatsch was at the store at the time, he said, although she did not participate in the meeting, he said.
Remmers testified that he was surprised to see the draft stamp on the document, but Derzon insisted on signing it that day. “She said, ‘I want to sign it. It’s my intent,’ ” Remmers testified.
He declined to comment for this story.
“I would love to talk, but I can’t,” he said.
It was Johnson – Rebecca Derzon’s half brother – who first decided to look into the will and the estate. His lawyer, Wisniewski, then became suspicious when he had difficulty obtaining records from Remmers’ law firm.
He found the “draft” copy at the courthouse and realized that the copy he had received from Laatsch’s attorneys had not included the “draft” stamp.
Since then, much of the case has revolved over fights to obtain records.
“They didn’t turn over anything – we seized it after multiple court orders,” said Wisniewski.
The Derzon sons found out the hard way that they had been cut out of the family fortune: The day Rebecca Derzon died, Alan Derzon called Mehalko at the store.
“He wanted to lock everything up and get the keys and give them to him,” Mehalko testified. “My response was, I can’t do that because Rebecca changed her will.”
Carroll, the judge, says she will decide in August whether the rewritten will stands.
Overturning a will based on allegations of undue influence is always difficult, said Erlanger, the University of Wisconsin law professor, noting that the burden is on the challengers to prove Rebecca Derzon was badgered into changing her will.
Said Erlanger: “If at the time you signed it you knew what you where doing, you knew who you were leaving it to and you knew who you were not leaving it to – if you know those things at the time you signed your will, then you had the requisite capacity to do so.”
The litigants Collectibles
- The Derzon estate includes 15,000 pounds of personal property and memorabilia, including:
- A boxing glove and photos signed by Muhammad Ali, including a photo signed as Cassius Clay.
- A baseball bat used by Babe Ruth.
- Maps of Milwaukee circa 1830.
- A Civil War sword.
- A child’s doll found in a Nazi concentration camp.
- A photo of President Dwight Eisenhower and the pen he used to sign it.
Battle of Wills: Family clashes over $3 million Derzon estate
July 14, 2012
Milwaukee Wisconsin Journal Sentinel